Pricing the commute

For years we have had a do-it-yourself telework cost-benefit analysis on our website. That analysis focuses mainly on the direct costs and benefits of telecommuting versus the daily commutes between home and work. Now let’s expand that analysis with some thoughts about the other costs of the commute; pricing the commute.

To be comprehensive, pricing the commute requires some analysis of the other factors beside out-of-pocket expenses: those so-called externalities. These additional factors include: the drag; health hazards; physical dangers and psychological effects. An article by Nathan Brooker in the 25 March 2017 Financial Times FTWeekend edition, titled Commuter pain or gain? gives one such analysis although it focuses on mass transit rather than private cars.

Let’s look at some of these factors, focusing on pricing the commute by private car.

Out-of-pocket costs

The out-of-pocket costs are those that you can find a receipt for somewhere. That includes: depreciation of your car; fuel costs; maintenance; insurance; parking/garaging fees; towing fees; interest payments and taxes. The pricier your car, the higher the costs. Of course, to be fair you have to multiply the total costs by the fraction of time that you use the car for commuting. On the other hand, you might want to alter the fraction due to commuting if some of those costs, like insurance and maintenance, have a commute-related increase built in.

The drag

This is the cost due to the sheer annoyance, if any, of your commute. Time spent staring at the immobile rear bumper of the car in front while in a traffic jam; shock and frustration at the antics of the car that cuts you off — or fails to move when the traffic clears ahead; an overly chatty passenger in your car; anything that raises your blood pressure during the commute counts in this category.

Health hazards

The long term effects on your health fall into this category. A few decades ago, when I was working with Rancho los Amigos hospital in Los Angeles, I found that a colleague of mine had been measuring the effects on commuters of carbon dioxide from car exhausts. Although is was hard to calibrate these effects there was a clear increase in irritability of commuters compared to non-commuters. This cost is in addition to the drag-related costs mentioned above. But related to this are such long term effects such as chronic hypertension and other cardiovascular diseases.

Note that this effect is not confined to commuters. For example, an article by Tony Barboza and David Zahniser appearing in the Los Angeles Times, also on 25 March 2017, notes an increased emphasis on rezoning residential areas near freeways because of the related health hazards.

Physical dangers and psychological effects

Then there are the actual physical dangers and psychological effects of commuting. These include traffic incidents ranging from inter-car collisions, bridge and grade crossing failures, road flooding and similar calamities. Also, in some areas, add accidental or intentional shootings to the mix. The dread of commuting, added to the drag impacts, is another element to be considered. Finally, add in the long-term impact of one or more bread-winners coming home to yell at each other, kick the dog, scream at the kids and otherwise vent their frustration.

Here’s an interesting summary of traffic hazards over the last few years from my alma mater-in-law the University of Southern California.  I imagine the situation is similar in most urban areas.

Parking

I’ve already mentioned parking as one of the out-of-pocket costs for consideration. But how about the larger costs of parking, particularly in cities? In the United States, somewhere between 70% and 80% of commuters drive their cars, alone, to and from work. That means parking space is needed at both ends of these trips; space that costs something that is rarely considered until you’ve spent minutes to hours vainly searching for a parking space. The Economist has a fairly detailed description of the problems caused by parking. For example, in The Economist article: “The rule of thumb in America is that multi-storey [sic] car parks cost about $25,000 per space and underground parking costs $35,000.”

Pricing

Of course, to the extent that you consider the commute to provide a restful and relaxing interlude in your life you can assign a proportionate benefit. This might be the case for those who take a commuter train instead of driving. The tricky part here is pricing. What is this agony/bliss worth to you in terms of dollars (or pounds, pesos, euros, yen, won, yuan) per hour? Generally it is you and not your employer who is paying this price.

Conclusion

I suspect that these factors, when priced properly, add a substantial amount to the out-of-pocket costs of the commute. The question remains: who pays the price? Of course, for many, there is the option of telecommuting and its accompanying cost avoidance

Are we having fun yet?

Leave a Reply

Your email address will not be published. Required fields are marked *

By submitting this form, you accept the Mollom privacy policy.

*