Could we pay travellers not to use over-crowded trains?

The John West technique: maximising carrying capacity on peak hour trains, Japan

If you think crowding of trains in Australia’s capital cities is bad, have a look at this extraordinary video of how they cram passengers onto trains in Japan! John West could learn a thing or two! Peak crowding is uncomfortable for passengers and increases operating costs – more capacity is needed to handle the peak, but much of it is unused in the off-peak period. That extra capacity might take many forms, such as more carriages, more trains, more staff, etc.

There could potentially be big savings if some of this peak demand were shifted to earlier or later periods. This applies to trains, buses and roads and indeed to many activities that experience peaking e.g. cinemas, concerts. Apart from the disincentive of being treated like a sardine, the standard approach is to charge a higher price in peak periods relative to the off-peak. However political constraints mean public transport operators in Australia tend to conceive of differential pricing as an off-peak concession rather than as an active way of managing peak demand.

Here’s another way of approaching this problem. The Economist reports Singapore is planning a pilot scheme offering public transport passengers a greater chance of winning a prize if they choose to go off-peak. All travellers are entered into a pool with a chance to win cash in weekly lotteries, but those who travel off-peak will effectively get three times as many ‘tickets’. The principle is that small rewards will pay for themselves in lower capital and operating costs.

The Economist quotes Stanford University academic, Balaji Prabhakar, who says lotteries rely on the behavioural-economics insight that the average person is risk-seeking when stakes are small:

Offer individuals 20p to leave the house an hour earlier, and most will say no. But a 1-in-50 chance of winning £10 may seem more enticing. The risk-seeking effect is amplified in small networks: regularly hearing about other winners leads individuals to overestimate their own chances of success.

The idea of carrots rather than sticks is not new. For example, long-standing readers might recall this proposal to reward drivers who don’t speed with a cash reward. Fines from speeders are paid into a pot and redistributed randomly as prizes to motorists who are ‘caught’ by speed cameras driving within the designated limit. The Capital Bikeshare scheme in Washington DC offers prizes to riders who travel against the dominant flow, thus reducing the cost of rebalancing the (geographical) distribution of bikes. This study of the effectiveness of a lottery in reducing car travel found it had a positive effect, although it disappeared when the lottery was stopped (note very small sample size). Read the rest of this entry »

Is it healthy to assume correlation means causation?

Association of obesity trend in the US with vehicles miles travelled (left) and with Justin Wolfer's age (right)

The link between the physical environment and health outcomes like obesity is fraught. The Victorian Legislative Council’s Environment and Planning References Committee should bear this in mind as it goes about its new inquiry into the contribution of environmental design to public health.

The Committee might want to start with the first chart in the accompanying exhibit, which comes from a recent issue of The Economist and purports to show that obesity has increased in the US in line with the increase in miles driven over the last 15 years. The chart is based on work done by researchers at the University of Illinois who found “a striking correlation between these two variables – but with a large time lag……This near-perfect correlation (99.6%) permits predictions about obesity rates”.

Expatriate Australian economist and Wharton business school Assoc Professor, Justin Wolfers, points out the folly of this claim. It is, in his words, a “nonsensical correlation”:

When you see a variable that follows a simple trend, almost any other trending variable will fit it: miles driven, my age, the Canadian population, total deaths, food prices, cumulative rainfall, whatever.

To demonstrate his point, Professor Wolfers prepared the second chart showing an even better correlation between changes in obesity over the period and changes in his age – he didn’t even need to resort to a time lag to get such a good fit! He acknowledges The Economist offered the customary caveat that correlation does not equal causation but this chart, he says, is so completely unconvincing as to warrant a different warning: “Not persuasive enough that you should bother reading this article” (in the interests of balance, here’s The Economist’s subsequent response to Professor Wolfer’s charge).

This exchange highlights a problem with much of the research that purports to show the physical environment — particularly density and/or public transport access —  has a strong effect on health-related variables like obesity. There’s plenty of evidence of correlation but not much evidence of causation. There’s no doubt obesity is inversely related to both density and access to public transport, but if it turns out these aren’t the underlying drivers of obesity then the economic cost of misdirected policies could potentially be significant.

There are special reasons why it’s hard to establish causation when dealing with real life infrastructure projects and transport/land use programs. These British epidemiologists reviewed 77 international studies examining the effectiveness of policy interventions to reduce car use. They concluded the evidence base is weak, finding only 12 were methodologically strong – and they mainly involved relatively small-scale initiatives like providing better information about travel options or direct financial incentives to reduce driving (incidentally, only half of those 12 actually worked i.e. reduced car use). Read the rest of this entry »