In addition to proposing a small sales tax increase to expand bus service, King County is also proposing to raise bus fares by an average of 75 cents over the next decade. That got me scratching my head about the bizarre way that we price bus rides. The incentives are precisely the reverse of what they should be.
Leaving aside discounts for children, seniors, and the disabled, the fare structure is pretty simple. You pay $1.25 for a ride anywhere in King County. But if you ride during peak hours—i.e. commuting hours—then you pay $1.50 if you stay in one zone (within the city of Seattle, say) and $2.00 if you travel through two zones (like from downtown to Redmond). But why on earth should riders pay more during commuting hours? If anything, riding the bus during the commute should be cheaper.
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The cost of running a bus is essentially the same whether it is carrying 1 passenger or 100. Fuel economy doesn’t vary (much) with additional passengers. The driver’s wage doesn’t change. Neither do the operational costs of maintenance, bus storage, and so on. What varies is the revenue.
Imagine a city bus during the day with 10 riders each paying $1.25. The fare box is collecting $12.50. But during commuting hours if 40 people get on the bus paying the same fare, then the fare box is taking in $50. And because commuters actually pay more, $1.50 per ride, the fare box is taking in $60 to provide the same service that it was providing earlier in the day for less than one-quarter of the revenue.
Instead, why shouldn’t commuters collectively pay the same as the daytime riders—$12.50? That would mean that each commuter paid just 31 cents apiece. Even if each commuter paid 50 cents, for a total of $20, the commuters would still be a windfall to the bus company.
Of course one reason why the price is higher is that raising the price during high-demand hours is a good way for bus companies to generate revenue. But the added revenue comes with a cost: fewer people ride the bus.
And that’s related to a second reason why it costs more to commute by bus: an age-old transportation planning principle called congestion pricing. Raise the price for a desirable good—such as a freeway lane during rush hour—and the economic principle of demand elasticity says that fewer people will use the good, thereby reducing congestion. This works pretty well in practice. When faced with higher costs a certain number of people will change their behavior—driving during non-expensive hours, switching transportation modes, or avoiding trips.
Unfortunately, congestion pricing for buses works just as effectively. People stop riding the bus at precisely the time when bus riding is most convenient. Commuting is, in fact, the ideal form of travel for buses.
Because jobs are often clustered in centers, commute trips are easier to serve with transit than are the diffuse trips to stores, friends, or recreation. And because the parking costs in job center are often high, commuters are already willing to try other forms of travel besides driving. And commuters normally don’t need to carry much—at most just lunch and gym clothes—as they do when they travel to, say, the grocery store. Commute trips represent only about one-quarter of all trips, but they are the easiest trips for people to get people out of their cars.
Cities and counties ought to have a large interest in getting people to ride the bus. Buses are easily one of the most energy-efficient, space-efficient, congestion-efficient, city-friendly, cheapest, and safest modes of commuting. When it’s most practical to do so, bus riding ought to be encouraged, even—dare I say it—subsidized. But under the current pricing system, the fare box is actually used as a disincentive to getting on the bus. Raising the price, as King County is proposing to do, just makes the problem worse.