It All Becomes Clear

[Solly]

I've bought a £33 bus pass that allows me unlimited travel on First manchester's services for a month. So, let's say that's 20 days or work.

Travelling to work is 6 miles on the bus, 12 miles return. Over the four weeks, I'll therefore travel 240 miles. Travelling a mile by car costs an average of 10p a mile with our petrol prices. £24 for those 240 miles.

If I have a car, it therefore makes sense for me to drive to work. If I don't have a car, the cost savings are not enough to cover the outlay.

What am I leading to?

Easy..in order to solve the massive traffic problems experiencing at the moment, the government subsidises the cost of cars and wholly funds this subsidy through extra petrol taxation. The cost of the subsidy should always equal the amount of extra tax revenue earned.

This would reduce the problem public transport has of needing to spread out the fixed costs of the rolling stock by charging more than the marginal cost of each journey.

Public transport, per journey, would become more competitive, and despite cars being cheaper, we would actually see a return to mass usage of public transport and a freer road system for those who are prepared to pay the extra.

[Ecthy]

public transporting is quite messed up in Germany, guess the reason...

of course it's the extra-inflexible and super costy labour system

these guys actually strike for more security and more money, like that wouldn't cost them jobs and us living standard

@ lefties of today

[PLATO]

The cost of running an automobile is not simply limited to petrol costs. Once maintence, deprciation, and insurance are included then public transportation is already far less expensive.

[Solly]

Maintenance and insurance are one-off costs - pretty much fixed, and depreciation is hardly affected by an individual journey.

[*End Is Forever*]

I don't see what you're getting at Stew. To buy a semi-decent car, you'd need to fork out the equivalent of up to 20 years' worth of monthly bus passes...

[Cruddy]

Don't forget parking costs either.

Not always relavent, but becoming ever more so.

As for your plan on subsidizing car costs - wouldn't that lead to increased congestion with more cars on the road for fewer journeys?

It might have other fringe benefits though, like people trading in their old more polluting vehicles for newer less polluting models (and more economical vehicles would be definitely desirable with an even higher petrol tax).

[Solly]

I don't see what you're getting at Stew. To buy a semi-decent car, you'd need to fork out the equivalent of up to 20 years' worth of monthly bus passes...

Once you have purchased a car, it becomes cheaper to use that car rather than public transport, due to the necessity of public transport spreading the fixed costs of their operation throughout the many marginal journeys.

Once you have spent the money on a car, each additional journey is (usually) less expensive than the equivalent journey by public transport.

By making cars cheaper, and the individual journey more expensive, you are essentially spreading the fixed costs of motoring over the marginal ones.

Remember Ged's lessons Iain - people don't take into account sunk costs.

Cruddy,

As for your plan on subsidizing car costs - wouldn't that lead to increased congestion with more cars on the road for fewer journeys?

No.

BTW I do realise that my argument, if you look at it closely enough, seems to imply that the purchase of a car may be irrational.

[*End Is Forever*]

I don't think the way to alleviate the problem of people not taking sunk costs into account is to use government intervention to eliminate the sunk costs!

[Solly]

People not taking sunk costs into account isn't the problem here.

And notice that I am proposing spreading those fixed costs over the cost of petrol, thereby making each individual journey more expensive, but not actually increasing the cost of motoring.

It would have the effect the government is looking for.

[Japher]

Does it not cost to get a liscense, liscense your car, get insurance on your car, register your car, etc..? I think insurance and registration are probably more than 9 pounds a month... Also, classifing something as a one-off cost does not dismisses the fact that you still have to pay for it, if you put it on your credit card it then becomes a montly expenses... Why not just buy your bus pass for a whole year and dismiss it as a one-off cost? Hence, your bus pass expense doesn't really exist!

[Ben Kenobi]

depreciation is hardly affected by an individual journey.

It adds up. You can calculate the depreciation from a single month of driving 240km.

Also, repair costs, maintenance, insurance have to be taken into account before the comparison can be made between driving, and taking transit.

[Solly]

Why not just buy your bus pass for a whole year and dismiss it as a one-off cost? Hence, your bus pass expense doesn't really exist!

By offering weekly and monthly tickets, the bus companies seem to have learnt something from this analysis...

Bugger! I just drew a great graph in Visio showing this clearly but the Print Screen lost the thing.

[David Floyd]

Or the government could not subsidize anything, AND not have oppressive petrol taxes.

[Solly]

Sometimes you need subsidies and social tinkering when the imperfections of markets lead to inefficiencies.