Free is cheaper

We are working on a spreadsheet that will show that charging fares for urban public transport costs more than making it fare-free. Click here for the latest version of the spreadsheet.

This is work-in-progress. Please send us your suggestions, corrections, or improvements. Here is an explanation of the sheet.

We collect costs that will likely be reduced by increased use of public transit. For example, health care costs. Studies show that bus riders walk more than car users. Then we estimate the percent reduction. As we add more costs, the percent that each cost must be reduced is less. Numbers are adjusted for a hypothetical city in the U.S. of population 1 million. If you follow the link to the spreadsheet, you can see the source and derivations in the second tab of the spreadsheet.

To estimate the amount of fares collected, that consequently must be replaced by savings, we used numbers from Chicago and adjusted for a population of one million. A city of one million needs only $95M in savings to justify free transit. That is an easy goal! And we still have not yet included the costs of climate change.

Here some other areas. Some are hard to quantify. We will add to the spreadsheet as we get numbers.
  • Increased return on investment. Public transit involves large fixed costs. When fares are gone, there are more riders per vehicle, getting more value from the investment.
  • Reduced parking costs. With free transit, fewer people will park downtown. City parking authorities can cost $180 million a year, paid by fines, which are just a tax on customers and delivery services.
  • Reduced traffic congestion. Studies have shown that the time lost in traffic costs urban economies hundreds of millions of dollars.
  • Less money exported for gasoline. A medium sized city can export 1 million dollars a day in gasoline money for cars. Free buses will reduce this considerably.
  • Better quality of life, priceless. In Hasselt, Belgium, when fares were removed, people in hospital started receiving more visitors.


Terry Conspiracy said...
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ahow628 said...

I would suggest removing "reduced traffic congestion." Car use will always to fill the available space. If you want to reduce car driving, make it harder to drive by increasing congestion.

One way to do this with regards to transit is to create bus only lanes which reduce the number of car travel lanes. A side benefit is that the buses won't be caught in traffic snarls.

The cost benefit is a reduction in the amount of resurfacing that needs to be done on a street compared to the number of trips (damage caused by one bus with 50 people vs 50 cars with one person).