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.


Meghan

On the other hand, a typical commuter uses public transportation 10x a week (inbound-outbound Mon-Fri). While a non-choice rider presumably uses it considerably more frequently. Realistically, both of these groups probably use a monthly pass. Therefore the cost per ride for the commuter is probably higher than the cost per ride for the non-choice rider.

John

This is how the DC system operates.

Jim

Why stop at just commuter rail? How about the same policy for toll roads and bridges.

The NJ Turnpike and Parkway could easily have variable (higher) costs during rush hours.

Given EZPass and other monitoring, it could be based upon load and not specific times. Therefore, Friday afternoons south bound GSP would be more expensive on the summer weekends becuase of shore traffic than the winter ones without shore traffic.

Dean

Elegant point on the cost burden. One of the key factors to shifting usage among commuters is going to be changing business culture to allow for a wider variety of working hours (8-4, 10-6, instead of just 9-5 or what have you). Generally this principle got a foothold in Utah over the summer when public employees shifted to a 4 day work week and saw gains there. For different reasons, I think that same idea of flexible hours, in the form of a wider spread of working hours of the day, would have additional convenience benefits in that it could lengthen the total hours a business operated to get around that problem where stores/doctors/banks/etc. are only open while you're at work. We'll see how that chips away at the intertia behind keeping everything the same.

Nick

Systems like the Oyster Card in London are a great idea, as it makes fare collection quite simple, and data can be collected to determine the routes that are busiest.

@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.
In the GTA there is almost no transit in "wealthy suburbia", which ensures that "wealthy suburbanites" won't consider budgeting without a car.

Ben D

In your "fairness" analysis, did you consider any taxes that are paid by the "choice" riders that are used to subsidize public transit?

I could have done without the fairness argument. It makes economic sense for transit organizations to reduce prices off-peak to increase ridership and revenue, whether or not someone judges it to be "fair."

Imad Qureshi

This is a great piece. I live in a western suburb of Chicago and use Metra to commute. Fare is distance based. I use a monthly pass (paid pre tax). I think poor people who can purchase passes don't get the option of getting it pre-tax which saves me around 30 dollars a month in taxes.

Jessica

Everywhere I've lived (Chicago and suburbs, Pittsburgh, and Seattle) has charged distance-based fares on public transit buses or commuter trains. I'm surprised NY isn't on that already.

Mitch

How, exactly, will changing off-peak prices affect the behavior of commuters who have to be at work certain hours? Seems more likely that peak trips will now be more likely to be taken via auto rather than shifted to the off-peak.

keith

In Philadelphia, SEPTA just concluded a strike with the city transit division (buses and subways; commuter rail is a different union, inherited from the Pennsylvania Railroad, and bus and trolley operations in surrounding counties are under a separate union contract). SEPTA has zone fares on buses, addressing distance, and an extensive peak and zone fare structure on trains. Also, transfers cost money, another charge for distance: I've been on systems that offer free transfers.

As a result of the strike being recent news, I have seen this report, and it does not fully corroborate with your post.

http://www.septa.com/inside/reports/ASP2010.pdf

On page 60-65 in this document: they rank each route by Operating Ratio, which is "Passenger Revenue" divided by "Fully Allocated Expenses" which I believe includes equipment depreciation and full cost for maintaining peak capacity. This ranges 67% to 33% for the Regional Rail lines, which beats the range for bus and surface trolley routes, which range 57-16% in suburban counties and 59-11% in Philadelphia county.

I do see that the total magnitude of county and state subsidy is greater for the rail lines. A concrete comparison of rail route R5 to bus route 23 is instructive as they handle similar total passengers per day (~20,000) and per year (6 Million passenger trips), and both connect the center city to fairly wealthy suburbs in Montgomery County with stops in working class neighborhoods. R5: 24 M revenue, 43 M cost, 23 bus: 5M revenue, 14M cost. They don't figure out passenger miles, but the railroad has 2.6 million vehicle miles to 1 million bus miles. I didn't cherrypick them for this, they're both above-average but not the best in their categories, and happen to serve similar counts of passengers, and I have personally ridden on both.

Six million rail trips are getting 19 million in state subsidy compared to six million bus trips getting 9 million. On the one hand, rail users are getting 2x the money the bus users are getting for the same number of trips (but the subsidy per mile of network served works out to about the same). On the other hand, for the double magnitude subsidy from the state, the rail users are paying 5x more out of pocket than the bus users, and the rail lines in general cover a greater percent of total cost out of passenger revenue, so in a sense, they're more efficient.

This doesn't quite support your thesis, and would appreciate your thoughts.

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Ben W

With the advent of electronic payment methods it becomes much easier to set arbitrary prices at entry/exit points as well as possibly making them variable based on other conditions.

e.g. in Dallas, they recently went to all electronic and the rates went to weird numbers which would be cause problems if dealing in cash - like $0.24 here and $0.73 there but it allowed them to more effectively distribute the tolls based on distance used.

further, in a proposed new expansion they are suggesting having a variable rate to enter the HOV lanes which changes dynamically based on the current average speed of the cars in the lane. So, as the occupancy of the lanes increase the toll goes up to discourage more people from entering and slowing it down. I wonder if you could do that with rail car capacities? Want to be that last guy to squeeze on to the train? it'll cost ya!

Grant

Two concerns:

1. How will this affect the prices on monthly passes? I suspect that prices will not fall on those, even though they are currently the best value in New York. There doesn't seem to be a way to distinguish between unlimited MetroCard use at peak and non-peak hours. I suspect that one solution will be to eliminate them, but that will hurt budget-conscious riders more, since right now a monthly pass saves a significant amount over just buying a fare each time.

2. Your advocacy of long-distance pricing doesn't adequately take into account the income distribution of New York City. People in Manhattan and the wealthier neighborhoods of Brooklyn (Brooklyn Heights, DUMBO, Cobble Hill, Williamsburg, etc.) certainly have shorter trips than those that live in the more far-flung areas like Canarsie, Flatbush, Flushing, the Bronx, etc. Yet it is these far-flung, generally less-affluent commuters who will be penalized by distance pricing.

In a system such as D.C.'s, which is largely based around a hub system and where most long-distance commuters come from the affluent suburbs variable pricing makes a great deal of sense (though, having lived near DC for most of my pre-New York life, I can say it is annoying). In New York (or, I dunno, Paris), it makes less sense. By all means, go to distance pricing on Metro North and the Jersey Transit. Don't do it on the subway itself.

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Beth

Dude, you clearly do not live in the NYC metro area.

This area is unique in its layout. It sits on a series of islands and pieces of the mainland, cut up into odd political and geographic segments by a bunch of harbors, rivers and tributaries. Unlike most cities, NYC does not have a poor "inner city" and a rich/middle class suburb/quasi-urb (what do you call the part of the city that's not quite a suburb, but more residential, quiet, and spacious than the more densly-packed parts?)

In NYC, unlike most cities, it's often the richest who live closest to work, and the lowest-paid workers who have the longest subway commutes. Many sit on the subway for well over an hour to get to their jobs in Manhattan. The richer folks in the city can afford to live in expensive neighborhoods that are close to their jobs: the Village, SoHo, Midtown, the UES, Tribeca. They often enjoy subway commutes of less than 20 minutes; some can even walk to the office. Other almost-as-rich folks live in the more traditional suburbs of Nassau, Westchester, and Montclair, and, despite being many miles from their job, have the option of taking commuter rails that get them to work in under an hour. The poor are stuck in between: They live very far from work, but are not serviced by an efficient commuter system. They must take a very long, slow subway or bus ride, often involving two transfers. They live in areas of Brooklyn, Queens, or the Bronx that are not serviced by an express subway line (live near an express stop, and you'll pay a premium in rent). They live far from the nearest mass transit station (living next to the subway also costs more in rent), and have no car to drive to it (and no money/place to park if they could), so unless they are healthy enough to walk two miles every day they must take a slow local bus to get to the slow subway line, which will then take them to the other subway line that will take them to work.

The New York MTA system already distinguishes fairly well between the habits of middle-class commuters and the poor. The commuter rails that deliver folks between Manhattan and Long Island/Queens/Westchester already have peak and off-peak fares. The express buses that haul people from the outer reaches of Brooklyn and Queens in (comparative) comfort are already more expensive than the standing-room-only subways and "local" buses.

I have no opposition to the proposal of lowering the subway fares during off-peak travel times - if anything, it would feel like some just compensation for the crazy-long wait for a train that we must often endure when traveling at off-peak times.

But adding the other part of the equation that you suggest - charging more for longer subway rides than for shorter subway rides - would in most cases discriminate against the poorest of New York. And please stop citing DC as an example. Anacostia is not SoHo, and Bethesda is not Canarsie.

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randy

Maybe (outside NYC), do what bay area 9bart and caltrain) SHOULD be -- charge more for parking in suburban commuter lots... hits right folks only, right?

Meghan

@Nick I understand why commuters aren't using public transportation the rest of the time. I don't think it necessarily matters why they aren't using it more than 10x per week, only that they aren't.

@Imad You (and I) get a monthly pass pre-tax (up to a certain limit) as part of fringe benefits for employer-provided communting costs. I'm certain that ends up being unfair across income levels, but it's also not really a matter of having the "option."

Ricardo

Vancouver has always done this. I don't think it can change behaviours too much though since if you're rich or poor, you'll be buying a monthly pass that covers your longest regular trip. Unless a poor person does not travel at all during peak times, they will have to get the same pass as everyone else. It only makes things cheaper for non-regular commuters like students and the elderly, and saving $1 in fare a couple times a month is unlikely to have people adapt their plans.

The Notorious H.A.M.

Hong Kong also uses distance-based fares with no trouble at all, but not off-peak pricing. They use something I wish Philadelphia (damn SEPTA) would take advantage of: mini buses. It would be so much better to have a 16-seater zipping through the tiny, narrow streets of Center City instead of those massive buses which can barely turn the corners.

Gary

@ John #2,

I use the metro in DC at least 2 days a week, often more. I'm not sure using DC as an example is a strong selling point. Metro is in a troubling state of disrepair, and has been for some time, due to constant budget shortfalls, and the poor maintenance caused by the shortfalls. Plus, the fares aren't inexpensive, and the cars are often packed.

That said, I live about a mile from the nearest station. On days I don't feel up to the walk (due to rain, cold, or exhaustion) I get off at a different station and transfer to a bus. I've found the MetroBus system to be quite excellent. The buses are modern, clean, reliable, and quick. With a transfer from a Metro train, they're even quite inexpensive.

Now if only we had a monthly pass like NYC does...

John

@Jessica I think it's more of a grandfathered thing... NYC famously clung to a universal 5 cent fare for a really long time.

Anyway shouldn't pricing focus on maximizing revenue? It seems like you should charge wtih an eye to maximizing revenue (which doesn't necessarily mean charging for distance since far-off stations often have low traffic), combined with subsidizing poor people if you want them to have equal access. But probably through writing them checks rather than giving them free train tickets.

Ben

The Octo in Hong Kong bases fares on entry/exit points, so essentially distance. When you walk into a station, you buy a pass to exit at a specific station, so the fare is based on how far you're going. Since I was a visitor, I didn't purchase a pass, but I presume you just swipe your card going in and going out, and it charges you appropriately. If you have high congestion areas, then you can easily charge more for crossing or exiting at those (Hong Kong charges significantly more to get to the airport, for example).

This seems a rather obvious solution.