![econlifelogotrademarkedwebsitelogo[1]](/wp-content/uploads/2024/05/econlifelogotrademarkedwebsitelogo1.png#100878)
Is the Middle Class Still Shrinking?
June 3, 2024
Why a Right Whale Slow Zone Is Like Less Mining in Alaska
June 5, 2024
Last week we said when not to nudge.
Today, we need one.
Fare Evasion
Taking a New York City subway, close to 13% of all riders don’t pay while it’s 30%-50% for the buses. That means a whopping 800,000 NYC subway and bus riders are fare evaders! For 2022, the revenue loss was estimated at $690 million. In addition to revenue that the transit system needed, evasion “tears” the city’s social fabric
To avoid paying, people (of all ages and socioeconomic groups) jump over turnstiles. Riders also squeeze through the turnstile or slip through open emergency exit doors.
The rationales range from an inability to afford the fare to a political ideology that says it is unfair. Others believe the legacy of free rides during Covid stuck. A third possibility takes us to an eroded social norm.
NYC might have turnstiles that resemble these:
So, knowing the possible causes, how to solve the problem?
There is actually a Blue Ribbon Panel on Fare Evasion that implemented some new policies and continues through a Fare Evasion Lab. Their initiatives included cheaper MetroCards for “eligible New Yorkers.” Also, they’ve added unarmed gate guards and upgraded turnstiles to prevent “backcocking” (a Panel word).
Our Bottom Line: Incentives
The incentive is the bedrock of the market system. With demand, we have the incentive to spend less while the supply side looks for profits. When the two meet, we get an equilibrium price. Similarly, incentives shape how we respond to a government’s fiscal and monetary policies. And sometimes those policies become nudges that shape our behavior–like paying our subway and bus fares.
A behavioral economist would say the Blue Ribbon Panel was giving us a nudge. Knowing that nudges are incentives that shape our behavior, I have another suggestion. In the UK, I can recall Nudge Unit letters that were sent to tax scofflaws. Apparently, because the letters said most citizens paid their taxes, many of the individuals that had not paid sent in their checks. Would similar subway and bus signs work to reconstruct a tattered social norm?
My sources and more: Thanks to Bloomberg, here and here, for alerting me to the fare evasion problem. From there, I found this MTA solution.
