Transcript The Economics of Car-Pooling: A Survey for Europe

Workshop on Highways: Costs and Regulation in Europe
Bergamo, 26-27th November 2004
The Economics of Car-Pooling:
A Survey for Europe
Matteo Maria Galizzi
University of York and University of Insubria
Economics meets common sense
Preliminary contribution for
an urgent real need
• Everybody would agree on that…
Traffic congestion in Europe
is a dramatic emergency
• But, can economists say something more?
• E.g. how dramatic is congestion in Europe?
European Commission estimates that in EU
• 80 % of all personal journeys are by car,
• between 1975 and 1995, the daily distance
travelled per person doubled,
• a further doubling is predicted by 2025,
• 3 million additional cars on EU roads every year
• every day 7500 kilometres of European roads
are blocked by traffic jams,
• the average traffic speed in European cities is
estimated only 15km/h,
• roads congestion in Europe costs 130 billion
euro per year
If this is not enough, also …
• The transport sector is responsible for 28 % of
EU emissions of carbon dioxide,
• the bulk of this amount, 84 % comes from road
vehicles,
• CO2 emissions from traffic are rising!
• In 2010 they are likely to be 50 % higher than in
1990 (the EU Kyoto target is reducing gas
emissions by 8 % by then),
• congestion adds 6 % to the EU fuel bill, with a
corresponding rise in pollution,
• the total social costs of traffic are estimated at
270 billion euro per year, around 4% of
Europe's GDP.
Finally, the most horrifying:
EU Commission Transport Division estimates that
• Roads conditions, in particular congestion, are
found to be an explanatory co-factor of 1/3 of all
the car accidents,
• More than 40,000 people still die on the EU
roads every year,
• an average of 112 people every day,
• The human and economic costs are
unacceptable,
• In purely economic terms, road accidents cost
the EU 2 % of its GDP every year.
Probably, less known that…
Many estimates, at national and at European level, show that
On average, on each moving car,
there are only 1.2 passengers !
Then, if we can just increase the average from 1.2 to 1.5
people for each car…

Number of vehicles would be immediately
reduced by 20 % !
This is exactly the idea behind
car-pooling
car-pooling is the agreement of joining the
use of a private car by several individuals
having the same journey at mutually
compatible times.
• usually referred to neighbours commuting
together to close workplaces
• But also, bringing children to school, a trip to
the city or to a shopping centre, travelling to a
common destination for business, conferences
or holidays.
Car-pooling versus car-sharing
Car-pooling
Car-sharing
• Group of people
voluntarily join
together for sharing
the costs of some
common journey.
• For the journeys are
used cars owned by
some of the
participants to the
pool.
• Public, business or
non profit institution,
owning some cars,
sells a group of people
the right to use them
when needed.
• Effective use rather
than ownership.
• Comparable to rent-acar or leasing service.
Useful related concepts
from traditional economic theory
• Externalities: by maximizing her own interest in
a decentralized manner, each driver burdens the
community of a social cost in terms of pollution
and congestion.
• Public goods: game of voluntary contribution to
decongestion has an equilibrium where the
individual dominant strategy is not to pool but to
free-ride on the roads eventually less congested.
• Coordination problem: equilibrium social
outcome could be improved simply by
coordinating individual actions on different, not
necessarily dominated, choices.
However, all these concepts cannot explain a
peculiarity of car-pooling:
• Here the socially optimal decision to car-pool
implies also private savings!
• By economic theory, any rational self-interested
homo economicus would opt for car-pooling.
• In fact, driving my own car causes not only
negative externalities but also larger private
costs for myself.
• Car-pooling is an example of externality with
alignment between private and social costs
Car-pooling induces both social benefits…
Lower social costs:
• Abating polluting
emissions, and
correlated environmental
and health problems.
• Abating the number of
circulating vehicles,
congestion and waiting
time in traffic jams.
• Decreasing the risk of car
accidents.
• Curbing the need for new
parking places and road
infrastructures.
Also behavioural
indirect benefits
• challenge to
cultural and social
habits,
• less selfabsorbed and
autarchic views,
• more
comprehensive
and cooperative
behaviour,
• greater awareness
of social
responsibility.
…and private benefits!
Lower private costs…
…but
Participants share:
• the cost of fuel
• the tolls to access
highways or city
centres
• the cost of parking
• alternating driving over
the day and the week
• Less tiredness and
stress,
• Greater concentration,
lower risk of car
accidents,
• More friendly and
talkative atmosphere,
• Better and less
competitive working
environment.
Less need for an extra
car in the household
Employers save too
also indirect benefits:
True question is:
Why do not people car-pool, then?
• General rationality and cognition arguments.
People are sometimes bounded rational,
instinctive, myopic: computing optimal decisions
can be difficult, frequent irrational choices, longrun less perceived than short-run.
• Force of habits. Rooted behaviour and mentality
are difficult to bend to innovative ones.
• Attachment to private property. “My own car”
is a safe extension of my sphere of influence.
• Feeling of freedom. Independence from anyone
else, strongly emphasized also by advertisement.
• Coordination failure. Lack of centralized
communication and matching between drivers
with compatible needs.
Co-ordination failure, besides externalities,
may justifiy
public intervention.
Directly or by funding other centralized subjects.
Role of non profit organizations.
• Providing monetary or indirect incentives
in adoption of car-pooling.
• Challenging force of habits.
• Centralizing the crucial process of
matching between drivers with
compatible needs in terms or routes and
times.
Matching and its algorithms are crucial
Help from Game Theory and Operational Research
• IRPUD Institute developed an OR simulation.
• Compile disaggregate data on 212,945 of work trips
within, into and out of Dortmund.
• Select the matching algorithms using criteria such
as minimum detour or waiting time.
• 2 work trips are poolable if residences and work
places coincide, or are on the same route, and if
departure times are not too different.
• 16 different scenarios on the max acceptable walking
distance (500/1000m), the max acceptable adjustment of
departure time (15/30’).
• Results --> for a max walking distance of 1000m and a
max waiting time of 30’… 2/3 of all work trips are
poolable, and 1/2 of Kms could be saved!
Experiments of car-pooling in Europe
3 main classes.
1. Car-pooling promoted by local authorities
and public agencies, targeting all the citizens,
(although from public employees), and often
funded and coordinated by EU.
2. Car-pooling initiatives from institutions and
companies for their own employees only.
3. Car-pooling projects, both business and non
profit oriented, specially designed for
occasional trips or long-distance travels.
Tentatively estimated number of total users in Europe:
about half a million
Successful car-pooling experiences in Europe I
1.
Main local authorities and public agencies.
•
EU CARPLUS project in Madrid, Rome, Paris/Les
Ulis, Stuttgart and several cities of Switzerland
(Zurich, St. Gall, Laax/Flims, Gstaad) with the
collaboration of ICT companies and universities,
The main Dutch cities: Utrecht 75% of all public
employees are now car-pooling,
Dublin with a capillary surveys at a suburb level
the Swedish small villages and the Danish rural areas,
Barcelona and the Generalitat de Catalunya,
The recent experiments in Mantua, Rome, VeniceMestre, Padua, Bologna and the Emilia region.
•
•
•
•
•
Estimate by aggregation: 35000/150000 involved people.
(Most) Successful car-pooling experiences in Europe II
2. Employing insitutions and companies.
• 90 private companies in Brussels: one year after the
car-pooling experiment the number of solo-drivers in the
city has been declined by 5%
• the Belgian branch of Ford: only 30% of the employees
is now commuting alone,
• the French branches of Nestlè and Ecover,
• Stockley Park Consortium Ltd, a business park close to
London with 32 firms
• many British and Irish universities,
• Saab and Bang and Olufsen in Sweden,
• the Italian hospital Policlinico Umberto I in Rome: 185
car-pools out of 5212 employees.
Estimate : 250000/300000 involved employees
Successful car-pooling experiences in Europe III
3. Business and non profit services for occasional trips
and travels.
Most based on free internet access and on-line database.
• The main two are www.car-pool.com in Germany and
www.ecotrajet.com in France, with thousands of users.
• www.vroom.be in Belgium, with about 100 business
users, and www.comove.fr in France (100 people),
• www.car-pool.co.uk in Great Britain,
• www.carpooling.com in Switzerland, the only one with a
membership fee, at 25 Swiss francs a year,
• www.mitfahrzentral.de in German cities (Stuttgart).
Estimate : about 40000 involved people
Main critical success factors I
• Large number of individuals.
• Potential participants living in close neighbourhoods.
• Commuting distance and time not too short. Persons
with more than 5 km to work are the most interested.
• Yearly driving not too small. Only 5% of those driving
less than 10,000 km per year are interested in car
pooling. But of those driving more than 30,000 km per
year 35% are interested.
• Working times fixed or easily predictable.
• Spouse’s variable working hours: interest for carpooling increases because the spouse can then have
access to the household's car.
• Number of driving licences in the family.
• No correlation between interest for car pooling and
the number and age of cars in the household.
Main critical success factors II
• Starting from workplaces. Not only as matching tends
to be much easier, but specially because...
• Personal knowledge, human behaviour and trust
really matter!
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–
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Fear of, or suspect for, unknown people (e.g. UK police).
Car insurance.
Behavioural idiosyncrasies.
Personal views about punctuality, safety, chatting, speeding up
or to smoking or listening radio in the car.
• Free negotiation of costs sharing. Almost all the
actions in Europe leave participants completely free to
negotiate how to share costs. Unique exception is Swiss
agency which recommends 0.1 to 0.2 Swiss franc for
any passenger/kilometre.
• Barter economy. Most the private cost-sharing
agreements involve no money transactions at all.
Rather, alternating turns of driving and taking the car.