Munger on urban transportation

The latest podcast on Econtalk has Duke economist Mike Munger talking about public transport, and how things have changed for the worse in Santiago after public transport was nationalized.

One of the points mentioned in the podcast talks about homogeneity in services after nationalization. Munger talks about how usage of the public transport system dropped after nationalization and people started using their cars much more. The reason, he mentions, is that earlier there were different classes of service. But the current left-of-center government decided that everyone has to travel in the same way and so the class system in buses was abolished.

This reminds me of my first ever post on the Indian Economy Blog, where I had argued that the Volvo buses in Bangalore should remain out of reach of most people. I had argued that keeping it expensive would also keep it more exclusive – which was a quality that people who would otherwise travel in airconditioned cars were looking for. It sounded quite brash, but it is the truth – “exclusivity” is a major factor that goes in to the “comfort” factor (I’m not sure if i’ve blogged it, but the three main considerations for choice of transport are cost, time and comfort).

Munger also talks about other incentive-related problems. Drivers were incentivized based on the time that they took for their trips, and they responded by not stopping at all at most stops! In Delhi, and sections of Bangalore where private buses are common, I’ve noticed the opposite effect. Buses take too much time at each stop, waiting to pick up more passengers. This leads to a massive increase in terms of travel time, and also leads to general chaos and pile-ups on the road.

Till about a year back, I used to be of the opinion that urban public transport is one thing that the government should control, however, in the last few months I’ve been doubting this view. The basic reasoning is that in case the operator is a monopoly, the time that the system will take to respond to market demands is way too high. Market-based systems, on the other hand, are much more nimble.

There are several other issues that Munger mentions in the podcast. This includes stuff like the buses being too large for some of the streets of Santiago. Apart from this, the government has decided not to run buses on a few routes because they were competing with the metro, and that has led to massive delays in terms of time taken to travel. I strongly urge you to listen to the podcast. So far, this has been the best podcast I’ve listened to on Econtalk.

The challenge would be to devise a system with both private and public participation that maximizes what I globally define as “overall traveller welfare”. This is the sum of the total “welfare” of all travellers in the city where welfare includes time, cost and comfort factors. We are at some sort of a local equilibrium currently, with most people who can afford it using private transportation. Compromises on the comfort front can result in large-scale improvements in the cost and time fronts. The challenge would be to offer a system where savings in terms of cost and? time are enough for most motorists to give up on the comfort thing. More on this will follow in a subsequent post.

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