The Short-Run Effects of Congestion Pricing in New York City

We study the impacts of New York City’s Central Business District (CBD) Tolling Program, the first cordon-based congestion pricing scheme in the United States. Using a generalized synthetic controls approach that compares outcomes in NYC to contemporaneous outcomes in other cities, we find that the policy increased speeds on CBD roads by 11%, with little-to-no effect on air quality, transactions at shops and restaurants, or overall foot traffic in the CBD. Speeds also increased outside the CBD, especially on roads commonly traversed by drivers traveling to/from the CBD. These spillovers lead to faster trips throughout the metro area, including for many unpriced trips. We develop a simple model to bound the effects on driver welfare. If drivers have a Value of Travel Time (VOTT) of $40/hour, then we estimate that driver welfare increased by at least $14.3 million/week, before any revenue recycling or environmental benefits. Passenger vehicles headed to the CBD are only better off if their VOTT exceeds $153/hour, but the modest speed improvements for the many unpriced trips reduce the overall ‘break-even’ VOTT of these drivers to at most $21/hour. Finally, we show how characteristics of local travel patterns and road networks can inform the potential impacts of introducing cordon-based congestion pricing in other cities.