Monday, March 06, 2006

Should public transport be free?

An economist advocating free public transport, or even that we should be paying people to use it?

That’s what Professor Joshua Gans does in his blog. Professor Harry Clarke provides a response in his blog.

This debate was sparked by a front page article in Melbourne’s Age newspaper suggesting that Melbourne’s public transport could be made free at a cost of around $340 million a year, boosting usage by 30% and reducing pollution, greenhouse emissions, accidents and congestion in the city.

Interestingly enough, public transport advocates don’t necessarily support the idea, believing that the money could be better spent improving the service than making it free.

Update (Tues 7/3):

Joshua Gans has an op-ed piece on this in today's Age.


Rob Dawg said...

I'm not sure if this is a case of two peoples separated by a common language but I think the use of "public transport" is misleading. In the US the word is public transit. "Transport" implies that we should be providing commercial delivery services for the same reasons given. Thus the point. What is it about passenger transit that it is in any way the desireable component of the transport mix worthy of special treatment? Transit enjoys special treatment merely because it has political support from three directions.

David Jeffery said...

Reasonable point Robert. Similar arguments can be (and are) made about freight - to what extent (if any) should governments provide / subsidise freight rail infrastructure to get heavy vehicles off the roads? There are externality issues there too because many fatal road accidents involve heavy commercial vehicles.

Rob Dawg said...


apartments and waiting for hand scheduled department store deliveries
just so transit makes sense again.

The question I pose: Does anyone claim transit is more
important than clean universally available water?
Why then do we subsidize the former and tax the later?

[the rest is just discussion about this question]

it ...?


Director of Welfare Services if he operated like a transit agency?

his job if he answered alarms the way the buses operate?

I vociferously support, nee advocate for

I have said that transit is unique among the
Transit is not like highway travel because there is no
massive subsidization. [There is probably a little but it isn't
of piddling subsidy leakage I mentioned earlier as long as you have
even on a bicycle.

Transit as a transportation choice is not
don't do any means testing. Does anyone claim transit is more
important than clean water and the public health issues of sewerage?
When was transit promoted to greater importance? Was this a
Proposition or Legislative law?

In the context of a public agency that loses money on every
passenger, attempts to build ridership and foster dependency looks a
lot like empire building by bureaucrats and social engineering by
transit planners.

Even welfare as a public service is based on
demonstrated need. Transit does not require demonstrate need.

calling maintenance a capital expense. The deliberate use of the
term boarding to make service figures appear larger. The depreciation

In as much as transit is an urban land use tool,
advocate for a transportation mode without demonstrating a willingness

Meryn said...

No it should definitely not be free.
Public transport doesn't have a positive externality, so it shouldn't be subsidized at all.
Driving has a negative externality, so it should be taxed to reflect it's true cost. Current research suggests a 1USD/gal gas tax to be economically optimal.

If driving gets more expensive, people will look for alternatives. But the price of public transport needs to reflects it's true cost.

Actually, also buses cause a little congestion, so bus fairs (in theory) might have to be taxed as well, only far far less then driving. It might come down to nearly zero, I don't know. But it certainly shouldn't be subsidized. Not on economic grounds.

hc said...

Joshua jumped in too soon. It was just too quick. Were the claimed benefits right? What was the cost of a 30% expansion in the system? How much of the transfer would be new traffic given low cross price elasticities.

In the original post too he argued for comprehensive pricing. This is impractical. The proposal for free transport in Melbourne would service currently well-serviced areas even better but do nothing for underserviced periphery areas.

The public transport advocates are right. This proposed 'free' scheme is a dud. Better - pricing low at close to marginal costs, a cordon and pricing the major arterials.

Rob Dawg said...


Do you have a reference? In the US the national average is about $0.40/gal and we already spend less than what is collected on enumerable costs. What externalities did you have in mind to address with the additional money?

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