We should make public transit fare-free

We have a fare-based public transit because of the private-sector commercialization of mass transit in the 19th century, which had to operate on a fare-basis to cover costs (and make a profit). When mass transit shifted to public ownership, it "inherited" the fare system because riders were already used to it, and it helped make the public costs of building the infrastructure an easier to pill to swallow.

But why do we even pay for fares for public transit, and not other public goods? We don't pay to use a public bathroom, or a public park, or public libraries, or public safety. I think it's fair to challenge the beneficiary-pays principle of being able to move around where we live. We can envision a city where we are entitled to move throughout the city regardless of whether we can pay for it. Wouldn't it be preposterous to envision a pedestrian toll sidewalk? In terms of what we expect people to pay for, why have we drawn the line at buses and trains?

Fare-free transit is not novel. I grew up in Oregon, where in the city of Portland can ride the light rail ("the MAX") for free within downtown limits. In Corvallis (home to Oregon State University) you can also ride the bus system fare-free. Other US cities that have experimented with fare-free systems are Chapel Hill, North Carolina; Olympia, Washington; Kansas City, Missouri; and Missoula, Montana, to name a few. (Notice that these are largely college towns; I suspect the fare-free system is to mitigate drunk driving).

Today, I live and ride in San Francisco, where I notice a lot of fare evasion. From my experience, maybe only 30% of people will actually "tag in" to pay for the $3 bus fare. I don't say this to poo-poo the fare evaders. I bring this up because if so such a small minority of riders pay the fares in the first place, it starts to make less sense that we all should pay for fares at all.  

To advocate for a fare-free system is to advocate for eliminating the small frictions snowball into bigger cultural shifts. In a fare-free system, the mental hurdle of "paying for a bus" is gone. You don't think about what distance is "worth" taking the bus. You just hop on and off the myriad moving platforms that transport you across the city. You don't worry about whether or not you're about to pay a transfer fee.

Most importantly, we can improve the culture around public transit. In a fare-free system, you don't expect a lot from something you don't pay for (see: Dan Ariely's zero-price effect and the price-quality heuristic). If something is free, you tend to value the service more than you expect it. This creates a constant positive (dare I say, invincible) aura around public transit.

The financial impact

If we went to a fare-free system, how would that impact SFMTA? Look at the breakdown of the operating revenue from the budget proposal below. Our fares only make up 10% of the total operating budget! ($141 million of $1.4 billion total).

For a balanced budget, you can safely assume that the revenue is roughly equivalent to the expenditures. But what's the biggest category for operating expenses?

Salaries comprise about 67% of the entire operating expenses.

Unlike Uber and Lyfts, ridership and operating expenses don't move in lockstep for public transit. An empty bus is just as expensive to run as a full bus (if you ignore fuel costs of a heavier bus). We're paying the driver and their pensions regardless of whether there is anyone in the bus.

The purpose of a public transit system is to 1) provide affordable access to all members of society regardless of socioeconomic status, 2) reduce the number of vehicles on the road for environmental and quality of life reasons, 3) RESOURCE EFFICIENCY. It's not efficient to run empty buses!

The bus was already manufactured. It is already eating fuel. The carbon footprint is imprinted. The best that we can do is actually utilize it to do what it's supposed to do: transport as many people as comfortably possible.

How much does it cost the SFMTA to operate a ride? And how does that compare to the fare?

The metric that we should focus on is the cost per ride.

We can estimate that SFMTA has roughly 120 million rides per year, estimated by a weekly ridership average of 395,000. (I don't know if the weekly ridership is already accounting for fare evasion, let's assume it is). We can also estimate that 80% of the total operating expenses are related to public transit (the other 20% are related to taxis, street services, etc.). This is about $1.1 billion.

$1.1 billion in costs for 120 million rides equates to: $9 per ride!

There are two ways to lower the cost. One is to just lower the operating expenditures per ride (this would cause massive upheaval). The other is to increase ridership by making it fare-free.

The status quo is that we pay $3 in fares, so it's actually a net $6 per ride. We can get to that net cost by increasing ridership by 33%, which, again, I argue could be possible if public transit didn't have a pay-per-ride system.

I'll continue with more thoughts in another blog post, especially those of you who are wondering "but how are we going to pay for it!" – I just wanted to get these thoughts out before this upcoming election in San Francisco, where reliable transit is one of the propositions on the ballot (Prop L).