Can Variable Transit Fares Increase Equity?

Campaigns to introduce what activists call “fair fares” on mass transit systems have recently taken root in U.S. cities. The idea behind these initiatives is to introduce a pricing system that is less regressive in order to promote equity for low-income riders. Most major U.S. public transit systems, including New York City, Chicago and Los Angeles, rely on a fixed-fare pricing model. Because these systems charge the same fare regardless of distance traveled or time of day, activists have perceived that low-income commuters living in the inner city might pay more per mile than affluent commuters traveling from suburban neighborhoods to traditional nine-to-five jobs. A new paper published in Case Studies on Transport Policy investigated these assertions and modeled alternative fare structures.

In “Fair Fares? How Flat and Variable Fares Affect Transit Equity in Los Angeles,” University of Oregon professor and urban planner Anne Brown examined transit equity in Los Angeles. Brown analyzed data from the 2012 California Household Travel Survey (CHTS) to establish links between travel patterns and household income. She used these links to evaluate how equitable Los Angeles County Metropolitan Transportation Authority’s (LA Metro) flat-fare structure is in comparison with several variable pricing models. The alternatives to the flat fare that Brown evaluated include fares that change based on the distance traveled (with and without a minimum/maximum fare), time of day, mode of transit, group (senior citizens or students), and a combination of distance-based and time-of-day variability.

Brown’s initial analysis of CHTS trip data revealed some patterns that are central to understanding how transit fares impact people and communities. Consistent with previous research, she found that low-income transit riders in Los Angeles are substantially less white, have lower levels of educational attainment, are less likely to be citizens, and are more frequently without access to a car than their higher-income counterparts. Brown also showed that high- and low-income transit riders take roughly the same number of transit trips, on average, but low-income riders disproportionately travel outside of the peak period. Lower-income riders also cover significantly shorter distances per trip, typically relying on local buses.

Using this information, Brown considered which income group bears the burden under each fare structure. Flat fares are the least equitable on a cost-per-mile basis, with low-income riders contributing 29 percent more to the aggregate fare revenue per mile traveled than high-income riders. Of the alternatives studied, distance-based fares in combination with off-peak discounts were the most equitable. Under this model, low-income riders would pay seven percent less of aggregate revenue per mile traveled and the lowest per-mile fare. Interestingly, while the percentage of the aggregate fare paid is reduced for low-income riders—improving relative equity—fare structures using distance-based pricing where fares also have a price floor and ceiling or vary by mode actually increase the real per-mile cost of transit. Accordingly, Brown concluded that such programs are still regressive.

Brown also discussed the role that monthly fare cards may play in transit equity, highlighting an avenue for further study. Her analysis of CHTS data revealed that low-income residents make significantly less use of monthly passes. The purchase of a monthly pass results in a lower per-trip cost than paying for each ride individually, but because wealthier riders are more likely to take advantage of the discount, such passes act as a regressive mechanism. Poor city residents, who may not be able to afford the initial cost of a monthly pass, actually pay more in the end. Accounting for this disparity is crucial for developing a truly equitable fare program.

Brown’s paper generally validates concerns about the equity of LA Metro’s flat-pricing scheme. But more importantly, it lays a foundation for further research on fare systems in other cities where travel patterns might yield different results. One might imagine that in older, more centralized cities such as New York or Chicago, low-income residents could actually travel greater distances on transit than wealthier residents, especially where inner cities have rapidly gentrified, pushing displaced people to less expensive neighborhoods on the periphery. In these cases, it is certainly possible that fixed fares are actually more equitable than they are in decentralized Los Angeles. Ultimately, the equity implications of variable transit fares must be more fully investigated before we can draw any definitive conclusions.

Article source: Brown, Anne E. “Fair fares? How flat and variable fares affect transit equity in Los Angeles.” Case Studies on Transport Policy (2018).