Our Transportation Infrastructure is Crumbling

Time or Tolls?

by Elaine Schwartz    •    Jan 8, 2012    •    271 Views

The tolls on New Jersey’s major north/south toll road are up 53%. The response? Some drivers took a cheaper route. The catch? Time wise, it was more expensive.

Confirmed (unscientifically) by 1 reporter who took the turnpike and the other, the free route, the tradeoff during rush hour was 20 minutes 4 seconds or $6.65. On an annual basis for commuters, truck drivers, car services, you can choose either saving more than 160 hours or close to $3,000 for the round trip between East Brunswick NJ and the entrance to the Holland Tunnel (that takes you to NYC).

Please note that while the numbers depend on so many variables about traffic and commuting time, the basic tradeoff remains.

The Economic Lesson

The opportunity cost of a decision is the next best alternative. Choosing is refusing. For drivers, the choice is NJ Turnpike or the free road. The benefit for the toll road is save time; the benefit for the free road is save money. How to decide? It depends on what you value most.

One toll finance researcher put it this way: “Higher income people have a higher value of their time…if you work at lower end of the wage scale, it may be a significant hit. If it is $3 to $5 a day extra, it’s coming right from your disposable income.”

An Economic Question: Looking at the toll road fare increase from the government perspective rather than the individual, what are the benefits of the decision and the benefits foregone of the next best alternative?

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