Economists at UBER

Here’s a good video discussing why tech companies like UBER hire economists.

Comments

I've come to bury tech, not praise it. Anyway, this video is a fair presentation of the bleak future when economists control our lives. Have a nice Sunday.

The video did note the drivers' dissatisfactions and at the end supplied the same figure that I've read elsewhere: Uber drivers make about $10 per hour.

What it failed to mention was how much do non-Uber taxi drivers make? A couple of websites say less than $26K per year. Which, on a per hour basis, might be about the same as what Uber drivers make:
https://work.chron.com/much-fare-taxi-drivers-keep-22871.html

So driving a taxi or Uber doesn't pay much and entails long hours if you want to make a living at it. Doesn't seem surprising, and it's not clear to me that Uber is worse than driving a taxi is.

These numbers have a big limitation however: I believe that Uber has consistently lost money, pretty much every year and every place? So either they'll have to reduce the revenue that drivers collect, or raise fares, or both.

Or replace the drivers with self-driving cars, but as a number of us have observed, self-driving cars may not be capable of dealing with strategic moves by human drivers and pedestrians.

I think maintaining a fleet of self driving cars would be more expensive than the current model, in which drivers have to maintain their own cars.

I think maintaining a fleet of self driving cars would be less expensive than the current model, in which drivers get a share of the revenue.

That robots would be in charge?

Those who listen closely to the video will pick up on what the economists at Uber are doing, which is tweaking algorithms to maximize the revenues of Uber. That sounds like a great idea, right? Economic efficiency and all that. But who is getting tweaked with all that good tweaking? Uber drivers,that's who. One economist did offer a tweak Uber is considering to help women drivers, namely tweaking how riders are charged, with more weight in the algorithm for time spent on the ride than on the distance traveled. Why would this help women drivers? Because they are sooo sloooow. The (woman) economist who offered this solution to the woman problem only said it's a tweak Uber is considering, not a tweak that has been tweaked. Why not just tell the women drivers to speed up, or get out of the way and go back to their knitting!

I know, readers of this blog don't drive for Uber. Besides, bad things don't happen to good people. Unfortunately, what happens at Uber doesn't stay at Uber. It's a future with economists tweaking everyone in every job. Of course, economists (and others) in academia have been getting tweaked for some time, so our hosts won't object to the rest of us getting tweaked.

+1 to all 3 of your comments.

Everything I have read on this blog for the last year or so leads me to believe that economists desire a dystopian future right out of the first "Blade Runner". They envision world of dense cities populated by people with no social capital, a transactional world without familial or communal bonds, a world of strangers competing against each other according to the rules of the free market, a world of cities stretching to the horizon without forests and prairies.

It is not a vision, it's a nightmare.

I think you are being overly dramatic. Economists acknowledge the value of those things all the time. Most just tend to think that letting people make their own choices is the best way to go.

Whats the point of emphasizing these jobs are done "economists"? If its just programming/modeling/data analysis/experiment design, STEM fields have a lot of excess that flow into those jobs... Its not bad a life, but it shows how inefficient the education system is, and that oversupply keeps wages down in those fields.

I saw an article the other day that said Amazon now ranks employees according to metrics that automatically track them at warehouses, and fires the lower 20% of performers, the same thing done on Wall Street. The difference: the Amazon workers are making a lot less in salary than Wall Street bankers.

So many hate facts in one 8 minute video.

Prices are used to balance supply and demand? Women have lower compensation due to reasons and not descrimination? Providing flexible work hours is an important part of the total compensation function?

Reeeeeeree!

Luckily the economists Uber selected for the show were nearly a 50/50 gender split. I was almost triggered. However it looked like the person in charge was a male? Patriarchy!

Reeeee.

Must downvote. Brigade!

Prices are used to balance supply and demand?
---------

Patently false and one of the great blunders of economics. What balances supply and demand is our desire to avoid long lines. It works, absolutely, maintaining a trend toward equilibrium without regard to price. The system is stable when there are 1 or 2 customers in the line, and 0 or 1 clerks serving them. At that point, Walmart velocity equation is maximally accurate, and prices work. Prices second, queue stabilization first. One of the major blunders of economics.

And Uber is losing money, like a gusher.

https://dilbert.com/strip/1999-12-24

Nails it.

Thankfully, nothing bad happened to the economy back then.

48% of Uber drivers have a BA or better. For every economist working at Uber there no doubt are 50 or more econ grads driving for them. It is tawdry and shameful how incomplete and misleading information is being used to entice so countless many young people to take on crushing debt loads to study subjects with minimal real employment opportunities.

+1

Tech careers are overrated. The Lords make out like bandits. The serfs do well enough, they can just barely afford the housing in Silicon Valley, Portland, Seattle, and Austin and nice new cars in which they can escape the city to find some experiences away from the stacked boxes in which they work, fighting the traffic jams all the way. The lucky serfs get to telecommute, but they don't really develop the human bonds formed when people work side by side.

One recent development, especially in startups, is the 'one big open space' office. Counterintuitively, there is very little noise, because there is very little conversation, because there is very little privacy, so there is very little chit-chat, so there is very little human bonding. There is a hushed vibe to these spaces. In places with 'at will' employment laws, combined with dependence on contractors and H1b visa holders, there is less team building. People come and go with no announcement. As soon as you learn begin learning about a person's family, their hobbies, how they spent their weekend etc, they are gone.

In my most recent startup experience as a manager, all my direct reports and my boss were remote. I had one 30 minute remote call via Zoom with each direct report once per week. My boss had the same with me. My manager's direct reports were also remote, with my most important colleague located in Europe. I spoke with my colleagues via video conference calls once a week for 30 minutes, and my and my manager's team meetings were 30-60 minute videoconference calls once per week. That's it. The rest of the time we are alone with our computer screens, communicating via Slack - a messaging app. There is no team building, no bonding, very little human connection, but it's all very economically efficient, guided by that invisible hand that magically and invisibly swaps out one human for a 'better' one according to the rules of supply and demand, finding ever better matches between talent and task. It was awful - soulless.

I talked to my friends and former colleagues, spread all over the world now, also via message apps and social media, and they tell me this arrangement is getting to be the norm, unless you work for the FAANGS or one of the better corporations - the new privilege. Btw, these corporations suck up all the talent - I am not sure that is efficient.

Almost all of the employees around me were part of the core business - there were very few, actually 2, support people. All non-core-business tasks are outsourced. There are no security, maintenance, front desk, janitorial, or IT personnel. I was surrounded by people with the same educational and economic status, all with STEM degrees (mine in mathematics). Though we came from all over the world - India, China, Pakistan, Europe, etc, the team was not very diverse - we were all of the same socio-economic and educational tribe. Even so, there was minimal opportunity for social interaction.

Everyday, especially during my 3 hours of commuting to and fro, I asked myself "How long can I stand this? How much of my limited time on earth am I willing to exchange for more economic security? Am I making myself sick to put up against a sick day?" I used to do this commute for two hours each day, listening to music or talk radio (now dead). Now I had to pay attention to Waze to find my way out of the mega traffic jams. I felt sorry for all the people who bought those nice houses in Los Gatos or Saratoga hoping for a quiet little neighborhood but now being overrun by anxious commuters.

I ended up leaving the tech industry for a more precarious life close to home, in a business I enjoy, with much less economic security but more time with my boys. Fortunately, I don't have a mortgage anymore. My new neighbors are wealthy. I couldn't afford to buy a house in my own neighborhood. Only CA proposition 13 allows me to hang on, but I don't know how long it will last.

I consider myself very lucky to have been part of the early days (mid 1980s to early 2000s) of the high tech industry. I worked for a small startup of 40 people, a global company of around 2-3k, and a mega company of 40,000 world wide. The startup and small company were the best. I had friends and colleagues in all departments and of all ages, races, income levels. We went to lunch together in local restaurants, worked out together in the fitness center, played in volleyball and softball leagues together, rode mountain bikes together after work, and had many more social bonds.

With the 'creative' destruction of those companies, the social bonds were stretched very thin, most to the breaking point as people moved away and started new lives. Some of my friends have had to jump from city to city - Silicon Valley to Portland, Portland to Austin, Austin to Seattle, Seattle to Atlanta, SF Bay Area to London, etc, multiple times, each time selling their house and moving out of the communities they lived in for 5-10 years. I stayed put for 30 + years, but it didn't matter because everyone around me moved away.

I think we are running a big experiment. For 2-4 million years we have been living in small communities, physically and emotionally close, high touch and high feel, sharing the same languages and creation myths. Now we are supposed to live in dense cities of millions of people with entirely different values, belief systems, and languages.

When we once lived in small villages, perhaps even sharing space in a communal long house, now we are supposed to live in boxes stacked on top of boxes of strangers.

To me, this world looks cold and disconnected.

The economists think it's great.

And that makes all the difference.

If you want human bonding, stay at home.

So this is what Brazilians have become. A once fun loving people that valued friends and family, they now eschew social bonds and advocate staying at home and watching TV or YouTube.

What will become of Carnival?

I was tolding about staying at home with your family... if they can stand you. As President Captain Bolsonaro has pointed out, increasing production is essential.

"...if they can stand you ..."

Ha ha! Not!

You are too funny! This blog would not be the same without you.

Tell Captain Bolsanaro I am done producing children, if that is what he meant. Right now I am preparing those kids for launch (not lunch).

10, 9, 8, ...

Wow, nice, thanks for sharing, you must have been good. Most people who love their jobs are pretty stupid or not in a demanding field I've found.

Thanks Ray. I was average but lucky. The contingencies that led to my opportunities are actually hilarious. I was also lucky to work with some outstanding people who have gone on to have very good careers.

Yep, as wise people have been observing for years indeed decades now, predictions that the web means that people will no longer need to physically work or meet together, that the external economies provided by cities will disappear and that therefore cities will de-populate, and that education will be dominated by online teaching are all crocks.

That still leaves a big middle ground though, between pre-web social and economic interactions versus whatever the brave new world will be:
old news media vs social media, full-time careers vs gig economy, etc. Free market types and libertarians would say let the market decide what the outcome will be. That might indeed be preferable to letting government or some social planing office decide but I think there's still some wiggle room in deciding how hands off we need to be. Only the most extreme libertarians advocate no role for government at all in all areas including national defense, border security, public health, police, etc.

I actually strongly identify and agree with your assessment of modern diaspora and dissolution of community. However, it seems to me a much more systemic, broad, and inevitable shift that you cannot pin on "libertarians and market types".

People in ancestral communities had strong social ties, but also strong practical ties (i.e. leaving the village wasn't even an option). As the world opened up and the economy became more fluid - a process that has been happening for hundreds of years -people started making these choices. The atomic family as a stable (and IMO, grossly anemic) unit of community has basically been the american model from the beginning. It may be getting worse still, but unless you want the government to literally force people to stay in the same area, what solutions are there?

Interesting comments towards the end, when two of the driver-critics say that they keep driving for Uber because no one else will provide them with the flexibility that they prioritize so highly. Leave aside for the moment why one would be so critical of the one company that provides what one is looking for rather than the other companies that don't. This prioritization of flexibility brings to mind the earlier post [https://marginalrevolution.com/marginalrevolution/2019/04/from-the-comments-on-work-hours-and-spousal-distribution.html] about the "overwork premium" and prioritization of work-life balance at the high end of the income scale. The prioritization of flexibility among Uber drivers suggests that non-wage considerations are important for many parts of the income distribution. Maybe, we are moving closer to Keynes's Leisure Society than we realize, although "leisure" may not be quite the right word for it. More like Ambiguously Non-Pecuniary Society.

How much of what the economists at Uber and other tech companies do requires a PhD and how much could be done by someone with a (good) Master’s in economics (or econometrics and mathematical economics if you want to be certain) and work experience in a team with these kinds of roles? Whats stopping someone doing GA Tech’s Online Master of Science in Analytics from boning up on the causal analysis and identification strategies that are most important here and doing similar work?

Driver: "Working for Uber sucks"
Journalist: "Why don't you quit?"
Driver: "The flexibility they give is great!!!!"

I can't wait to see Uber featured on "American Greed".

The drivers complaining about being "forced" and "having no choice" - as they turn the key and step on the gas - have been de-brained by their teachers. It is this lack of conceptual clarity that, ultimately, dooms freedom.

The scrutiny of Uber is interesting - is it because so many people can see themselves, just possibly, as a contingency plan, driving for Uber?

A friend worked at a couple of big-box stores in the early days of big box stores (Walmart, Home Depot). I was surprised to learn - can't recall which - one of them offered super-flexible hours. That is to say, you might drag yourself to work, and find your shift was cancelled because of some determination that you were surplus that day. I'm sure they don't do that anymore - America gave them ample time to mature, as companies.

Still, I never heard of McDonald's, born at midcentury, doing anything "flexible" like that, but then we all know McDonald's is killing us with food.

The guys here on vacation from another country to our south, doing mission work building a house a thousand yards from me, also have super-flexible hours. They can arrive at around ten, and stay until 9 PM; or arrive at eight, and knock around six. They can get drunk on Friday night and not come in on Saturday, but typically they will then come in on Sunday. Or vice-versa. They can work 55 hours a week, or sixty.

There are some things money can't buy: flexibility. There are some things money can buy: number-crunchers to tweak revenue for ridesharing companies.

Spigot from Mexico spraying workers into certain industries less interesting to the educated or tech-savvy: priceless.

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