More Money Prices, Please
Why you should be happy to pay for things.
When New York rolled out its congestion pricing policy, leftists and rightists alike recoiled in horror at the prospect of paying to enter NYC.
“This hurts the poor!”
“Don’t they get enough of my taxes??”
Despite its outstanding success1, people still distrust the idea of paying for things with money.
Any time there is a policy which advocates for either higher taxes or a similar type of fee, people get up in arms about how this will hurt the poor or how the government is ripping you off. Carbon taxes, transit fares, congestion taxes or toll roads, paying for freshwater, payphones or pay toilets, etc. We conjure up visions of a capitalist dystopia where poor, hardworking folks are nickel-and-dimed and have all their hard-earned cash siphoned away to greedy corporations or incompetent governments.
The backlash might be well-intentioned, but it is poorly thought out. Here’s why you should (probably) be happy to pay for more things.
You already pay an opportunity cost2. For toll roads, the opportunity cost is a longer commute and more pollution. Money prices make opportunity costs explicit; they do not increase costs.
Money is fungible, while other prices—like time—are not. We can save and borrow money, but we can’t save or borrow time.
Money prices enable marginal decision-making. Money prices can be put into different bundles, and are generally more flexible. Without money prices, choices are much more binary.
Money prices enable greater consumer choice. This goes hand-in-hand with the above point. For example, paid toilets are illegal in the US3, which reduces the number of toilets that are easily accessible to the public. Allowing paid toilets gives people more choices, and exceptions can be made for the poor if a money price is deemed too burdensome. They often aren’t, as low prices are usually sufficient to ration a resource, or the resource being rationed is mostly used by the wealthy (for example: trips by car into NYC’s business center).
Money prices make relative costs more transparent, and are easier to understand. Instead of juggling many relative prices, we only need to consider the money price. A grocery store with 500 items has 124,750 relative prices, but only 500 money prices4.
Money prices convey information about opportunity costs very efficiently, which enables the efficient allocation of scarce resources. Without them, resources are wasted.
So, bring on the capitalist dystopia! Tradeoffs already exist, and money prices make them more visible.
You can read this thread from Cremieux for a summary, or read Cook et. al (2025) here.
Everything is subject to an opportunity cost, even things that we don’t usually think of as being “consumed” or “produced” in the traditional sense. No money has changed hands, yet this post that you are reading was produced, and you are currently consuming it. Instead of reading this, there is a myriad of other things you could be doing. You could read another post, watch Andor, watch a YouTube or TikTok video, chat with friends, go outside, exercise, work, etc. Even though this post is “free”, it is not free from tradeoffs. Sowell says the first law of economics is scarcity for good reason.
Check out this wikipedia page on the topic.
The formula to find the number of relative prices for N goods is simply (N(N-1)/2)