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A Smarter Commute in the Age of Uber

Saturday, 26 July 2014 11:49 By Paul Krugman, Krugman & Co. | Op-Ed

Justin Riley, a driver for the car service Lyft, waiting to receive a request on his iPhone from a passenger needing a ride in Los Angeles. (Photo: Patrick T. Fallon for The New York Times) Justin Riley, a driver for the car service Lyft, waiting to receive a request on his iPhone from a passenger needing a ride in Los Angeles. (Photo: Patrick T. Fallon for The New York Times)

I've been following some of the discussion about smartphone-connected car services like Uber, Lyft and all that, and I have a few unoriginal thoughts. Well, strictly speaking they are original, in the sense that I haven't read them anywhere else, but surely they're out there. So this is partly for reference.

Anyway: the big benefit from new information technology-mediated car services will come if they make it possible for lots of people - and not just people in Manhattan - to forgo buying their own cars. And if you think about it, you can see how that might work.

Right now, if you live in a place without exceptionally good public transportation, it's very difficult to manage without a car. Yet when you think about it, for most people owning a car is quite wasteful. It's an expensive item of equipment that sits idle most of the time; it requires parking (and often a parking structure) both at origin and at destination; it requires maintenance and is a big hassle all around.

So reliable, quick-response chauffeur services could free many people from the need to tie up all those resources on something that they only use now and then. And from a social point of view, it would reduce the need to tie up so much capital that sits unused most of the time.

There is, however, an obvious problem: rush hour. Peak car use comes twice a day, and that would seem to dictate that we keep on hand nearly as many cars as we do now, even if they're supplied by the likes of Uber.

But here's where surge pricing comes in. If traveling during peak hours is more expensive than during off-peak hours, people will have an incentive to shave off those peaks. People who aren't commuting to work will avoid travel at peak hours; some people will find other ways to travel; some people (and businesses) will rearrange their schedules to take advantage of cheaper off-peak travel. So you can imagine a society that still relies mainly on cars to get around, but manages to do this with significantly fewer cars than we need at present.

Cars aren't the only consumer durable where something like this might work, of course. People in New York don't need refrigerators (and in particular freezers) that are as big as those in the suburbs, because it's so easy to pop around the corner for groceries; online ordering and delivery could produce a similar effect outside the city. But cars are surely the big prize.

Again, I'm sure this has been worked out by someone somewhere. But I'm having fun thinking about it.

© 2014 The New York Times Company
Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.
Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008. Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including "The Return of Depression Economics" (2008) and "The Conscience of a Liberal" (2007).
Copyright 2014 The New York Times.

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A Smarter Commute in the Age of Uber

Saturday, 26 July 2014 11:49 By Paul Krugman, Krugman & Co. | Op-Ed

Justin Riley, a driver for the car service Lyft, waiting to receive a request on his iPhone from a passenger needing a ride in Los Angeles. (Photo: Patrick T. Fallon for The New York Times) Justin Riley, a driver for the car service Lyft, waiting to receive a request on his iPhone from a passenger needing a ride in Los Angeles. (Photo: Patrick T. Fallon for The New York Times)

I've been following some of the discussion about smartphone-connected car services like Uber, Lyft and all that, and I have a few unoriginal thoughts. Well, strictly speaking they are original, in the sense that I haven't read them anywhere else, but surely they're out there. So this is partly for reference.

Anyway: the big benefit from new information technology-mediated car services will come if they make it possible for lots of people - and not just people in Manhattan - to forgo buying their own cars. And if you think about it, you can see how that might work.

Right now, if you live in a place without exceptionally good public transportation, it's very difficult to manage without a car. Yet when you think about it, for most people owning a car is quite wasteful. It's an expensive item of equipment that sits idle most of the time; it requires parking (and often a parking structure) both at origin and at destination; it requires maintenance and is a big hassle all around.

So reliable, quick-response chauffeur services could free many people from the need to tie up all those resources on something that they only use now and then. And from a social point of view, it would reduce the need to tie up so much capital that sits unused most of the time.

There is, however, an obvious problem: rush hour. Peak car use comes twice a day, and that would seem to dictate that we keep on hand nearly as many cars as we do now, even if they're supplied by the likes of Uber.

But here's where surge pricing comes in. If traveling during peak hours is more expensive than during off-peak hours, people will have an incentive to shave off those peaks. People who aren't commuting to work will avoid travel at peak hours; some people will find other ways to travel; some people (and businesses) will rearrange their schedules to take advantage of cheaper off-peak travel. So you can imagine a society that still relies mainly on cars to get around, but manages to do this with significantly fewer cars than we need at present.

Cars aren't the only consumer durable where something like this might work, of course. People in New York don't need refrigerators (and in particular freezers) that are as big as those in the suburbs, because it's so easy to pop around the corner for groceries; online ordering and delivery could produce a similar effect outside the city. But cars are surely the big prize.

Again, I'm sure this has been worked out by someone somewhere. But I'm having fun thinking about it.

© 2014 The New York Times Company
Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.
Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008. Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including "The Return of Depression Economics" (2008) and "The Conscience of a Liberal" (2007).
Copyright 2014 The New York Times.

Hide Comments

blog comments powered by Disqus