Gasoline and Time
A few days ago, I posted that people seem to make strange tradeoffs between the cost of gasoline and the value of their personal time. Don Boudreaux at Cafe Hayek makes a similar observation about recent calls to reinstate the 55 MPH speed limit, pointing out that slower speed limits may save gas but they cost people time, and time is one resource that is truly finite:
In short, for every 75-miles covered on a highway, reducing the speed limit from 75 MPH to 55 MPH will save a driver $2.58 in fuel cost -- and this assuming that the increase in fuel efficiency of the average car caused by the lower speed limit is a whopping 10 mpg. But the resulting greater time on the road will cost a driver earning the average non-supervisory wage $5.82 worth of his or her time per 75-miles driven.
By the way, it is no surprise that this always seems to be proposed by Easterners who have no conception of the travel distances out west.
Posted on June 6, 2006 at 08:21 AM | Permalink
What I would love an economist to do is to explain to me why, despite all available evidence to the contrary, economics insists that man is a rational consumer.
Posted by: Dave | Jun 6, 2006 8:38:15 AM
I think many of those Easterners have copied it from European socialist countries like Germany and France, which are incidentially places that are rather crowded compared to the many lone hours on US high ways.
It is acceptable to make speed-limits lower when you live in a country where the distance between work and home is only a 10-15 min drive, which is usual for Germany.
The average distance between villages is something around 5-10 miles (depending on your location). So I think the more crowded a place is, the more people are likely to accept lower speed-limits (because there they can really be seen as a sur-plus trade-off).
Posted by: Max Schwing | Jun 7, 2006 7:19:12 AM
Why do people argue against laws based on economics? If it makes economic sense to do something, people will be doing it already. You wouldn't need a law! You need laws in cases where the behavior markets naturally encourage is not an ideal behavior -- child labor, for example, or freeloading. Or in this case, consuming resources as though their price reflected their true scarcity and not just whatever the Saudis want the price to be.
Also, your time is a finite resource, but "time" will go on forever in future generations. Whereas your access to oil is virtually unlimited, but for future generations it's quite finite.
Posted by: Noumenon | Jun 10, 2006 6:13:22 AM
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