When is Uber cheaper than a taxi?

Uber appears more expensive for prices below 35 dollars and begins to become cheaper only after that threshold,” say Mascolo and co.

That is for New York City and the data set appears pretty impressive.  The article is here, the original research here, and for the pointer I thank Michelle Dawson.

Comments

Interesting -- in Sydney all my UberX trips have been cheaper than a taxi. My data set (of routes where I know the taxi fare) is in single digits however :-)

mmh. The relevant comparison is the low end of the bar with the red line. Uber is also cheaper for rides<$35

Eyeballing the graph shows Uber is slight more expensive under $35, but not by much. However above this amount Uber is much cheaper.

Actually in Sydney it is impossible for (non-surged) uberX to be more expensive than a Taxi (as long as your driver uses a similar route)

UberX is $2.50 + $1.45/km, a taxi is $3.60 + $2.19/km (and after 10PM a taxi is $6.10 + $2.62/km)

The newspapers here love anti-Uber stories -- there was one horror story on New Year's Eve of a woman who had taken an Uber and ended up with a much higher fare than a taxi. No where did the story mention that she had chosen Uber Black rather than uberX.

It's equal below 35 $, then Uber loses above this amount, just eyeball the graph in the article. This is an alarmist piece, not backed by the actual evidence.

They have a local version of "Uber" here in Manila, Philippines, but no cabbie I know of wants to stop for the smart phone passengers, preferring flagdowns, who typically pay more, or you can do a lot more short trips and make money with flagdown passengers than a long, cheap (pre-paid) trip with a smart phone "Uber" passenger, at least talking to cabbies here.

@myself--the PH local "Uber" version is reliant on existing cabbies to be drivers, so it's more of a smart phone 'call a cab' scheme than a true Uber scheme however.

No mention of the expectation of a tip by yellow cabs?

Had to go the original source (http://arxiv.org/pdf/1503.03021v1.pdf) to find out, but the tip is included in the taxi fare calculation.

In France Uber is always always cheaper, by a huge margin. Usually half price or less. I was amazed by how cheap it is.

Maybe French taxi prices are inflated, though. Like in many regulated countries

Yes, with no or little maintenance costs, and paying very little to drivers voila...

at least i am hearing some stories of drivers complaining about the pay both in US and EU

Second, Uber X prices vary according to demand and Mascolo and co took no account of this in their comparisons. They argue that the comparison is interesting and useful nonetheless. “We argue that the process of comparing two different companies that provide the same service in the same geographic area is of value to commuters,” they say.

Given that uber has been doing almost constant surge pricing in dc, this is a big failure.

Given that uber has been doing almost constant surge pricing in dc

Maybe this reflects fewer drivers as they have learned that driving for Uber is a bad deal for them.

...or demand is consistently high and the supply of drivers has not caught up yet.

Or that uberX cut their rates too far and are relying on "surge" as a regular pricing mechanism, rather than supply/demand.

dynamic pricing is more true to supply & demand than static pricing, surge pricing is no exception.

Or that it isn't true - I am a regular Uber rider, have seen surge pricing very rarely in DC and DC metro. And checking now from DC - no surge pricing for any flavor of Uber.

Surge pricing could eliminate the rush hour and its congestion by encouraging commuters to arrive and depart at non-surge times. Markets self-correct excesses absent intervention by government. That's the beauty of markets.

But if you can't get a regular cab (or it is a pain to do so), Uber really should be more money.

+1

The convenience of getting a car when you need one is worth a premium anyway.

A cab might be cheaper but how much time (money) do you spend waiting for one?

Cheaper maybe; more convenient? In any city but NYC, most definitely.

Perhaps any city but NYC that is in the USA.

True, I was only thinking of the US.

There are other cities in the US?

"Uber then suggested a minimum and maximum possible fare, which Mascolo and co used to take an average. They then compared this figure against the Yellow Taxi fare."

--This assumes that the highest surge pricing (and every other surge) occurs as often as the base rate with no supporting evidence this is true. They need an actual distribution of Uber X fares over the same time period for this to be a useful comparison.

Social science is hard, so we might as well fudge it and say it's important anyway.

If you value time at anything other than zero dollars, wouldn't Uber always be cheaper? Isn't it the convenience and promptness that people choose Uber for rather than trying to get a bargain cost wise?

No? I don't know about you, but I often see 2-3 taxis zip by me as I awkwardly stand on the side of the road with a phone in hand waiting for my Uber driver to show up. I don't hail those taxis because they are more expensive.

In most large American cities, there's basically a constant supply of taxis on any major street, and an Uber takes 2-3 minutes to arrive.

Not in LA!

Yeah my thought exactly. On the basis of availability alone, or at least the ease of requesting a car through the app and watching its progress, Uber quickly became my preference for getting around LA.

Yeah, "most" large cities should be changed to "a handful" of large cities.
New York and San Francisco have a lot of cabs along certain major streets. But then it gets a bit dodgy...
The best thing about the new app based systems is that you can track your own car, whereas you are usually left wondering with a cab order system - is it 5 or 15 minutes? (assuming you are not on a 'flag down' street)

Isn't the idea behind Uber to cut GDP growth?

Lower spending means lower production, lower GDP growth, or GDP decline.

Or in income terms, lower incomes means lower consumption means lower GDP (growth). (Production that no one can afford to buy will not be done.)

Yes. So is the idea behind washing machines, computers, robots, video sites, and digital cameras. I speak with great sarcasm.

Shhh! Most people don't realize how ridiculous Keynesianism is, and this parody might push them over the edge!

I think the surge pricing vs. non-surge is a key determining factor. I wonder if the taxi data set includes time of pickup and drop off, which would allow for a better comparison of Uber vs. Taxi during rush hour and non-rush hour. Otherwise, if the data from Uber has the surge multiplier, one could compare the base rates and layer in the surge pricing on top (to see at which surge pricing point Uber becomes more expensive).

Uber in NYC is super expensive, though. If they did this is Chicago or Boston, you'd see a different result.

Uber is almost certainly always cheaper in Washington DC, except during times of surge pricing. I think New York just has unusually cheap taxis for an American city.

I found no financial savings using Uber in SF on my last trip. Time is a different matter. One SF native said the city was notorious for having several cabs pass you by before one picked you up.

What is exactly the difference (in terms of service) between the Uber and a regular cab system?

Google it

I googled it and still don't understand the difference - for what I have reading, the only difference is that, instead of dialing a number in your phone to call a taxi, you simply click in an icon; it is only that the difference, or there is more differences?

It's complicated.

I would say "Uber is an app, cabs are called or hailed on the street." ... but there are apps to summon regular cabs too.

I would say that Uber drivers are part-timers using their own car, but Uber also has the professional black car service.

I guess the real difference is that Ubers are hailed only through the app, only cashless, and it also tracks the path taken (and reports it back to you), and has mutual rating (it stores the ratings that drivers give to passengers and vice versa).

Thanks for the explanation.

"tracks the path taken (and reports it back to you), and has mutual rating (it stores the ratings that drivers give to passengers and vice versa)" seems to be the bigger difference.

Also, the UberX service (not the black car one) is people using personal vehicles that aren't just used as cabs.

Eh... kind of. In the major markets, probably the strong majority of UberX drivers will be full-timers who use a car that has relatively little other use besides being the UberX vehicle.

almost no regulation... which has advantages (cheaper) and disadvantages (riskier? power shifts from taxi driver to app owner > less profitable than being a taxi driver?...)

But ok i never use taxi, except if i am in US to go from airport to hotel, so i dont care

All this talk of not accounting for surge pricing is confusing to me: as a fairly regular Uber user I have only been hit by a surge once. At this time it was flat out impossible to get a cab so it's not a fair comparison for price at that point!

In Chicago at least, Uber is cheaper by a large margin at least up until the $35 (Uber price) mark. This is about what it costs to get to O'hare from my house in an Uber. The equivalent Taxi fare is $45, without tip.

Manhattan (not so much the outer boroughs, the the city government is trying to fix this) is great for street hails, so Uber gains nothing in availability or convenience. In most parts of the country, where you have to call for a cab, I'm sure the situation is different.

The green cabs are better, but there are still large swaths of Brooklyn, Queens and the Bronx where you will not bother trying to look for a cab. (Hint: look for places where you can't buy single origin pourover coffee.)

NYC is one of the cheapest Taxi cities in the US. See http://www.washingtonpost.com/wp-srv/special/business/taxi-fares-compared/ for US city comparisons.
In suburban areas underserved by taxis, Uber is much cheaper and more reliable. Fares to SFO from my house are ~$100 by taxi, $42 by Uber. Also Uber ALWAYS shows up exactly when they promised as opposed to taxi dispatched by phone.

Since UberX is more convenient, quicker, and often considerably more pleasant and comfortable than a Taxi, I would happily pay more. Even so, where I live, it usually costs less.

As for surge pricing, how do you compare available at a higher price with not available at a lower price?

It's also a time saver, not only money saver. In my West Texas time, if i call a taxi I would have to wait an hour or more. Uber comes in 5 minutes. That also saves me $$

1 hour to wait for a taxi??? Gosh...

More Ubers than taxis in NYC now: http://www.nydailynews.com/new-york/uber-cars-outnumber-yellow-taxis-new-york-city-article-1.2154997 (but still c. 20 times more taxi rides than Uber rides)

I didn't read the original paper, but why couldn't they just calculate fares, as I did above for Sydney?

Obviously Uber is bit expensive ride than other taxi cab services. Especial traditional yellow cabs are chaep and reliable but uber has mobile app which would helps to hail a taxi by tapping away. You could read more at http://www.taximobility.com/blog/traditional-taxi-cabs-are-really-cheaper-than-uber/

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