Chapter 11 Mass Transit

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Chapter 11 Mass Transit
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Why Do SOOO few commuters use Mass Transit?
Less than 5 of all commutes use mass
transit. More than 3/4ths of commutes are made by
a single driver in a car. Because we are all
maximizing our utility, there must be something
that explains why we have decided to drive our
cars, even when mass transit has substantially
lower out-of-pocket expenses than driving. Gas,
insurance, maintenance, weartear
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Commutes broken down further
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Transit riders by income shares
Transit ridership is high among low-income
(lt15k). For riders who earn above 15k, their
share of ridership seems to increase in more
heavily populated metro areas. For those earning
over 50k, their share of ridership only
substantially increases in the largest metro
areas. Conjectures!? Why might more affluent
commuters rise as a share of ridership as
populations increase?
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Efficiency of Transit Modes
Auto transportation exhibits almost constant
costs, because the majority of commuters in cars
are alone, adding one more commuter means one
more car. Bussing and rail transit have
decreasing costs. The first rider costs a lot to
transport, but as more riders are added, the
average cost per rider declines. If you were
designing a city and you could pick only one
transportation system, what would you choose to
maximize efficiency? Auto, bus or train?
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What affects demand for transit

• Price elasticity - 10 increase in fares
  decreases ridership by 3.3 (ep-0.33). Not very
  elastic overall, but high-income commuters the
  elasticity is higherwhy?
• -Remember, more available substitutes means
  higher price elasticity of demand.

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What affects demand for transit

• Time elasticity - The demand for transit is more
  responsive to changes in the length of travel
  time. A 10 increase in the travel time reduces
  ridership by 3.9 (et-0.39). Furthermore, the
  time it takes to get to the stop is -0.71.
• -Time is moneythis cost is often more
  important than the out-of-pocket costs.

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What affects demand for transit

• Value of time - the average commuter values the
  time in transit at half their wage. This means
  that the average commuter would be willing to
  spend ½ of their hourly wage to avoid an hour in
  transitthe value of time spent going between
  home and the bus stop (or work and the bus stop)
  is valued at 3 time more or 1.5 times their
  hourly wage.
• -For higher wage commuters, the costs are very
  high when viewed this way.

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Modal Choice and Time Costs

• In SF, the out-of-pocket cost of operating a car
  is substantially more expansive than either
  transit choice.
• Time cost of collection
• Time costs of the actual travel
• Time cost of distribution
• Once ALL time costs are factored inCars actually
  are substantially less expensive than transit
• What if you have a very low incomewhat happens
  to the value of your time in this table?

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What improvements could help improve ridership?

• Location of stops/stations (closer to housing and
  work centers, lower collection costs)
• Scheduling (more often, less wait time)
• Express routes (fewer stops, faster travel)
• 1 3 are working in opposition to each other.
• Commuter rail has few stops, but high collection
  costs.
• Bus has low collection costs, but more frequent
  stops.
• BART integrates both of thesebuses and other
  transit gets commuters to rail station, then
  express to work in SF.

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Modal Costs May Vary

• Capital costs (rail vs non-rail, rail high)
• Operating costs (rail high)
• Pollution costs (bus high)
• Time costs

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In a market, what do economists use to determine
the efficient level of production. MRMC,
right?! If all fares are the same price,
MRPrice, so PriceMC Because of declining MC,
Ave. Costs are below MC For efficient amounts of
transit A SUBSIDY IS REQUIRED!!!
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Public Subsidy of Transit
Total subsidy for mass transit in 2002, 23.2
billion. About 13.8 billion is for operation
expenses. In the graph, the higher the bar, the
lower the subsidy. Heavy rail receives the lowest
subsidybus and light rail, the highest.
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Why do fares no longer cover costs?

• In 1960, transit actually made a profit (on
  average). What happened?!
• Fares have been kept low to attract riders
• Wages have gone up for transit workers
• Sprawl means transit has to cover more ground
• Transit labor productivity declined6 more
  riders since 1960, but twice as many workers.
• MORE PEAK TRAFFICyou have to build for peak
  (like with power generation), so, average costs
  during non-peak times are higher.

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Residential Density
Heavy Rail Density Required
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