Tuesday, March 7, 2017

Lucas Davis


For this post, I interviewed Professor Lucas Davis about his paper, “The Effect of Driving Restrictions on Air Quality in Mexico City.” 

Professor Davis is an Associate Professor at the Haas School of Business at the University of California, Berkeley. He is also the Jeffrey A. Jacobs Distinguished Professor in Business and Technology there, as well as the Faculty Director of the Energy Institute at the Haas School of Business, and a Research Associate at the National Bureau of Economic Research. He specializes in the economics of energy and the environment. 

In 1989, the government of Mexico City enacted a policy to control air pollution. The policy, called Hoy No Circula (HNC for short) is still in place today. The government was very concerned about the extremely high levels of air pollution, and they thought that placing a restriction on driving would be a good way to reduce it. The policy bans most drivers from driving their vehicle one weekday per week. For each vehicle, the last digit of the license plate determines which day the vehicle cannot be driven.

In Professor Davis’ own words, “I lived in Mexico City in the 90s, and I coped with this program on a routine basis. I found it to be a huge hassle. . . I always assumed that if there was so much pain being inflicted by this policy, then there must be must be some evidence of its effectiveness.” He carries out a very thorough search for such evidence, but he just cannot find any.

First, he looks at the daily pattern of pollution after the policy is enacted. Carbon monoxide, for example, which vehicles emit, follows a typical rush-hour pattern. It peaks at 9 am and at 6 pm. He wants to be thorough, so he also examines several other pollutants, including nitrogen dioxide, ozone and sulfur dioxide. None decreases after the policy. He also finds that drivers seem to have simply switched to using their cars more on weekends. 

When I asked Professor Davis what the unintended consequences of this policy were he said, “The problem with telling people that they can’t drive their car once a week is that it means they are going to look for substitutes on that day; and anecdotally, long before I wrote this paper, I was hearing that people went out and bought more cars.”  He goes on to say, “Now if, for example, I have a third car, I can loan it to my teenager the other days of the week, and increase my family’s total driving.” 

Professor Davis looks for solid evidence of these anecdotes he was hearing. He finds it. First, he finds that gasoline sales did not decrease after the policy. He also finds evidence that both the number of registered vehicles and sales of vehicles increased after HNC. And, think about it, what kinds of cars do you think people would go out and buy? He discovers that people bought mostly used vehicles, not new ones. So, most of the extra vehicles on the road were high emissions vehicles. Of course, this ended up contributing to air pollution and gasoline consumption! 

How else did people react to this policy? He has some evidence that they took taxis more; and the taxis in Mexico city at the time the policy was implemented consisted of mostly relatively old, high-emissions vehicles, also making air pollution worse instead of better. 

But wouldn’t people take public transportation? It was a stated goal of the program. It’s a very good system (subways and buses), but he finds no evidence that people switched to it. In fact, Professor Davis’ evidence is that ridership decreased slightly. He thinks that this might be because the people who drive to work are from the middle and upper classes and hence value time highly. They therefore took taxis and bought additional cars instead, as we just discussed.

Professor Davis struggles to identify any real winners from this policy. He thinks that everyone, except maybe the taxi drivers, has suffered in Mexico City, because of this policy. It’s been a huge inconvenience, and it just hasn’t worked.  

But, it turns out, several countries have this kinds of policy in their big cities, and more are planning to implement it, including Delhi and Paris. Several large cities in South America also still use it. So I asked Professor Davis what types of policies he thinks should replace this policy. One suggestion he had was better emissions testing. He said that emissions testing is sometimes too lax, and sometimes even fraudulent. With tighter standards, we can keep offending vehicles off of the roads. 

Let’s talk! I would love to know what you think about this example of unintended consequences. Please submit comments and questions.