Public Transit Should Be Uber’s New Best Friend

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The two combined could takes personal cars off city streets.

If Uber is worth its $50 billion valuation, it will have to do more than win over the market historically occupied by the taxi and limo industry — it will have to identify new types of customers.

The biggest potential market is among people who own their own cars: The average American household spends around $8,500 on personal vehicles per year; multiply that by 125 million households, and you have a market worth in excess of $1 trillion per year. Persuading even a small fraction of households to give up their cars for Uber could be very lucrative for the company.

But if Uber is to achieve its goal of becoming cost-competitive with car ownership, it may have an unlikely ally: public transit. A combination of (mostly) public transit along with some Uber rides can be affordable for a wider range of customers than Uber alone.

New York City is the biggest market for public transit in the country — in fact, about 40 percent of all public transit trips in the United States occur in the New York metro area. And as it happens, we have some very good data on how New Yorkers are using Uber, public transit and other services. Earlier this month, we published an analysis based on about 93 million Uber and taxi trips in New York from April to September 2014, including information about Uber trips that we obtained via a Freedom of Information Law request. That analysis focused mostly on the differences between Uber and taxi coverage: As compared with taxis, for instance, Uber use is proportionally higher in Brooklyn.

But in New York overall, there isn’t much difference between the people picked up by Uber and the ones who ride in cabs. Uber and taxis both disproportionately serve wealthy areas within Manhattan or just across the bridges and tunnels from it. What’s more, these customers usually live in neighborhoods with abundant public transit access also. In other words, the combination of public transit and for-hire vehicles is something that New Yorkers have been relying on for years.

Take a look at the maps we’ve produced below, which track pickups by Uber and taxis on a per capita basis, census tract by census tract.1 The data includes an adjustment for the ratio of residents to workers in each census tract, with the goal of identifying rides that originate from a person’s place of residence rather than where they work, shop, go to school or spend leisure time.2

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s you can see, Uber and taxi usage have a lot in common. The correlation coefficient between per capita Uber use and per capita taxi use3 is 0.89, not that far from a perfect correlation of 1.

We can also consider these differences by various geographic and demographic categories on a scale where 100 represents average per capita residential usage for each service.4 Here’s a comparison of how often cabs and Ubers are used by borough, for example.

As of mid-2014, the average Manhattanite used Uber about 3.6 times as often as residents of New York overall, and taxicabs about 4.3 times as often. Remember, our method seeks to adjust for the fact that many of the pickups in Manhattan are from commercial rather than residential locations; without that adjustment, the differences would be even greater. The closest thing to an Uber borough is Brooklyn, where cabs were used 70 percent less often as in the city overall, but Uber rides were used just 20 percent less often. Otherwise, the differences between the services are quite modest. In Queens and the Bronx, Uber and taxi use is fairly proportionate. In Staten Island, which is not connected directly by road to Manhattan, both Uber and taxi use is extremely rare.

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But while there are some geographic differences in Uber and taxi usage, the demographics of their passengers seem to be mostly the same. In particular, passengers of both services are highly concentrated in wealthier areas. A resident of a census tract where the median income is $135,000 per year takes about 20 times more Uber rides and 20 times more taxi rides than one where the median income is $35,000, for example.5

This is a reminder that a taxi or an Uber is a big expense. Given the current fare schedule for yellow cabs, a 5-mile journey in a New York taxi might cost $20, including a reasonable tip and depending on traffic. (Pricing for one of Uber’s lower-cost services, UberX, is pretty similar.) Subway rides cost $2.75, by contrast — about $17 less. If traveling by taxi saves a passenger 15 minutes — a possibly generous estimate given that the subway is sometimes faster than a taxi stuck in traffic6 — that means she must value her time at $68 an hour or more to make taking the cab worthwhile, equivalent to her earning an income of about $140,000 per year from a 40-hour work week. For a well-paid lawyer or banker, that’s nothing, but the median household income in the city is closer to $50,000.

The subway is the quintessential New York mode of transportation

How big is the for-hire car market in New York? Our data set includes 93 million taxi and Uber rides over a six-month period in 2014. Double that and round up,7 and you get to about 200 million rides per year. By contrast, the New York subway provided 1.75 billion rides in 2014, about nine times as many. There were also almost 800 million MTA bus rides8 in 2014.

Public transit use, in contrast to taxi and Uber rides, is relatively egalitarian in New York. In census tracts where per capita income is $50,000 or less, 62 percent of workers commute by public transit; but so do 53 percent in tracts where per capita income is $100,000 or higher.

For a few upper-middle-class and wealthy New Yorkers, Uber and taxi service may serve as a substitute for comparatively poor subway service. For instance, taxis and Ubers are used especially heavily on the far west side of Manhattan between Houston Street and 59th Street, an area not currently well-served by the subway (although service will improve following completion of the No. 7 line extension). Taxi and Uber use is also high in areas with crowded subway service, like on the Upper East Side along the Lexington Avenue line9 and in Williamsburg along the L train.

But for the most part, Uber and taxis provide service in places where public transit is a good option also. We collected data on how many subway lines10 are located within a quarter-mile of a census tract’s boundary line in any direction.11 In census tracts that have no nearby subway lines, taxis are used only 27 percent as often, and Ubers 36 percent as often, as in New York overall. Use of taxis and Ubers is markedly higher in census tracts with even one nearby subway line, and it continues to increase until you get to the handful of census tracts saturated with 10 or more nearby subway lines. The differences hold12 even if you account for the distance from Midtown Manhattan: Where public transit is poor, taxi and Uber service tend to be uncommon also.

Read the full story at Five Thirty Eight

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