Twice as fast, half as expensive

The debate about how to regulate ridesharing services such as Uber and Lyft – even whether to ban them entirely – has suffered from a surfeit of passionate assertion and a deficit of systematic data collection.

Ridesharing has been alternately criticized for its supposed mistreatment of ethnic minorities, people with disabilities, and the poor, and praised for providing those communities with an alternative to the inferior service they get from the regulated taxi industry.

A research team at BOTEC Analysis, with funding from Uber, set about to gather actual evidence about the relative performance of taxis and UberX in a sample of low-income neighborhoods in Los Angeles. (I’m on the author list, but only for editorial help: Rosanna Smart and Angela Hawken did the design and number-crunching, while Brad Rowe ran the data collection.)

The design could hardly have been simpler; we sent pairs of riders to call for taxi service or use an app to summon UberX for travel along pre-planned routes. The riders recorded how long it took – starting from the moment of picking up the phone or opening the app – before they were actually in a car and on their way, and also how much the ride cost, including a standard 15% tip for the taxi drivers and any premium charged under the Uber “surge pricing” system.

After each ride, the riders switched off; whoever took a taxi last time took an Uber next time. Our riders didn’t know that Uber had paid for the study.

The answer was clear-cut, and consistent across neighborhoods and days: summoning an UberX took less than half as long as calling for a taxi, and the trip cost less than half as much. UberX was also more reliable, with no very long wait times.

Even though Uber had no control over our data analysis or interpretation, the fact that Uber paid for the study makes some skepticism about our results natural and proper. We will happily share our data and methods with other research teams for re-analysis and replication.

It was not possible for a single study in a single city to answer all the relevant questions about ridesharing. Would the same relationship hold in other cities? Would it hold in the small number of very-high-crime neighborhoods we excluded in order to protect our riders? Would it hold after dark?

This study didn’t address questions about service for minority groups; though the neighborhoods we selected tended to have high concentrations of Latinos and African-Americans, we didn’t systematically vary the ethnicity of our riders. Nor could our study address the question of how taxis and ridesharing compare in handling riders with disabilities. And people who lack either a smartphone or a credit or debit card cannot use ridesharing at all, though they can use taxis. It would be helpful to know how often people lacking one or the other use taxis.

So this study ought to be the beginning of the scientific effort rather than the end.

But for now, anyone who asserts that ridesharing services disadvantage poor people or poor neighborhoods is making a claim that is not merely unsupported but actually contrary to the findings of the one systematic study of that question. The evidence in hand strongly suggests that UberX outperforms conventional taxis in serving low-income neighborhoods, at least in Los Angeles.

Full report here.

Two Unknowns of a Guaranteed Minimum Income

Two people I respect, Dylan Matthews and Mark Kleiman, have both endorsed a guaranteed minimum income as a poverty fighting tool. Here is Dylan’s conclusion, which he draws after discussing the findings of negative income tax experiments undertaken by the Nixon Administration:

A negative income tax or basic income of sufficient size would, by definition, eliminate poverty. We still don’t know if there’d be much of a cost in terms of people working and earning less. If there is, the effect is almost certainly small enough that a negative income tax can offset the lost earnings and remain affordable. The worst case scenario is that we eliminate poverty but see a modest decline in employment. The best case scenario is we eliminate poverty at even lower cost and don’t see much of an effect on employment. That’s a gamble I’m willing to take.”

It sounds great, but there are two unknowns that could undermine the whole approach.

1. What is the effect on the employment decisions of people NOT eligible for the guaranteed income?

Dylan focuses quite appropriately on the labor participation data available from negative income tax research, namely whether the research participants who got the income boost worked less as a result. But what happens to the far larger number of people initially not getting the subsidy could be much more important.

Imagine someone who is working hard 2000 hours a year at $11/hour, generating an income of $22,000. Then the government creates a minimum income of $20,000, which the person could receive if s/he stopped working. The person is now working 2000 hours a year for an extra $2000, i.e., for $1/hour.

Some people would keep working at that low effective wage because they like their jobs or they think they will move up someday or they just believe in the moral value of work. But other people — potentially most people — would be glad to free up 2000 hours a year at such little cost.

When those people move from jobs paying just above the guaranteed income (and such people will exists regardless of the level of the guarantee — $20,000 is just an example) to taking the guaranteed income, two things happen. The fiscal demands on the income support program grow and the tax base to pay for it shrinks. Neither of these possible effects supports the program’s long-term viability.

2. What is the effect of a guaranteed income on inflation in goods that people need to survive?

A number of industries that produce essentials (e.g., food, clothing) pay the minimum wage or just above it to some of their workforce. But as explained in the above example, once there is a guaranteed minimum income, the effective return on working a low wage job (i.e., those offering under or just over the minimum guaranteed income) drops precipitously and could indeed be negative, reducing the incentive to work in such jobs. One might say “Good, that will teach those plutocrats! The minimum wage will have to triple!”. But follow that logic out such that you have an economy where a fruit picker can only be employed for $30/hour and someone who sews shirts together can only be employed for $35/hour and so forth, and you end up with sharply rising prices in the market for essential goods.

This inflation in the price of essential goods means that the basic guaranteed income has to be sharply raised concomitantly to keep it as a meaningful anti-poverty program. This makes the costs of the program per enrollee go up, and also exposes a large group of new people who are just above the new guaranteed income to a strong incentive to quit working. As some of them respond to that incentive, the number of enrollees grows and the tax base to support the program contracts at the same time. Rinse and repeat.

Maybe Dylan, Mark or some other advocate of a guaranteed income has evidence that would allay the worries raised by the above two questions, but barring that, I don’t see a scenario under which a program like this wouldn’t collapse under its own weight within a decade of being implemented.

Wherein the Nonprofiteer Does a Literature Review and Endorses an Increased Minimum Wage

Over on The Nonprofiteer, I demonstrate my recovery from the Chicago School of economics by reviewing arguments for (and even one against) an increase in the minimum wage. Not sophisticated but (I hope) clear.

Food stamps

This is vile, it stinks to heaven.  I used to be pretty good at teaching public policy in a non-partisan manner (we have some of my former students reading this blog and if I’m wrong, don’t hold back) but the last decade or so has really cramped my style, hooboy.  The insouciant cruelty of fat and happy Republicans simpering about making hungry children dependent (are there no poorhouses?  do the mills not offer employment to a deft eight-year old?) after they engineered the budget deficits they have now decided to rail about, and carried water for the “job-creators” who feathered their nests giving us the recession that’s put so many people on the street and on food stamps, is simply Dickensian.  Eric Cantor is a horrible person, whipping a gang of racists and ignorant, fearful, haters into increasingly unspeakable behavior with fake moralizing and outright lies.

And the horse’s asses he rode in on.

Medicaid expansion, too.  Mississippi, our own Haiti, land of poverty, despair, and early death, turns down free federal money in order that its poorest don’t get medical care?  It can’t even be selfishness among the plutocrats: how is it good for business that its workforce is sicker?  It’s simply cruelty, far beyond the possible bounds of policy debate or the scope of ideology, an abomination no religion can countenance. What did these people’s parents raise them to be? What were they told in Sunday School?

I give up, I’m not up to this.  But luckily, there is Käthe Kollwitz.

kollwitz 1 kollwitz 2 kollwitz 3

and George Grosz.Untitled 4Swim if you can, and if you are too fat, go under (Schwimme, wer schwimmen kann, und wer zu plump ist, geh unter!)

May your dreams be haunted with sick, starving children, you swine.




Charitable giving, radical utilitarianism and democracy

Over on The Nonprofiteer, I grapple with the justification for philanthropy which fails (as mine does) to increase Disability-Adjusted Life Years in the developing world. Not entirely satisfied with my arguments and would welcome any and all assistance.

The Siege of Grand Rapids

Poor seniors in Michigan are advised to dilute their soup during the shutdown..

NPR´s Patrick Center, reporting from Kent County, Michigan, on the suspension of the USDA´s Commodity Supplemental Food Program:

Kent County’s Community Action Agency is recommending its seniors stretch the food they already have — by watering down milk and soup.

(via Joey Fishkin at Balkinisation)
ratburgerThe shutdown isn´t really hurting anybody, of course. Stories like this are just lefty spin.

Note to literal-minded critics: the tasty ratburger is mine not Center´s or Fishkin´s, and it´s hyperbolic commentary, not reporting.

Fishkin´s essay, on the decay of empathy under rising inequality, is worth your time.

Stupid Billionaire Tricks: Give Charity to MBAs

The Nonprofiteer is at it again, gently suggesting that a Sun Microsystems billionaire isn’t necessarily the world’s authority about how to combat poverty.  But maybe fighting poverty isn’t what he had in mind after all.

Who taught people to say “charity” with a sneer?

Poverty, Meet Cash Transfers

In my guise as The Nonprofiteer, I suggest that the solution to poverty might be money.

dorothea lange depression era photographs 13

Alert the media.  No, really.