Congestion pricing impacts people differently depending on their income

highway traffic

By Aaron Westling

A new study from researchers at MIT analyzing London’s congestion pricing program can offer insight into the equity impacts of such a program and provide lessons to US cities considering similar strategies, such as New York City.

Using data from the UK National Travel Survey describing trips taken in the designated chargeable zone of Central London, researchers’ models found that the congestion pricing program in London mostly impacted high-income drivers, with 60% of the program’s revenue coming from the top 40% of income earners.

Additionally, the top 40% of earners were more likely to continue to take trips in parts of Central London that charged additional fees, but use alternative modes of transportation; while low-income travelers were more likely to drop trips completely.

The researchers also looked at how the behavior of drivers in different income groups changed over time and in relation to occasional price increases. As seen in the figure below, the study found that after a 15% price increase in 2014, almost no trips were dropped by the low-income group while trips did drop for the high-income group. This finding suggests that as prices continue to increase, the remaining trips are essential and unavoidable. That low-income workers have no alternative but to pay to drive into Central London leads to doubts about the program’s equity and highlights the potential need for price-offset programs for these workers.

Trips eligible for congestion pricing surcharge shown over time
Trips eligible for congestion pricing surcharge shown over time. Each vertical line represents a price increase. Source: Craik & Balakrishnan, 2022.

Ideally, congestion pricing offers a path toward cleaner air and safer streets with the brunt of the costs being paid by those who can afford them. However, as models similar to London’s become a distinct possibility in US cities, local governments and state departments of transportation will need to craft programs that offer convenient and reliable alternatives for mode shift, and consider tax breaks or rebate programs for lower-income drivers who are not able to eliminate or shift their necessary trips.

Photo Credit: Open Grid Scheduler / Grid Engine on Flickr, unmodified. License