Does Your Car Make More Than You?

By John Carr, NMA Massachusetts Activist

I have been reading The High Cost of Free Parking by Donald Shoup. I’ll have more to say about the book later.

I want to answer a question implied by the book’s title: how much does free parking cost you?

“Free” parking is parking that costs nothing once you have arrived at the parking space. It is not free to provide — that’s Shoup’s point — but it is also not free to use. You have to get to the parking space. (I’m assuming commuting and shopping here, not residential parking.)

A typical car burns over 2 gallons per hour on the highway and 1 gallon per hour crawling around town. It depreciates at about $8 per hour it’s on the road. Maintenance and insurance each cost about a dollar per hour.

You can calculate per mile if you like. The IRS says 51 cents per mile. City driving usually averages 10-20 mph and you probably went a lot faster before you hit downtown traffic.

If you are making a single, discretionary trip you should treat some costs as fixed. Insurance, for example, is not normally charged based on how much you drive. If you have an old car you pay for maintenance but do not suffer depreciation. At current gas prices and vehicle choices the marginal cost of driving vs. leaving your car at home is still significant.

If your car is less than five years old it makes more than minimum wage. If you are driving it on the highway you may be paying more than twice minimum wage.

A round trip to Cambridge costs me about $10 for 40 minutes of driving, half gas and tolls and half maintenance and depreciation (wear and tear on my car). If I find a free space, that’s $10 total. If I find a $2 meter the trip costs me $12.

In an idealized microeconomic model people behave rationally based on total costs. If I’m deciding whether to drive today, a $10 trip and a $12 trip are nearly the same. Free and metered parking are about equally expensive. (Americans are not entirely rational when it comes to paying for parking, but enough people are close that you can hope to predict collective behavior.)

There’s a catch. The meter only gives me two hours and feeding meters is illegal and inconvenient.

Meters were not invented to be a financial burden. They were an accounting mechanism to ration a limited resource. In most cities they still are. Rationing is a world apart from supply and demand. If I have more than two hours worth of business, a two hour limit will keep me out of the city.

Off street parking is a markedly inferior alternative. Private parking lots around Boston are not close to free. Land prices and EPA regulations make sure of that. Parking in a downtown garage for a day costs as much as an average commute.

If you drive a half hour each way and park in a garage your car probably costs you as much as minimum wage earner makes in a day.

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