In today's edition of Houston's newspaper of record, transportation beat writer Rad Sallee notes that Harris County Metro has achieved record boardings. I had noted that a while back on Tory's blog, but I have yet to post the latest boardings statistics on my spreadsheet. Fare collection is also up. In general, I like this.
The easy explanation for this is that we have $3 per gallon gasoline. I posted my observations on Metro and posed an observation to an internet board which I belong to in conjunction with another poster's remarks that transit ridership for SEPTA in Philadelphia is also up, mostly on its commuter routes. The observation I posed was, whether price increases in gasoline or other transportation fuels will drive increases in transit patronage, and if so then how much?
The result was a fascinating conversation which centered around such issues as the marginal rate of substitution of motor vehicle use to transit, the income elasticity of demand, and the cross price elasticity of demand for transit use. The general thread of the discussion centered on the marginal cost of transit trips.
The level of discussion was of a far higher quality than that which I normally encounter when visiting local internet boards and blogs, given that fair number of these people are transportation professionals and journal published Ph.D's with no particular ax to grind. Well, they have no other ax to grind other than the simple wish to spend public monies only if absolutely necessary, and then as cheaply as possible lest their profession be given a really bad name. Many of these people are outraged at some of the projects which have been fobbed off on the taxpaying public.
The result of my posting of the Metro statistics and the other gentleman's SEPTA story from Philadelphia resulted in a discussion thread that went something like this:
One of the opening posts in the discussion thread was made by Steven Polzin:
In general gas prices would be a meaningful mode choice factor for a small number of all travelers and their impact on overall ridership could easily be overwhelmed by local factors such as economy, service changes, fare changes, parking cost changes, etc. Remember some of the impact of gas prices is not economic but folks showing a concern about global warming, energy independence, sending more $ to the mid east etc. that influence decisions. Thus part of the impact of high gas prices, to the extent that it exists, may bean emotional response not an economic one. The media and to a lesser extent the industry have fed a perception that gas prices have/will contribute to greater transit ridership. Looking at the numbers would suggest caution when setting these expectations.
The thread of the discussion went into such topics as how much to people value their time verses what amounts of money they were willing to pay in order to get somewhere more quickly and conveniently. Discussion also centered on whether longer transit trips were part of the equation of increased transit patronage.
Mills and Hamilton cited that Keeler and other researchers in the 1970's whose work indicated that people valued their commute time at roughly 30 - 50 percent of what their wage rates were. Charles Lave came to a similar conclusion which he published in this 1979 article in The Atlantic an article which discussed the high gasoline prices of the era when combined with various governmental laws which rationed gas through price ceilings and caused people to wait in line for gas instead:
But an increase in waiting time is, in fact, an increase in the real cost of gasoline: studies of transportation choice have established that commuters are willing to pay about 40 percent of an hour's wage to save an hour of travel time. That is, the increase in waiting time was equivalent to a real price increase of 50 to 100 percent, and motorists responded by reducing their weekday travel by about 15 percent. If this had continued, their long-term response would have been even greater since they would have had the time to make more important adjustments, such as changing automobiles or residences.
Mills and Hamilton go on to state that people value wait times, transfer times, and access times at much higher rates than those of times actually spent in transit. In particular, they state that wait times for vehicles are absolute killers for patronage, being put at some 2-4 times greater than one's average wage. Clearly one way to increase transit patronage is to make sure wait times are cut down to a minimum. The other is to find ways to increase the travel speeds of the vehicle, perhaps through bus routes with fewer stops or through dedicated bus lanes. It also points to the idea that people are willing to pay some rather high fuel prices before giving up their vehicles.
But what about the idea that higher fuel prices will cause people to abandon trucks and cars and instead patronize mass transit? One big clue for whether people will do this can be to see what has happened in Europe. This BBC story from 2003 indicated that outside London, only 11% of British people got to work by public transport, only 5% of commuting was by national rail. Only 3% cycled to work, while one in 10 walked. Prices for gas in Britain in 2003 were about $6.50 per gallon, while today they are about $7.50 - $8.00. The per capita income in Britain is some 10-20 percent lower than here in America, so there is not a terribly great difference on the income elasticity of demand figures.
Intriguingly, Metro's increased patronage numbers may be coming from the fact that since Houston has a booming economy, Houston may be drawing in more poor people in addition to wealthier income groups. In article in the New York Sun, noted urban economist Edward Glaeser writes that New York draws a lot of poor people and he states that one of the reasons why it does is because it has a large public transportation network. In a more formalized paper published recently in The Journal of Urban Economics (which I subscribe to), Glaeser speaks more thoroughly to the issue of the role of public transportation drawing people to cities and urbanizing poverty. Amongst the amazing interpretations of a model he works through, he writes that:
Let WRich be a rich person's opportunity cost of time, F be the fixed time cost of public transportation, and C be the fixed time cost of driving you get:
...
Alternatively, if WRichF < C then some rich people will take public transportation. In this case, a four ring city can be one outcome. In the inner ring, the rich take public transportation. In the next ring, the poor take public transportation. In the third ring, the rich drive and there may be a fourth ring where the poor drive.
Glaeser finds that proximity to public transportation does well at predicting the location of the poor in cities.
My thought is that if fuel prices were to increase to circa $7-10 per gallon, that Metro's patronage figures would increase from 4-5 percent of work trips to perhaps an overall range of somewhere around 10 percent. Perhaps Metro's annual boardings would increase to 200-300 million per year from the 100 million they are at now. However, those numbers are still not enough paying passengers to enable Metro to stand on its own two feet.
This is frustrating to me because my real dream for public transportation is that I want public transportation to be able to pay for itself and not have to be considered something that can only be provisioned by government. Houston had private bus service operated by Bernard Caulkins all the way into the early 1970's, when the Arab oil embargo caused gas prices to climb 4 times. That in turn required a doubling of fares which caused patronage to drop by one third. Still, despite a sales tax regime that approaches half a billion dollars, Metro struggles to draw as many riders as Mr. Caulkins did in the 1960's. Once Metro was voted into existence, one of the first items on the agenda was to start building trains everywhere. Since then, we have gotten so used to this crap that nobody anywhere ever seems to have remembered how the world once really was.
Private provision of public transportation would destroy the rationale for taxation. It would also:
1) Put paid the question once and for all as to whether rail or buses are cheaper to own and operate.
2) Destroy the rationale for the 1,500 foot radial condemnation zones around train or BRT stations that Metro now wields and the potential for political corruption.
3) Put an end to the ever twisting and changing rationales that the public wants out of public transportation. Instead, a private actor would simply concentrate of providing good service and making a profit while moving people from one place to another. Tory alluded to this when he wrote:
Metro is a public agency subject to the will of the voters. It started out as subsidized alternative transportation for the poor and disabled. Then people wanted commuting alternatives (the HOV buses). Then they wanted local rail. Now, given the local boom of $100 oil, they'd like to see some freeway congestion reduction by attracting more riders out of their cars.
4) In a similar vein, getting government out of the provision of public transportation would put an end to the political battles where various groups try to capture the agency for their own purposes, whether they be money and patronage, urban reengineering, downtown groups wanting rail lines to cover up for the fact that their property is expensive, for shelling out to run rail to airports through neighborhoods where Metro previously refused to place more bus stops because of a lack of patronage, $300 million intermodal transit temples, or any other idea they may come to mind.
5) Public transportation would not be considered a jobs program with the specter of unionization by government workers who can't lose their jobs.
6) A private bus company would probably buy cheaper equipment and look to do things like put maps at bus stops. We would no longer see large 50 seat buses running around empty anymore.
7) One thing people might remember was that in 1955, Rosa Parks refused to give up her seat on a bus that was operated by a private bus company. Blacks then protested the bus company by refusing to use the company's services. If blacks were to try that same political tactic today over some issue, Metro could care less. It doesn't help that the Black elite of today is in on the handouts for contracts.
8) The compadres at BlogHouston would not have Dick Nixon Metro to kick around anymore. I could write about more interesting issues, like when cellulose ethanol will become economically viable as a transportation fuel.
More than anything, privatizing public transportation would take the politics out of the equation, which would bleed off all of the intensity of the entire debate.
And so it goes. It's getting late and tomorrow's another day.
Wizard