Hall: How is ride-hailing changing cities?

Head shot of Jonathan Hall
Professor Jonathan D. Hall

UTTRI associated faculty Professor Jonathan Hall received SSHRC Insight funding of $85k for his proposal “Ride hailing, public transit, and consumer welfare” for a period of two years.

The objective of the research project is to explore how the rise of ride-hailing, such as Uber or Lyft, is changing cities and and the lives of those living there.

In particular, the research addresses two questions:

  • How does ride-hailing affect public transit?
  • What are the consumer welfare effects of ride-hailing?

Both of these questions are contentious, with valid theoretical arguments on either side.

Proposal summary

Uber, Lyft, and other ride-hailing companies have transformed the transportation marketplace in over eight hundred cities around the world. These firms’ entry into cities has been controversial. They have been credited with providing a reliable and affordable transportation option, serving neglected areas of cities, and providing meaningful employment. Against these benefits, however, they have been accused of being unsafe, creating congestion, destroying stable jobs, and flouting the law. Governments have struggled to decide how to regulate these companies, in part because of a poor understanding of the actual economic effects of ride-hailing companies.

The proposed research program intends to increase our understanding of how ride-hailing is affecting cities. The first phase of the project will estimate how ride-hailing affects public transit. Theoretically, this is unclear since while Uber is an alternative form of travel, it also can increase the reach and flexibility of public transit. To measure the effect of Uber on transit, we will use estimate how the introduction of new subway stops affects Uber ridership. This will shed light on whether Uber and public transit are complements or substitutes. This project will involve Uber’s proprietary data. We have provisional approval from Uber to access their data, and are currently working with the legal team at the University of Toronto to sign a formal data usage agreement.

The second phase will estimate how much residents value the benefits they receive from ride-hailing. It will do this using the Transportation Tomorrow Survey, a comprehensive travel survey conducted in the Greater Toronto and Hamilton Area every five years. Specifically, by comparing how peoples’ choices change before and after the introduction of ride-hailing, we can estimate how much it would have cost to make their current set of trips before ride-hailing existed, and what it costs them now. This allows us to estimate how much better off they are as a result.

The knowledge generated by this research will benefit four constituencies. First, academics beyond our own field of economics are interested in these results, with researchers in transportation engineering, geography, urban planning, and urban studies all benefiting from the knowledge this research generates. Second, local governments will value the information as they determine how to regulate ride-hailing. Third, transit agencies will be better able to plan for the future and better able to integrate their service with ride-hailing firms. Finally, civil society will benefit from the public discourse that arises from this project, operating through newspaper articles and public events.