Drivers who are
similar in all respects–age, gender, driving record–pay roughly the
same premiums whether they drive 5,000 or 50,000 miles per year, even
though the likelihood of a collision increases with each mile. This
“all-you-can-drive” pricing scheme imposes significant costs on
society: more traffic accidents, congestion, air pollution, greenhouse
gas emissions, and dependence on oil.
…the effect of PAYD on miles traveled and gasoline
consumption would be significant: a 6.5 percent reduction under
conservative estimates, and others suggest the reduction could be as
high as 10 percent. To put that in perspective, it would take an
81-cent-per-gallon increase in the gas tax to achieve a 6.5 percent
reduction in miles driven.
Monitoring costs seem workable, at least in principle with computerized odometers, so why don’t companies do this?