Social Costs of Traffic Jams

In the 21st century, the general mobility (transportation, logistics, etc.) system needs technological renewal because the system based on the foundations of the previous century is overstretched and increasingly unbearable. The population explosion and concentration are stronger than the pace of development of urban infrastructure, transportation, and public transport. Due to the lag in infrastructure development, traffic congestion has become a global phenomenon in urban environments. https://www.penzcentrum.hu/auto/20230323/brutalis-mennyisegu-idot-vesztegelnek-a-dugoban-a-fovarosi-autosok-europaban-alig-latni-ilyet-1135276#

Standing in traffic jams for several hours has made the organization of Budapest's transportation a central element of social debates. Public discourse focuses on the priorities of car, bicycle, and public transport, with traffic jams being a phenomenon and a problem. I have only seen a detailed economic analysis of the social cost of standing in traffic in the "Economic Review". If the actual total social cost of standing in traffic were presented as part of the public discourse, the social and budgetary decisions aimed at resolving traffic jams would also change. It is hard to argue with numbers. http://veke.hu/download/Kszemle_CIKK_917.pdf

From a real estate developer's perspective, when prioritizing urban infrastructure investments, it is worth prioritizing the element that ensures the fastest return, i.e., the one that results in the greatest reduction in traffic congestion time. The return typically appears as a cost savings in time. One part of the problem is whose cost is being saved through the investment, and the other is whether it affects the voters from the perspective of political decision-makers? Are we talking about a local resident, a commuter, or a passerby?

We are facing a specific commons problem. If a passerby buys the highway vignette, they pay the cost of highway use but do not contribute to the development and maintenance costs of the urban road network they use. The commuter, even if they buy the necessary highway vignette, pays the vehicle tax for road maintenance in their town every year. They use the road network near their workplace as a common good, free of charge (vice versa for a company car). Another problem is that the area available for transportation in large cities has run out. More urban roads cannot be built.

In the capital, more than 40% of daily car use is for commuting, and 14% for transporting children to school or kindergarten. In addition to 560,000 cars in Budapest, the city's roads and bridges are used by over 700,000 cars coming from or passing through the agglomeration. One-third of Hungary's 4.1 million car fleet commutes and stands daily in the central region. Budapest ranks 30th in a survey of 200 capitals, with an average time spent in traffic jams exceeding 1 hour per day. This means that at least 1.2 million cars spend 1 hour in traffic jams on working days. This results in a waste of 1.2 - 1.8 million working hours daily (assuming an average occupancy of 1.0 - 1.5 people per car). The social cost of this is enormous, reaching 5 - 7.5% of effective working time in the central region. The central region's share of production within GDP is approximately 40%, i.e., HUF 75 trillion x 40% = HUF 30 trillion. Of the 3 million people living in the central region, about 1.8 million spend an unnecessary 1 hour in traffic jams daily. (HUF 30 trillion x 1.2-1.8/3.0 x 1/8h = 5% - 7.5% x 40% GDP ratio = 2.0% - 3.0% GDP ratio "traffic jam loss").

In other words, GDP could be HUF 600-900 billion higher if the time spent in traffic jams were used 100% for GDP production. But even if the time spent in traffic jams were reduced by only 50%, the GDP increase would be HUF 300-450 billion (assuming that we do not try to use this time for phone calls or other work). Compared to this, the cost of fuel wasted in traffic jams or the environmental cost is negligible. Moreover, electrification does not eliminate traffic jams; it only means that EVs will replace diesel and gasoline cars. https://www.portfolio.hu/ingatlan/20200121/ennyi-idot-pazarol-el-dugoban-ulve-egy-atlagos-budapesti-413133

Now let's look at some solutions that create appropriate incentives!

According to the article cited above, commuting and child logistics justify car use in more than 54% of cases, so it is worth creating social incentives to reduce this. Our goal is to reduce the demand for commuting and school transport. Between public transport and car use, there is the school bus. Small, flexible route, 9-20 seat capacity vehicles work well for private schools and replace the driving of 9-20 parents alone. Whether operated door-to-door or between institutions and fixed-route public transport, the 10-20 versus 1 car/bus can significantly impact a given morning school route. Such transportation of children can be extended to non-private schools and educational institutions alike. Taxis organized with the BOLT app are an excellent example of how transportation can be better organized with active IT connectivity. Using minibuses for morning commutes and afternoon returns would make many families' lives more comfortable and effectively reduce peak traffic between 7-9 am and 4-6 pm. This intermediate solution between parental driving and public transport provides the level of safety for parents and children that public transport currently does not, while 1 vehicle transporting 10-20 children replaces 10-20 cars. If this works for private and public educational institutions as with BKK/BOLT taxis, it can also be extended to large employers generating a lot of corporate car use, i.e., company buses can also be organized for them. Combined with tax benefits, this might be sufficient to bring about change even in the short term.

The demand for business travel has been significantly reduced by the spread of modern telecommunication tools. Today, meetings with 3-20 participants can be held efficiently on IT platforms, BUT this has not reduced the need for commuting. The "home office" does not replace the workplace, so the traffic jams caused by morning and afternoon peak traffic remain. IT has made office use more flexible but has barely reduced the demand for it. IT allows us to hold meetings even when stuck in traffic, mitigating the rudeness of being late, but the social cost of traffic jams remains.

Public transport can be better organized and made more flexible as described above. The average car occupancy of 1-1.5 people and the 100-200 passenger capacity of buses, trams, and metro trains can be supplemented by a flexible, territorially organized 10-20 person minibus service, which, due to direct IT connectivity, immediately provides the expected safety for parents and children alike. Dávid Vitézy is right that as long as the safety of travelers on public transport cannot be guaranteed, those who can afford to use cars will not use public transport (hence the need for the intermediate minibus IT platform solution). This requires a completely different approach. Safety (the most basic Maslowian need) on public transport and in public spaces must approach the safety of traveling by private car or school bus. This requires full surveillance of the metro, underpasses, and public spaces, a professional entry system, and a ticketing system enabling digital identification, supplemented by strict punishment for those who violate public behavior norms. In Singapore, there is no littering, vandalism, or public space vandalism due to drastic penalties and minimized freeloading. Zero tolerance for violations of public space norms, from speeding to drug use, eliminates or excludes norm violations from the area of enforcement, i.e., it diverts them from public to private space.

Walking and cycling in the capital in their current form are completely flawed, dangerous, and unhealthy. Separate pedestrian and bicycle paths are needed in the capital. Bicycle and pedestrian paths should not run along Üllői út but on parallel streets, from which through car traffic should be banned. Based on safety priorities, multi-lane car traffic at 50-70 km/h cannot be conducted alongside pedestrian traffic at 3-5 km/h and bicycle traffic at 20-25 km/h. The air is significantly cleaner in parallel streets. Traffic is less dangerous and healthier there.

Safety and health. Car-free zones as residential areas will appreciate in value over the long term. The pedestrian and bicycle zone from Corvin köz to the Clinics and Népliget would increase the value of surrounding properties. This process does not occur on Üllői út. The same is true for Mester utca. A designated tram, bicycle, and pedestrian zone from Kálvin tér to Illatos út would result in a livable and habitable area. Üllői út and Soroksári út would carry car traffic in a concentrated manner without reducing bicycle lanes.

It is advisable to dimension the outbound side of major city roads with more lanes than the inbound side. Two or three lanes help exit the city center but prevent the formation of downtown traffic jams. The inbound side needs additional parking, wider sidewalks, speed restrictions, and P+R facilities at public transport points. The outbound side should have a constant green wave, a higher speed limit, and more lanes. Drivers also learn. Just as they use standing in traffic jams for phone calls and meetings, they respond to changes in traffic rules. Of course, there are always dissatisfied people, and each decision has its losers.

If every traffic development decision shows the intention to reduce time spent in traffic jams, it is clear to everyone that the winners are the users. Even small results in complex problems generate acceptance and motivation. The tax system can support change as it effectively reduces state welfare costs by creating a non-cash benefit to the value of citizens' time. Time spent in traffic jams cannot be claimed as a tax-deductible expense, but a small portion of travel expenses (e.g., 20% of public transport passes) can be deducted for regular use (e.g., for traveling to the workplace or school). This can also create appropriate incentives.

Summary of Key Points:

1. Traffic jams in Budapest have very high social costs, reaching 2-3% of GDP.
2. In a classical urban environment, transportation capacity cannot be expanded indefinitely because available space for transportation has run out, and the architecture is protected. The solutions used in the USA or PRC, such as 12-lane urban highways, do not solve but rather concentrate the problem.
3. Adopting Charlie Munger's Thinking: To find solutions, we need to return to Charlie Munger's thinking by creating a social incentive system that impacts both demand and supply sides (we cannot expect car manufacturers to solve the problem).
4. Reducing Demand for Transportation:
   • Use IT & telecom tools to handle some meetings.
   • Make transportation more efficient: fewer trucks transporting the same amount of goods.
   • Reduce the need for car use for commuting and child transport.
   • Analyze and help avoid morning and evening rush hours, distributing the load over 24 hours.
   • Shift transportation demand to alternative modes of transport.
5. Improving Supply Side:
   • Resolve bottlenecks at critical points—expand underpasses, overpasses, tunnels, bridges, bypass rings, etc., increasing the capacity of the same transportation area.
   • Minimize the time for repairs and maintenance to the technically necessary minimum.
   • Offer alternative routes or bypass options, allowing choices between longer routes or shorter times.
   • Make participants in traffic jams aware of the actual costs, enabling them to seek alternative transportation solutions, such as walking, e-bikes, EVs, e-buses, and public transportation.
   • Make alternative transportation options attractive, safe, and sufficiently incentivized.
6. Combined Solutions: These points together can provide a solution; individually, they cannot, and solutions develop slowly because daily routines need to be changed on both the providers' and users' sides.