Use Those Quarters for Laundry

 

Last week, a toll road outside Denver and another outside Dallas went cashless.  Drivers on E-470  and the President George Bush Turnpike will have to attach transponders to their cars or pay a fee when their bill arrives in the mail.   The move toward cashless toll roads has been a long time coming, as Professor Erik Lillquist and I discuss in this article about the ways in which government encourages the use of new technologies.  In Denver, for instance, 30% of drivers used transponders when they were first introduced in 1991; by 2009, 75% of drivers used them.

Electronic tolling has been a win for both drivers and toll authorities.  Drivers with transponders enjoy a quicker ride, while the authorities who run the toll roads save on labor costs.  Electronic tolling also reduces vehicle emissions and accidents in the vicinity of tolling stations. 

For the last decade or more, the challenge for tolling authorities has been convincing drivers to incur the hassle costs of obtaining a transponder and establishing an account from which tolls can be deducted.  As an incentive for participation, authorities offered the ability to zoom through tolling stations and, in some instances, lower tolls for electronic customers.  Now electronic tolling has apparently reached the tipping point.  In addition to the roads outside of Denver and Dallas, the Miami-Dade Expressway Authority is converting five of its expressways  to electronic-only tolling.  The highway that  will connect Prince George’s and Montgomery counties will also be cashless.

Drivers had better enjoy the convenience of electronic tolling, as the days of lower tolls for electronic customers are apparently over.  The Wall Street Journal is reporting that some researchers expect tolls on electronic-only roads to be higher than on roads that offer a cash option.  Amy Finkelstein, a professor at MIT, suggests that electronic tolling results in tolls that are 20 to 40 percent higher than they would otherwise be.   Apparently it’s easier for authorities to raise rates when the toll is just automatically deducted from the driver’s account than when the driver has to toss coins into a hamper or feed dollars into a cash reader.

So drivers should beware.  The moment of payment may be intangible, but the money deducted from their accounts is real.

You may also like...

2 Responses

  1. “The highway that will connect Prince George’s and Montgomery counties will also be cashless.”

    …and Maryland has just gone to a $1.50/month transponder fee. Not unlike cigarette taxes, fairly sure this won’t disproportionately hit the rich.

    “Apparently it’s easier for authorities to raise rates when the toll is just automatically deducted from the driver’s account than when the driver has to toss coins into a hamper or feed dollars into a cash reader.”

    Which is also why tax withholdings are a mandatory feature of our tax collection process. If people ever got to touch – even for a moment – the money they spend on FICA and Income taxes…

  2. Jens Müller says:

    Just look at the German consortium “TollCollect” …

    When they put billions into a collecting infrastructure, it’s clear that the toll will be higher …