That is according to economist Donald Low. He said in his Facebook post about the news that MOE is reviewing whether teachers should be charged for parking in schools that he had “expected people to respond as an economist would – on grounds of efficiency and equity.”
He argued that giving teachers free parking in school is inefficient because instead “of a hidden subsidy, it’s much better to simply pay teachers a bit more and let them decide whether they want to use that extra income to pay for parking (which should be charged at a comparable market price) or to use it for other things. Tying the subsidy to parking distorts teachers’ decisions (at the margin at least) and encourages them to drive. Turning the parking subsidy into cash would get teachers to weigh the costs and benefits of driving to school. That’s clearly a more efficient arrangement. It’s basically the same argument for why we think ministers should receive a clean wage with no hidden perks or benefits.”
Donald also explained why letting teachers park for free in schools is not equitable. It “benefits teachers who own cars and not those who don’t. It’s a regressive arrangement that favors teachers who are better off. In short, a parking subsidy is neither efficient nor equitable. This conclusion is neither surprising nor difficult for economists to reach- in fact, we assume that this is common sense thinking that is evident to everyone else.”
According to Donald, his explanation of why MOE should charge teachers for parking in schools is called the Second Fundamental Theorem of Welfare.
Donald also elaborated that “Just because something is a publicly owned space doesn’t mean it should be free. The charge is an indication of resource’s scarcity value. If a good or a resource has very low scarcity value, a zero charge may be justified. Alternatively, if its use produces large benefits for society at large, a low, highly subsidized charge would be justified. This is the basis for letting students of primary and secondary schools use their classrooms at close to no charge. Charging students who use the classrooms to produce private (as opposed to social) benefits isn’t that crazy an idea. Why do you think business school students pay so much school fees? Part of it goes to maintain the expensive facilities of their school. It’s only when the benefits of education are socialized that we think free or low cost education is justified. If all its benefits go only to the students themselves, we expect them to pay for it.”
One of Donald’s friends also supported charging teachers to park in schools. She said: “From an urban governance perspective, parking lots (esp in land-scarce, dense cities) are a terrible use of space. Half the time, parking lots are unused (bc of destination/origin parking difference). Even if we weren’t to monetize the space, a parking lot could be a park/garden, which could enhance livability, reduce temperature through greenery, etc. By making parking so convenient for any class of workers (nearby, free) we encourage driving, which is not good. And, given the amount of space that cars take up, they represent a spatial inequity: richer people who can own cars take up more land.”
Donald expressed surprise that people respond to this story through the lens of deservedness, i.e. many teachers work extra hours and spend their own money on their students and thus deserved free parking in schools. He explained: “do teachers deserve to get free parking at their places of work? The problem with this line of argument is that virtually every public servant would claim that he deserves this subsidy, and there’s almost no good way to assess the validity of those claims. What about doctors, nurses, soldiers, tax collectors, social workers or even ministers and MPs? They’d all say that they work long hours and that their pay is not sufficient compensation for the long hours they put in. Conversely, what about lazy teachers or part time teachers- do they also deserve the parking subsidy? Deservedness is a poor basis for assessing the soundness of such a subsidy.”
Some have tried to attribute the negative response to the news to loss aversion, i.e. the idea that people’s tendency to strongly prefer avoiding losses to acquiring gains. But this does not explain why the general public’s negative reaction. Someone commented on Donald’s post that this is the “fairness model” – “Somehow people feel unfair to take away something that has been there a long time especially something that doesn’t seem to cost anything to provide.”
I was initially against charging teachers for parking in schools. But after reading Donald Low’s post and the discussion that followed, I have come to be convinced that charging teachers for parking in schools is the right thing to do. After all, most other civil servants pay to park at their respective offices. In fact, if a teacher is posted to work in MOE HQ, they too have to pay for season parking. So why shouldn’t teachers who work in schools not have to pay for season parking? With that said, I think all the SAF camps should also start charging army personnel for parking.
It would be interesting to see what MOE eventually decides on.