Wednesday, October 12, 2011

Rewarding Hybrids

If hybrids provide benefits to society, it's appropriate to reward people for choosing hybrids. In addition to some tax benefits, for a long time Californians owning hybrids also had access to the car pool lane even if they weren't carpooling. That changed recently, and hybrids were pushed out onto the rest of the road. The resulting increase in the number of cars on the (rest of the) road has slowed traffic down by about 10 mph during rush hour.

So what's the optimal policy? It turns out that having people going slow on the rest of the road also slows down the folks in the carpool lane- you don't want to be driving 65 when someone going 20 moves into your lane to avoid a suddenly stopping vehicle. These researchers argue that more people need to be let into the carpool lane for the lane to continue to be as effective as possible. Optimization- it's what economists do!

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