You're late for school. The time is 9:30 a.m. and you've just pulled onto Gale Lemerand Drive, hoping to find a parking space in the commuter lot. After searching for fifteen minutes, you give up and head to the O'Connell Center lot. Sorry, no luck - this lot is full, too. Despite being a bad way to start the day, thousands of students face this situation. The question is, how do we remedy the problem?
While teaching an introductory economics course over the summer, I had an opportunity to discuss the parking problem with my class. The resonating opinion of the students was that parking decals are too expensive and spaces are too few. I asked my students to pretend they were UF President Bernie Machen and propose solutions.
Some proposals included banning parking for freshmen, opening faculty lots to students and lowering parking fees or eliminating them altogether. Most UF students would be elated at the arrival of reduced parking prices. However, most students (and people) have a misunderstanding of basic economic principles. The real answer is to raise the decal price.
The fundamental economic problem confronting UF parking is a shortage. In economic terminology, the quantity demanded of parking exceeds the quantity supplied. In 2003, Transportation and Parking Services sold nearly 27,526 parking decals for about 19,371 available spaces, resulting in around a 42 percent oversell. Overselling is acutely felt in the commuter lots with about 7,655 decals sold for only 3,393 spaces, about a 125 percent oversell.
The shortage of spaces is only part of the problem. Costs of not being able to find parking include missing class, wasted gasoline and added road congestion while you drive around trying to find a parking space. These costs add to pollution levels and greenhouse gases, which economists refer to as negative externalities.
Despite my class' recommendation, reducing or eliminating fees would only aggravate the problem by increasing demand and deepening the shortage. The solution, according to a 1996 winner of the Nobel Prize in economics, William Vickrey, is to increase the price of parking.
In economics, when a good faces a shortage, one way of removing the shortage is to raise prices. Parking, while expensive, is actually priced too low, according to the rules of economics. The scarce spaces available are not allocated to the students most willing and able to buy them. By increasing prices, the shortage of spaces is eliminated by reducing the quantity demanded of spaces.
By raising prices, the probability of finding a parking space increases because fewer students will buy a parking decal. Not only do higher prices reduce or eliminate the shortage, but the inefficiencies caused by time wasted hunting for a space are removed. This means you miss less class, waste less gasoline, and pump fewer greenhouse gases into the atmosphere - benefits which may exceed the cost of a higher decal.
You may not like the solution, but you should have a better understanding of the economics behind the student parking problem.
Matthew Salois is a graduate student studying food and resource economics.