The Impact of Congestion Charging on Social Capital

We analyse a new data set to examine how congestion charging policies affect an individual's investment social capital. We exploit a (quasi-)natural experiment - the implementation of the Western Extension Zone (WEZ) to the London Congestion Charging zone in 2007. We measure investment in social capital by using the frequency of visits to friends and family before and after the implementation of the WEZ. Using longitudinal data collected in January and November 2007 made available by Transport for London, we perform difference-in-difference analysis, using both OLS and interval regression, with the treatment group defined as those who used a car to make visits pre-WEZ. We observe large and statistically significant reductions in visits as a result of the WEZ, with, for example, a reduction of around 20 visits a year to friends. The effect of the WEZ on the number of visits to act as an informal carer is much larger, with reductions of around 100 visits a year. Given that the changes occurred in such a small time frame (10 months), we conclude that the WEZ is likely to be the main driver of these reductions.