Congestion Pricing

You've probably noticed that every time you see a price for an optional, lighter-traffic toll lane (if you have them where you live), the price is just high enough that it doesn't seem quite worth it. You end up taking the regular highways, and arrive late.

Blame the traffic dilemma on a concept termed "congestion pricing": the heavier the congestion on normal roads, the higher the price you have to pay to use the toll lanes. Habitual drivers and economics students will, of course, recognize this as a relatively simple extrapolation from supply-and-demand.

However, the concept of congestion pricing has an additional nuance that is intriguing -- and, it seems to me, applicable to many other scenarios. The nuance is this: Congestion pricing is meant to be a deterrent. The whole idea is to convince people not to use the toll lane. If everyone is willing to pay to use the toll lane, and everyone pays, then no one ends up with what he paid for -- lighter traffic. When you fork over those dollars, you're paying because you believe you'll face less traffic that way. But you'll face tons of traffic if the lanes are cheap. The only way to guarantee a product at all is to make it expensive.

It seems to me that pricing-as-deterrent is more common than most people realize. Take, for instance, speaker fees. Every once in a while there's an article about the outrageous fees that some politicians and celebrities charge to speak at public occasions. Implicit in the articles is a question like: "Do these people really think they're worth $50,000 an hour?"

Probably not. To help us understand the situation better, let's consider a suitable parallel to the celebrity speaker: me. I offer services as a writing consultant. If someone wants to pay me to write something, or to edit something, or to talk to a team of writers, I'm for hire. However, I'm also doing a lot of writing of my own. And I teach. And I'm doing academic research. I also have a family, and a life. Most importantly, there's only one of me. So every time I have to tell someone "No, I don't have time to do that job," it takes up time I don't have, by definition.

As a result, I've raised my rate for jobs that are in high demand (like editing and proofreading) to astronomical levels. (Don't ask. Please.) It turns out that it's easier than saying "no" all the time. I just list an outrageous price and people don't even bother to inquire. Every once in a while, someone finds it acceptable, and, since the total is outrageous, so do I.

I recently visited my cousin, an artist, in her display booth at the famous Sawdust Festival in Laguna Beach. On the back wall she had a gorgeous, original painting with an alarming price tag. I suspect some people walk in, look at the tag, and wonder whether the artist really thinks it's worth that much. Maybe it is, maybe it isn't. But the price tag in her case is also a deterrent: Someone in her family is very fond of the painting, she told me, "and she'll kill me if I sell it." (Why not mark it as not-for-sale? Well, I asked her. The answer is that anything displayed at the festival needs to be for sale. And since the painting is a good demonstration of her skills, my cousin wants to display it. So there you go.)

Back to the high speaker fees: I suspect these fees are meant to be insane. Anyone you'd find interesting enough to invite to your event is interesting because she's busy. The stuff that she usually does is what makes her an attractive speaker. The high fees help her out by keeping casual inquiries to a bare minimum. If she has a famously high price for public speaking, you don't even need to ask her. You just catch a whiff of the rumor and move on to someone with more time on his hands. If you're willing to pay the fee, she might be willing to give up time on other projects (or rare and precious free time) to help you out, but even then she might be reluctant. Remember: This probably isn't how she makes a living, or the sort of work she prefers to do. It's a distraction, and a big one. If she really had the time to burn, she'd probably want to take the day off instead.

Indeed, the more I think about it, the more I think that things around us have been priced to deter: that perfect wedding site, that perfect advertising space, and much else besides. It's a sign of life in a world where everything's believed to be for sale. It's a sign, indeed, of a paradigm shift in signs themselves. Gone are the "keep out" signs, which only seem to encourage people to start naming prices. In their place are new signs, ones with lots of zeroes.