Wednesday, December 21, 2005

New York City's Quality of Life During the Public Transit Strike

After interviewing an embedded reporter (my father) about how New York City’s Public Transit Strike has affected this city's quality of life, I would like to ask some questions and make a few observations.

1. What is the marginal increase in worker's commute times? How does this increase vary as a function of a person's income and commute schedule? My father is a doctor. His day starts at 8AM and usually ends at 9PM. After the first day of the strike, he is not having trouble finding a cab. But, the cabs now have multiple people in them and this slows him down. In addition, since the subways are not operating there is more traffic on his route and this increases his commute time.

2. During this time of high demand, how could the taxi market be made more efficient? The current problem is that holding commute zone constant, everyone is paying the same price for a taxi ride. If high value of time people could signal that they are willing to pay more for a cab ride, how much would this reduce the deadweight loss of this strike? I'm making the obvious point that there is not enough price discrimination taking place right now and this introduces inefficient queing for cabs. Sticky prices might have excited Keynes but I'm Kahn, not Keynes. To reduce search costs for cabs perhaps a co-ordination device is needed. Permit me to suggest one. If you are willing to pay a premium for a cab, you should wear a Krugman mask and beard. This would differentiate you from other ordinary buyers of this product.