Fare's Fair?

When does transit fare policy treat people unequally? When it treats them exactly the same.

Why?

At the risk of overgeneralization, there are two major constituencies for mass transit. First are wealthier workers who commute to jobs in city centers where parking is expensive. The other group consists of the very poor. Unlike the “choice riders,” who could drive if necessary, low-income “captive” riders often have no other option.

The two groups have very different travel behaviors. For example, they favor different modes. As of 2001, the wealthy were much more likely to ride commuter rail or heavy rail (e.g. most subways) than bus or light rail; those earning over $100,000 took twice as many trips on the former modes as on the latter. For the poor, it is just the opposite. Members of households with incomes under $20,000 were almost six times more likely to take bus or light rail trips than heavy or commuter rail ones.

The wealthy also travel longer distances. Those bus and light rail trips favored by the poor averaged only 6.8 miles, while the heavy rail and commuter rail trips preferred by the wealthy averaged 8.7 and 22.1 miles respectively.

Since they are largely commuters, the wealthier tend to travel during the peak periods (the weekday morning and evening rush hours) and in peak directions (inbound in the morning, outbound in the evening). The poor, who rely on transit for a wider variety of travel, take trips in more varied directions and are much more likely to travel at off-peak times.

What does this add up to? In pretty much every respect, the trips of the wealthier impose heavier costs on the system than the trips of the poor.

Bus service is cheaper to provide than rail service. Short trips are obviously less expensive to accommodate than longer ones.

And even though vehicle occupancy is much higher during the peaks, on a per-rider basis it is still cheaper for transit agencies to provide service at off-peak times and in off-peak directions. This is because accommodating rush-hour traffic means purchasing extra vehicles and hiring extra staff which will be underused at midday, at night, and on the weekends. It also means problems with trips like reverse commutes; for example, commuter trains often travel outbound during the morning peak and inbound during the evening nearly empty.

Yet despite the very different burdens different types of trips impose on the system, most transit agencies prefer the simplicity of flat fares, regardless of time of day, day of week, mode, distance, or other forms of costs imposed (excepting, to a degree but not completely, commuter rail service).

This is why it was with considerable happiness that Professor Brian Taylor and I read this article announcing that the New York MTA is considering cutting fares during off-peak times. Brian is my mentor at UCLA and is an outspoken advocate for equity in transportation; after seeing this piece he wrote me that “you would be hard-pressed to find anyone in the country more excited by this article!”

What has Brian so giddy? This policy would be progressive in that it would benefit poorer riders who disproportionately travel at off-peak times. It would also be equitable in that it would reflect the lower costs those riders impose on the system. This would help equalize the subsidy each passenger receives.

And in addition to being more fair, this policy would be more economically efficient. By using price signals to increase demand at off-peak times, it would put underused staff and equipment to work.

Consider that transit vehicles can be packed during the peaks but are decidedly light on traffic much of the time; economists Clifford Winston and Chad Shirley calculated that as of the mid-1990’s rail vehicles ran only 20 percent full. Yet there is usually no flexible pricing mechanism to fill those seats. Compare this with the commercial airlines, which are continually (perhaps maddeningly) adjusting prices to be sure every seat is occupied, and which have succeeded 81 percent of the time this year.

Unfortunately, for the moment new MTA chairman J.H. Walder is ruling out fares that are higher for longer trips, but this would be the logical next step. As with time-sensitive fares, this would combine greater equity with improved economic efficiency. Distance-based fares sound confusing and logistically difficult, but they need not be: San Francisco and Washington (which also offers an off-peak discount) already charge fares based on distance without any major problems.

But for now, off-peak discounts are definitely a step in the right direction. In a world where economic efficiency and social equity are often at loggerheads, this policy promises to increase both. Let’s hope the new ideas will represent more than a (sorry) token effort.


frankenduf

awesome post and comments- philly bus rider here, and have noted the 'apartheid' system: poor on buses/subways, wealthy on high speed lines- all i would add is weekend discounts- favors the inner city poor who live/work on weekends, as well as increasing tourist transit $

htb

This analysis seems to have forgotten about the externalities -- the costs of getting people to work that are not paid by the transit agency.

Wealthy commuters have a choice: to take the train to work, or to increase vehicle traffic. Given the many costs associated with increased vehicle traffic (including worse air quality for poor people, who suffer disproportionately from asthma and COPD), I'd think that the ideal solution would be to make mass transit free, and to tax single-occupant vehicular traffic.

ottan

I generally agree with Grant and Beth, I just wanted to add one thing.

There is a major infrastructure limitation with the subways in NYC to allow for distance pricing. The subway stations in DC have wide entrances, and people enter and exit (and swipe their cards) at different sets of turnstiles.

In NYC, the entrances are usually tiny and bi-directional. Requiring people to swipe upon exiting the system would cause major bottle-necks that most of the stations can't handle.

Karl Bielefeldt

As with most "innovative" economic ideas that put fairness first and foremost, this one neglects the supply side of the equation. What incentive does this provide for the transit company to supply reliable off peak service with adequate coverage?

I would have paid double for off-peak service to a previous workplace, but the bus company wasn't able to make it profitable at any price, so anyone who didn't work the 7 to 3 shift was out of luck. What's to keep scenarios like that from becoming more widespread?

Speaking of which, it stands to reason that the vast majority of commuting is to and from work regardless of income. Guess which group has the most elasticity in their work shift start and end times?

Trying to impose fairness is almost always fraught with unintended consequences.

M.M.

I agree with everything save the idea to eliminate the flat fee within the subway system. This, in my experience, actually increases equity across social classes, since many lower-wage folks that still have to work in downtown Manhattan often are also forced to live farther away from downtown Manhattan. When I lived in the city a few years ago, I knew many dirt-poor folks who commuted over an hour on the subway from the Bronx to downtown or from distant parts of Brooklyn. Why charge them more than the well-to-do folks who hop on and off the 6 train to ride it three stops within midtown?

Matt H.

The problem with this analysis is it ignores externalities.

The value of the commuter rail at peak hours is it takes commuters off the roads and decreases traffic headaches for those not taking the train. There is no similar benefit from the poor transit users riding around in buses at odd hours.

More controversially, providing affordable transportation alternatives for wealthy commuters increases the likelihood that high-tax-paying corporations will relocate to a city, while providing affordable public transportation for the poor riding around on buses in the middle of the day makes the city more attractive to those who are likely to impose more costs upon the city in increased social services.

Pierre Karcher

I live in Paris and I have seen fares based on distance in many european cities.These fares don't vary according to rush hour and around Paris are based on a system of "zones": the price of the trip is determined by hour many zones you travel through.

So while inside Paris you have a single fare for a small price (1.7 euros will get you one-hour's worth of metro or bus in Paris intra-muros), taking the Regional Express Trains (RER) will cost much more for a longer trip (up to 15 euros). But moving from zone 5 to zone 6 will cost as much as from zone 2 to zone 3.

The effect is that it very expensive for people from poor suburbs to travel to Paris, increasing social unequalities.It is one of the reasons why poor suburbs are isolated and are a social and economic problem in France where "downtown" is the richest part of the city, and the suburb often the poorest.

Derek

The problem is that for the wealthier people who take the bus, it takes little for us to turn around and buy a car. Buses suck. I took a bus daily from the suburbs for 6 months and it is a miserable experience. 2 incidences of violence included.

I will now buy a car before I do that again (although probably a Prius).

I can agree with discounts, but hiking rates for the wealthy will just push us over the edge to car ownership.

anth

1 problem, you say "For example, they favor different modes."
Favor is the wrong thing here - bus & light rail reaches poorer areas of the city - i.e. areas where the was not infrastructure support for transit initially, and commuter rails go to the suburbs - areas that disproportionately have rich over poor. I don't think anyone who is low income chooses to ride a bus, rather, they have no option but to ride the bus.
Otherwise, I'd imagine the city would increase peak fares instead of decrease off-peak?

James D

Unfortunately, the facts are the other way around. In 2007, NYCT buses covered 37% of their operating costs out of the flat fare; with the same fare, the subway covered 67%. This should not be surprising: a 600' subway train moves about an order of magnitude more passengers for the cost of paying two employees than two 40' buses can. Labor is expensive in the USA and other developed countries.

Where subsidizing the rich comes in is 30-day unlimiteds that charge less than 44 peak fares and then give away weekend, evening, and off-peak travel for free. The unlimited Metrocard's pricing structure needs to be aligned more with the Fun Pass, so that the commuters who cause peak demand are moved onto pay-per-ride.

Fred Jones

I love the idea of charging users or roads and public transit for the actual burden imposed on the system, and support this completely. However, does this mean that we are going to get rid of graduated income tax and start charging the "poor" the actual cost for heath care, schools, national defense, law enforcement, etc? Seems only fair, or does fairness flow only one direction?

BSK

@meghan: non-choice riders tend to live in well-serviced areas and can often walk to do their errands; wealthy commuters tend to live in suburban sprawl and need to drive.

Not true. In NY, the wealthy, choice riders have a bevy of opportunities available them. It's the poorer, "non-choice" riders who are limited. Look at a map of the MTA at some point, and look how jampacked Manhattan is with subways, while the outer boroughs have relatively few. This is also true in DC and Boston, in my experience. While those traveling from outside the city may be a different story, not all of them are using the MTA (many are using NJTransit, a completely different system), so the money doesn't all pool.

How about a little thought experiment to figure out who should be footing a larger portion of the day. For one week, we'll keep the wealthy, choice workers home. The next week, we'll keep the poorer, non-choice workers home. Then, we'll look at how each group fared without the other. My gut tells me is that the choice workers are more directly reliant upon the non-choice workers, on a daily basis.

Also, these false dichotomies of "choice" and "non-choice", rich and poor, are overly simplistic. Where do I fit, as a school teacher making 40K a year? Was I in one group in Manhattan when I had no car? Am I in another group in DC now that I do have a car and Metroing would be very hard?

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chris

Well even though Sydney's public transport is among the worst of the developed world, it is at least ahead of others in this respect. There are lower fares off-peak and for shorter distances, and discounts for students, seniors and children

Eric

Adelaide has a good system for nearly everyone:

Less than $3 a pop to ride any trains & buses for 2 hours if you're buying a 10x ticket (more otherwise)

Less if you're student, pensioner or unemployed, less again for children.

Less for daytime off-peak.

Only downsides are the slow speed and low frequencies of many routes.

Most poor areas in Australian cities are in the outer suburbs.

Erik

In general I like this idea. One thing though - the statement at the end about San Francisco charging by distance is a little misleading. Bay Area Rapid Transit that does this, not Muni (San Francisco's metropolitan bus/rail line). The difference is significant: BART runs like a train line, with fixed stations and turnstiles that one has to pass to both enter and exit, so it's easy to charge by distance (all BART rides are paid for with a card).

Muni and other bus-based systems generally only have monitored entry points - the front of the bus - so there's no way to know when people get off and thus how much to charge them. Caltrain, the local commuter railroad, does this also, but they can run an effective proof-of-payment system by having one ticket agent monitor each long train, which would be ineffective on buses.

What would a distance-based pricing system look like on street buses?

Jason S

Transportation equity? Ideas like trying to put the concept of equity in areas like this are one of the reasons we always end up just making things worse.
It is simple, do they feel that by reducing fares that more people will take advantage of the off peak times? If not you take operating at a loss and just increase the loss. Most public transportation systems are run horribly on the business side. But that is ok because public transportation isn't about making a profit, it is a service and therefore should just attempt to do the best it can to cover its own cost so the taxpayers don't have to. At the same time do they really feel like if they raised the prices at peak times that it would transfer any riders to off-peak times? If the answer is no then don't do it.
Transporation isn't about social justice, it is about providing a service to all that would use it. If it wasn't for all those rich people using the transportation during peak hours most of the public tranportation probably wouldn't exist.
What happens when you raise the prices on the rich and they just drive and the poor end up walking when the mass transit has to shut down for lack of funds?

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Al Marsh

Apologies if anyone has already said this, but:

Where I live in the UK, many train journeys taken at peak hours are double the price as off-peak journeys. I am specifically talking about commuter train journeys into London - these are about double before about 9:30am. It kind of makes sense as the trains are about 5-10 times more full during peak hours.

Incidently, I have the facillity to drive to work (in theory) but choose to pay the extortionate £3,300 per year train ticket. The reason for this is because London is such an utter nightmare to drive in that it would take longer to drive and I would get lost, and probably crash my car. When it's not late, the train is actually pretty convinient.

Kirilius

In Sofia, Bulgaria retired people are entitled to a free (they pay a nominal fee actually) monthly pass for the entire trasit system. However they cannot use the passes during peak hours and this has had a very positive effect in terms of off-loading the busses and streetcars during the morning rush.

In that respect the proposed change in NYC is not uniqie. GO trains, which serve the area around Toronto are more expensive than the cyty's subway. To the north the VIVA buses' fare is also based on two zones.

Matt

I agree with you on peak/off-peak fares. I think you are off-base on a call for distance-based fares for MTA. BART and METRO have distance-based fares because they are more comparable to commuter rail - higher speeds, much larger distances between stations, etc - than MTA is.

stinc

Public transportation is not a social service.

It is a public utility.

Think of it like water and sewerage.

People with access to a clean water source (i.e. well, cistern, etc.) and a septic field really don't require the services of a municipal water district. People who do not have access to such resources must use the public option. Among those with the public option, those who use the most pay the most.

But somehow a pretzel logic has overtaken public transportation. We have taken a perfectly good and practical public utility and changed it into a welfare/social program, that we grudgingly allow the general public to use. Of course the transit dependent will consume more than those who have options. Yet your thoughts are that they should pay less and that those who have options should pay more.

That kind of thinking is utterly unsustainable and has been the ruination of many transit systems who must cow-tow to a segment, not to meet the needs and improve the customer experience, but for reasons of "equity."

The era of an SOV for everyone is passing with every barrel of oil that pops up from the soil. Public transportation is the future. And what is fair is that we all pa the same fare, based on use of the system. Most public transit is over 80% subsidized by taxes - it makes sense that those who use it most should bear a greater burden.

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