Hoy No Circula: The effect of transport policies on car use: Evidence from Latin American cities

From a paper by Francisco Gallegoa, Juan-Pablo Monteroa, & Christian Salasb. 

In an effort to reduce air pollution and congestion, Latin American cities have experimented with different policies to persuade drivers to give up their cars in favor of public transport. This paper looks at two of such policies: the driving restriction program introduced in Mexico City in November of 1989—Hoy-No-Circula (HNC)—and the public transport reform carried out in Santiago in February of 2007—Transantiago (TS). Based on hourly concentration records of carbon monoxide, which comes primarily from vehicles exhaust, we find that household responses to both HNC and TS have been not only ultimately unfortunate—more cars on the road and higher pollution levels—but also remarkably similar in two important aspects: on how policy responses vary widely among income groups and on how fast households adjust their stock of vehicles, when they do.

A draft is here. From the conclusions 

Despite the bad news, there are some valuable policy lessons (not to mention how good a proxy for car use CO proved to be, particularly at peak hours). As illustrated by the theoretical model, the immediate or short-run impact of a policy may say little about its overall effectiveness. Both experiences confirm that policies that may appear effective in the short run can be highly detrimental in the long run; thereby, the impor- tance of understanding whether and the extent to which households adjust their stock of vehicles and how fast in response to these policies. Again, both experiences show that the adjustment process is quite fast, 9 to 11 months (pp. 39-40).

Price System, Traffic Congestion, and Crime

Traffic is bad and getting worse in cities around the world, with some exceptions. Many economists propose charging a fee to drive a car in certain roads and times. The benefits are obvious, a price will make driving more expensive and less cars will be circulating. People on average will spend less time in traffic. That is pretty straight forward. The idea is to reduce congestion costs that we impose on others because of the traffic we all create. 

Contrary to what we might expect charging a fee might also reduce inequality. The money that is collected can be used to improve public transportation and security, which could lead to less crime. In dangerous cities in Latin America that can be very helpful. 

Source: http://cambiociudaddeguatemala.blogspot.com/

In Guatemala City thieves on motorcycles take advantage of heavy traffic to rob car occupants, and sometimes robbers kill the victims. Robbers look especially for cellphones which can be easily resold in a secondary market.