A Non-Parametric Analysis of Welfare Redistribution: The Case of Stockholm’s Congestion Pricing Trial

This study uses non-parametric distributional comparison tools to evaluate the equity effects of a transportation policy. I consider as a case study a congestion pricing plan for Stockholm, Sweden. This case is particularly relevant because the plan has been criticized for its potentially negative equity effects, and the literature is so-far inconclusive. The welfare effects for a sample of individuals were simulated using a travel modeling system and sample enumeration, then the results examined using a series of non-parametric tools. The results confirmed earlier findings that the magnitudes of effects are small compared to absolute welfare. The overall progressivity or regressivity is strongly related to the choice of refund scheme, with the most progressive scenario being a lump sum payment subsidy and the most regressive being a reduction in income taxes. Disregarding the refund scheme, the results suggest that the welfare effects of the plan itself are borne largely by those who initially use auto. Since these are predominantly high-income individuals, the plan itself tends to be progressive, but low-income individuals who began using the auto mode also bear a high burden.