I dont know whether its appropriate to compare London travel with other places as surely in a city like London the use of what is expensive transport is more commonplace by necessity.

In addition I dont know if higher fares do encourage living and working closer to home- I dont think people have a choice. They may eventually move closer to where they work but thats a difficult one these days when the turnover of jobs is greater. Some people choose to live further away and pay higher travel costs if it means they can buy a cheaper property.