JW sends me to Dan Ariely on "The Pain of Paying"
JW writes:
Here is an interesting presentation by Dan Ariely about the pain of paying. I think there are implications for infrastructure spending. There is a tradeoff between reducing the pain of paying and creating a moral conflict, or developing morally dubious payment schemes. For example, general revenue funds are a common pool resource with all of the tragedy of the commons issues - as people try to exploit the "resource" first before it is exhausted. Tolls create a higher pain of paying than gas taxes. Motor vehicle registration fees probably fall in between. Property taxes may not be recognized as funding local roads and so the pain (and anger) may be misdirected. Vehicle mileage taxes create a higher pain level than fuel taxes I think.
Ariely has a nice framing and discusses "saliency". Andrew Odlyzko and I identified mental transaction costs as a related factor in:
- Levinson, David and Andrew Odlyzko (2008) Too Expensive to Meter: The influence of transaction costs in transportation and communication. Philosophical Transactions of the Royal Society A: Mathematical Physical and Engineering Sciences 366(1872) pp 2033–2046
