What Do You Know? Competition Improves Taxi Services.

Studies showing city folk getting better treatment.


"Thank you for not trying to actively get me killed, today!"
Credit: pennuja / photo on flickr

File under "You don't say":

The Technology Policy Institute's Scott Wallsten, in research presented this week at the annual meeting of the American Economic Association, finds evidence in New York that the number of complaints per taxi trip there has declined as Uber has expanded in the city. In Chicago, complaints about air conditioning, "broken" credit card machines and rude drivers have fallen as well with the recent rise of alternatives to taxicabs. …

As Uber grew more popular in New York (a trend Wallsten corroborates with Google Trends data), complaints fell, even controlling for factors like the weather that might affect taxi service.

Source: The Washington Post.

The numbers show the change in complaints vs. hundred thousand rides, so it's not a matter that complaints have dropped just because people stopped riding taxis in New York. People who are riding taxis are complaining less frequently.

Emily Badger notes that Chicago's numbers aren't based on the total of taxi trips, so it's not clear whether the change is connected to a drop in taxi use. But in both cases taxi passengers appear to be seeing better service.

This is obviously a good sign, not just for passengers, but for the health of the taxi services themselves. When ride-sharing services began intruding into the cartel-controlled taxi industry, responses showed how little the industry understood—or cared—that their success depended on how they treated their customers. It didn't matter until passengers had easier and cheaper alternatives. Then they responded with absurd ideas like strikes, a concept that doesn't work at all when the whole point is that your customers are tired of dealing with your wretched behavior and are now actively trying to avoid you.

As a result, all customers may end up getting treated better, even those who continue riding taxis rather than shifting to Uber or Lyft.

It reminds me of a time several years ago when I lived in a community that had no charter school presence. The school district and school board resisted any effort for charter programs to be created within the school system, despite unhappiness expressed by parents over the status quo. Eventually, an established charter system managed to expand into the community, overcoming resistance because it had an actual history of performance to point to.

Then, about a year after the charter program established itself, and other charter programs started approaching the community, the school district's high school announced a host of planned improvements to provide more choices for students and parents, even including online courses for credit. Because of the challenge and competition provided by the alternative charter program, students were getter better options even if they stayed in their public schools. The schools had every incentive to up their games (if they weren't able to stop the charter schools), because otherwise they'd lose state per-pupil funding.

Read more about the taxi study here.