Delhi has begun its odd-even number policy for cars on the road. One impact of this regulation that will be relevant to researchers, would be to create conditions of a natural experiment, the application of rigorous statistical methods to evaluate its impact in various aspects.
For someone not well-versed in statistics, a pop-economics book recently introduced to me another way to engage with Delhi’s transport system. That book is The Economic Naturalist by Robert H. Frank, his collection of tales of economic naturalism from his students’ writing assignments in Cornell University’s Introductory Economics class.
The task of Economic Naturalism assignments is to simply use the principles of economics to probe and explain patterns of event or behaviour in everyday life. The fun and challenge of Economic Naturalism is to be intuitive and curious about all things around you. In this spirit, I decided to look at the public transport system in Delhi.
First, the Metro. The discount of 10 per cent on the use of smartcards against tokens is the rule in question. The Delhi Metro Rail Corporation’s own pamphlet for promoting smartcards mentions the benefits of using one. First, the incentive of a 10 per cent discount, and next the convenience of not waiting in line for a token.
One can intuitively state that smartcard travellers on the Metro weigh their incentives in the opposite order: avoiding the waiting line for a token is the much more important incentive. The 10 per cent discount on the use of smartcards goes against the principle of additionality — it makes little net positive difference to actual behaviour in the adoption of smartcards. To interpret the discount negatively would be to state that token- buyers pay an 11 per cent premium over smartcard holders.
Though I could find no systematic study on the composition of token-buyers, a rough survey finds that the three important categories of such passengers are migrant workers with casual employment, travellers to Delhi and residents who commute by Metro rarely (this includes car-owners and autorickshaw- and taxi-drivers who don’t use the Metro much).
They are definitely not the categories of passengers who should be paying a premium on Metro travel.
An important logic in the discount for smartcards is the interest payment made by the DMRC for the upfront credit issued by consumers in the purchase of smartcards. To remove the discount would mean the DMRC gets an interest-free loan on any unused credit in the smartcard.
However, this economic principle is not inviolable. There is at least one other railway system, that of Amsterdam, which offers no discount on its ‘OV-chipkaart’ cards. They are taken only to be a method for electronic payment of fares; discount fares are available only on special subscriptions.
Next, Delhi’s DTC buses. The very first observation for an outsider in Delhi buses would be that the conductor in DTC buses doesn’t go from seat to seat; one has to approach him for tickets. The DTC was estimated to face a loss of Rs. 1 crore daily in ticketless travelling in 2012. This estimate of the economic cost in ticketless travelling did not factor in the cost of hiring a large workforce of ticket-checking squads (around 2,000 people) as an additional layer of employment without great improvements to productivity. This practice also creates practical impediments in terms of passengers crowding around the door, and the inability to implement a system of separate doors for men and women.
Finally the autorickshaws. Meters are often merely a design feature here; the drivers don’t agree to go by meter rates. And travelling in Delhi, it almost seems this non-compliance is by design rather than accident.
The obvious comparison is with Mumbai, where the ‘meter down’ system in autos provides an easy binary switch for drivers to shift when carrying passengers, and which can be pinpointed by any traffic officer on duty.
In Delhi, the effort required for an auto-driver to bend over to open the meter’s lock, look into the device and press two buttons is a subtle but important deterrent for them to avoid using the meter even when they are charging the customer in a fair manner. This makes avoiding meter usage the default stance, a norm that drivers exploit later to impose extra charges whenever they find that a customer has no bargaining power. Simply, the design and placement of the meter is important — an insight that derives from the behavioral economics’ concept of choice architecture.
Conclusion: Delhi’s public transport system is peculiar; it needs to do better. Also, economic naturalism is fun.
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