Regarding The Acceptability Of Road Pricing

Resistance to road pricing reforms
Implications to improve acceptability

Jens Schade
Dresden University of Technology
schade@verkehrspsychologie-dresden.de

Jens Schade Imprint-Net EG 6-3
Brussels 04 Dec 2007

Outline
1. Why Acceptability Is Important?
2. General Reasons: Heuristics & Biases
3. Specific Road Related Acceptability
Issues
4. Some Recommendations


1. Why “Acceptability” Is Important?
• Democratic society (e.g. referendum)
• User perspective
• Strong public resistance may lead to fear of
political parties about negative consequences
for their next elections
• Resistance might be exhibited in the form of
demonstrations, boycotts or even sabotage.

The more people accept road pricing the more
effective the measure will be.

Recent example of resistance
• A 2007 online petition against road pricing, started by Peter Roberts
attracted over 1.8 million signatures, equivalent to 6% of the entire
signatures
UK driving population. Over 150,000 signatures were added during
the last day before the petition closed on February 20, 2007. Some
commentators were puzzled by such strident opposition given
the lack of clear proposals in this area by Government.


2. Some general reasons why people object
pricing reforms: heuristics and biases

• Cognitive psychology and behavioural
economics have shown that people deviate from
ideal precepts of rationality in many settings,
showing inconsistent judgement in the face of
framing and other formal manipulations of the
presentation of problems
• People are vulnerable to a wide range of
heuristics and biases, leading to inconsistent
judgement and evaluation.
evaluation


Why people normally object ‘reforms”

• Because… people like things to stay relatively
the same, i.e. they favour the status quo.
• This is called a „status quo-bias“
• Why? People do not value objects in absolute
terms. They value it relative to a (neutral)
reference point. This is (normally) the status quo
(can be also expectations, experiences etc.).


A simple example …
• You did an exam (in microeconomics or in psychology …)

You feel good
and you expect to get
gain loss

A B C E F

excellent worst

Grades


A second important issue …
• Losses are experienced more intensely
than gains of similar objective magnitude
• i.e. you are more disappointed about the C
grade than happier about the A grade
(compared to the expected B grade)
• this leads to the following value function …


subjective

2

1
objective
value
-2 -1 1 2

-1

-2

Kahneman, D., Tversky, A. (1979). Prospect theory: Analysis of decision under risk. Econometrica 47: 263-291.


Three characteristics of the function
1. The value function is defined on deviations
from a reference point (normally the status
quo) and
2. is normally concave for gains (implying risk
aversion), commonly convex for losses (risk
seeking) and
3. is generally steeper for losses than for gains
(loss aversion).
I.e. in the context of gains people tend to risk-
avers decisions, and in the context of losses
they tend to risk-seeking decisions


Loss Aversion
• loss aversion refers to the tendency for
people to strongly prefer avoiding losses
than acquiring gains. Many studies
suggest that losses are as much as twice
(or even more) as psychologically powerful
as gains
• The aversion to loss means that people
are willing to take more risk to avoid
losses than to make gains!


losses loom larger than gains …
• losses or disadvantages have a greater
impact on people’s preferences than equal
gains or advantages.
• When the status quo situation functions as
reference point for evaluating different
options, the disadvantages of leaving the
status quo situation are weighted more
heavily than its advantages, resulting in a
bias in favour of the status quo

A simple application of loss aversion ..

• is penalty aversion.
• People do not like “penalties,” they do like
“bonuses.”
• But in standard economics, these are
simply two sides of the same coin:
– a bonus is the absence of a penalty, a penalty
the absence of a bonus. The problem
abounds in tax. A child bonus is a childless
penalty, a marriage bonus is a singles
penalty, and so on.

• People will act to avoid penalties but not
necessarily to obtain bonuses, in rhetorically
different presentations of the same underlying
facts.
• Thaler found in a real-world experiment, when a
gas station charged a “penalty” for using credit
cards ($2 versus $1.90, say), people paid cash;
when a gas station across the street gave a
”bonus” for using cash ($1.90 versus $2.00),
people used credit cards.

Thaler, R. H. (1980). Toward a positive theory of consumer choice. Journal of Economic Behavior and Organization, 1, 39–60.


Some relevant biases in evaluating
road pricing
• Status quo bias
• Loss aversion
• Framing (people react to the form of a
choice or decision problem, even where
the substance is held constant) “Pricing”
• Hidden Tax Bias (people prefer hidden
over visible taxes because this leads to
less “hedonic pain”) no TDM,
preference for gasoline tax

Preliminary conclusion …
• The seemingly harmless tendency to separate
out matters in one’s mind can lead to disturbing
anomalies in one’s acceptance of public tax
systems
• subjects prefer policies described as “bonuses”
to the self-same policies described as
“penalties” or hidden to transparent taxes, tend
to be affected by starting points, and fail to
integrate their judgments across relevant fields
of data.

3. Specific Road Related Acceptability Issues

• Results summarized are based mainly on
European projects like TransPrice,
AFFORD, CUPID, PATS, PRIMA, MC
ICAM, TAPESTRY & DIFFERENT


Generally, RUC is the least accepted TDM
measure (with varying degrees)

96
100% 92 91
84 84 86
81
75%
59

50%
41

25% 19 16
16 14
8 9
4
0%
Improve P& R Access Reducing Increasing Cordon Congestion Distance
public restriction parking parking pricing pricing based
transport space cost pricing

acceptable not acceptable


Important determinants of acceptability

• Negative personal outcome expectations (SEU)
dominant (time gains are too abstract);
• „Radiation Effect“ of outcome expectations: the
Effect
more advantages are expected the more fair,
effective and socially desired road pricing is
evaluated and vice versa!
• Negative social norms, public (and published)
opinion against RUC
• Doubts about general effectiveness of RUC


Important determinants of acceptability ctd.

• Clear effect of pro-social value orientations
(‚morale‘);
• No income effect
• A strong positive relation to own car (and car
use), connected to values like freedom, privacy,
positive social distinction
• Moderated by system characteristics like charge
level, method of charging and revenue allocation
(hypothecation), pricing history, objectives, local
problems etc.


Support for a transport package
including cordon pricing

100%

75%
64
53 53
50% 45 44 41
36
20 24 20
25% 19
16 16 16

0%
Total Athens York Como Leeds Graz Madrid

Cordon pricing Package

Schlag & Schade (2000)


How to improve inter-urban road pricing acceptability
in Germany: An example

• According to cognitive dissonance theory (Festinger,
1957), there is a tendency for individuals to seek
consistency among their cognitions (i.e., beliefs,
opinions).
• Dissonance theory postulates that when there is an
inconsistency between attitudes or behaviours
(dissonance), people are motivated to reduce or to
eliminate the dissonance because these inconsistencies
cause discomfort.


• According to dissonance theory the introduction of road
pricing evokes feelings of cognitive dissonance.
However, this is only the case, if the introduction is
(perceived as) inescapable.
inescapable
• On the one hand people favour the status quo without
road pricing. On the other hand people perceive that in
the future this commitment can not be maintained any
longer because the introduction of road pricing is
inevitable. This causes strong cognitive dissonance.
• A devaluation of road pricing in terms of negative
attitudes would not be an effective strategy to reduce
dissonance in the long run. In contrast, the only effective
option to reduce dissonance would be to develop more
positive attitudes towards road pricing.


Impact of perceived probability of RUC
implementation on acceptability


Additional evaluations of road pricing
• Persons who got the impression that the introduction of road pricing is
almost inescapable report

– weaker social norms against the toll
– less negative emotions like anger
– a lower importance of toll free use of infrastructure
– a weaker infringement of freedom
– weaker motivations (intentions) to defend or restore personal freedom e.g. by
taking action against the toll or by evading the toll

In sum, results show that persons with a strong conviction about a definite
introduction of road pricing exhibit much more positive attitudes towards
road pricing than persons who are less certain about a close introduction

• It seems, that people attempt to adapt to the new situation as soon as no
real alternative is available. Apparently this applies even to areas where
people do not make own decisions


4. Some Recommendations

• The objectives of road pricing have to meet main public
concerns
– time gains are too abstract
– do not focus on pricing but on traffic problems and
solutions people perceive as helpful.
– Combine with additional issues e.g. climate change, health
issues, justice … etc.
• Transport pricing measures have to be perceived as very
effective solutions for perceived traffic problems.
• Revenues must be redistributed and alternatives have to be
provided.
• Fairness needs have to be considered very carefully
(distributional as well as procedural, which means forms of
public participation).

• Problems which are not an issue in the pre-
implementation phase may become more critical the
closer the introduction gets (e.g. privacy which relates to
technology, reliability, trust)
• Consider to implement RUC for a limited time or as a
trial / experiment. May change the preference for the
status quo
• keep messages short and simple,
• tell stories about real people, how they benefit
• communicate in the agenda of the outside world, don't
export an internal agenda, plan, jargon, or message


Thank you for your attention


Regarding The Acceptability Of Road Pricing

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