Sunday, February 26, 2012

Los Angeles and the 3%

Forget the 1% and OWS.  The new key number in life for the people of Los Angeles is 3%.   In Los Angeles, it is easy to evade paying for riding the subway.  Turnstiles are unlocked, security is lax and commuters often hop over or pass through undetected (source).    Why has the LA Metro chosen not to invest in the basic public transit infrastructure (such as monitoring turnstiles) that New Yorkers take for granted?  The answer is, as reported by the LA Times, that the Metro Authority assumes that only 3% of riders are evading fares!   Talk about the honor code!  Gary Becker wouldn't be surprised to find that there is more crime where there is less punishment.   The honor code is honorable but unreasonable.

During this time of public sector budget deficits, this "free pass" adds up to a fair bit of redistribution to those who evade. Who chooses to jump the turnstile?   This would be a good study that an economist and sociologist could write together.  I'm guessing that those who evade are more likely to be poor and young but I apologize for my profiling.   In LA, the base fare is $1.5 so if you evade twice a day and work 200 days a year, that's $600 that you have chosen not to give the city of LA as you enjoy its services for free.

For those economists who measure the CPI, I think that this price of transportation should be factored in.  If the poor are more likely to evade, then they face lower transportation prices than people who drive.  There is an old literature in economics studying whether there is less consumption inequality than there is income inequality.  This could happen if the poor face lower prices for goods.   Here is a paper by Cutler and Katz that rejects the claim that consumption inequality is lower than income inequality.


2 comments :

Kelcie said...

I agree that fare evading is probably more common than LA Metro assumes. I'm not so sure about your profiling. Paul Piff at UC Berkeley just published a paper in the Proceedings of the National Academy of Sciences demonstrating experimentally that upper class people are more likely to cheat. Here's a link to a useful summary:

http://www.physorg.com/news/2012-02-upper-class-people.html

Kelcie
UCLA

Bart Reed said...

This post is completely inaccurate and very unprofessional. First, there are no locked gates at Metro, so there is nothing to hop over. It suggests that the writer has never been on the LA Rail system.

why hasn't Metro invested in fare infrastructure? Adding staffing at each station on a yearly basis is in the millions of dollars. Fare evasion at the same station is the hundreds of thousands of dollars. Spend a million to recover $250,000 is not good business practice.

Making the jump that the poor evade the fares shows even less knowledge about the system. To ride a bus, you almost always have fare media such as a tap card, which is good between different modes of the system. Bus riders buy a $5 day pass or have a monthly pass. Few pay individual fares on each vehicle. Why is the fare evasion rate so high? It really isn't. The deputies found that a huge amount of riders simply were not taping, but had valid prepaid fare media.

The average fare paid by riders is .70, not $1.50. and statisticly evading the fare 400 times and not being caught is just unlikely. Since fare enforcement is higher at high volume stations, sneaking is possible, but I see people getting caught all the time.

The fare gates came, because the technology supplier bought off the board, who don't understand that spending $180 million in fare enforcement equipment and $30 million a year to staff stations is slightly more than losing about $3 million / year in fare evasion. The economics are actual at Metro, not any theory.

It would be nice if there was some actual research before this piece was written. Shame on you.