Friday, 18 July 2014

An Uber experiment

Reason asks an excellent question: is Uber helping to cut drink driving rates in the US? When it's cheaper and easier to get a cab, maybe more people will do it instead of chancing a drive home when they shouldn't.

Reason points to some preliminary work on the topic done by Uber, looking at Uber's entry into Seattle with San Francisco as control. The work's suggestive, but hardly conclusive - especially when there are dozens of cities that could have been chosen as treatment or control.

So, here's the Masters thesis for somebody. Get a city-level panel of DUI rates and of taxi fares. As a first step, just run fixed effects with Uber entry and exit dates. Then run a few more complicated versions, like matching cities by probability of Uber entry based on city characteristics and taxi fares (comparing those of similar ex ante probabilities with different ex post resolution). Or exploit the city-by-city variation in pre- and post-Uber prices. There's loads of potential here, if city panel data on DUI arrests is available. There's loads of wonderful not-related-to-DUI variation in whether cities allow Uber or not making for something close to a natural experiment, though that will be less true if Uber's started using DUI-effects in its lobbying.

In other news, I had my first ride in an Uber cab in Auckland a couple of weeks ago. The cabbie was very enthusiastic about telling me all about it: he's on an hourly rate, but flips to commission when it's busy enough (says he gets 80% of the take). It makes sense that Uber would put cabbies in new markets on hourly to make sure that there's enough supply there when new customers come in.

If you sign up with Uber on code ericc294, you get $10 off your first ride and I get $10 in credit too.

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