The Value of a Free Ride On Public Transit? Not Much, According to New Study

While the eyes of most of the world are on the Sochi 2014 Winter Olympics, some places are actually more focused on their own local events.

Take for example Tallinn, Estonia, where “February and spring is the perfect time for outdoor activities…and for attending musical events and festivals all the month long at the local concert halls and venues,” as the Tallinn.ee reports.

Now, it’s true that the Olympic Games might be a little more interesting than Tallinn’s upcoming BMX contest (Feb. 22-23), but the residents of Tallinn can be proud of having at least one thing the residents of Sochi don’t have: free public transit.

On Jan. 1, 2013, Tallinn, the capital of Estonia, became the first European capital to extend free public transport to all of its 430,000 residents. One of the main drivers was mobility for all, explained Allan Alaküla, head of the Tallinn EU Office. While pensioners and youths already benefited from free public transport in Tallinn, the city wanted to make it easier for people to travel in search of work, and for low-paid workers, who might choose not to take a job that they have to travel to if the cost of transport means it is financially not worthwhile.

So, does it really work? Is making public transportation free actually increasing mobility (i.e. getting people to use it more)? While it might take some time to evaluate the economic impact of this change, a new study of three researchers from the Swedish Royal Institute of Technology provides an initial outlook into the changes in ridership following the introduction of free-fare public transport.

The researchers, Oded Cats, Triin Reimal and Yusak Susilo, compared data from fall 2011 through spring 2012 (the “before period”) and January through April 2013 (the “after period”). What they found was a 3 percent increase in the total number of boarding passengers and a 2.5 percent increase in total miles per passenger.

Yet, even this modest increase can’t be fully attributed to reducing the prices to zero. The researchers calculated that making the fares free is responsible for about 42 percent of the total impact, while the rest of the increase is attributed to other factors, such as new priority lanes for buses and service improvements. In other words, overall, the introduction of free public transit in Tallinn has resulted in a 1.2 percent increase in passenger demand.

The analysis looked not only at the generation effect (i.e. trips now carried out by public transport that otherwise would not occur), but also at the substitution effect (i.e. trips made previously by some other mode of transportation are now made using public transport). The desired effect is that public transport will be substituting car trips, but in the case of Tallinn the researchers suggest that if any modal shift is happening, it is that people are walking less and riding transit more.

One positive finding was an increased access to the city from the northeastern district of Lasnamäe, the most populous and dense district in the city, which is characterized by higher unemployment rates--transit ridership increased there by 10 percent.

Still, in total, the increase in ridership in Tallinn is very modest according to the study, which brings up the question: Why is it that the residents of Tallinn don’t take more advantage of the option to take free rides in their local buses, trams and trolley buses? The researchers believe this is due to the following factors: Public transport fare was relatively low to start with (about $2.20 for a single ticket) and many user groups already didn’t pay the full price, public transport share was relatively high (40 percent) to start with, and the introduction of the new scheme had to overcome a two-decades-long negative trend in the share of public transport.

You might wonder what the importance of this scheme is and why we should care if it succeeds or not--after all, this is not the first city experimenting with making its public transit free. First, as Sulev Vedler writes at The Atlantic Cites, what sets Tallinn’s experiment apart is its size and status as a European capital. “As the birthplace of Skype and online voting, Tallinn also has a reputation for innovation, Vedler writes. "So there's a feeling, at least among advocates of the idea, that if free transit can work here, maybe it can work in other large cities.”

Second, the importance of the results in Tallinn also stems from the fact that no comprehensive analysis was made to truly evaluate the impact of the experiments made so far in providing free transit (mostly in small cities in Europe), which left us mainly with anecdotal evidence. So basically this is the first time where we can truly evaluate the value of this policy tool.

Last but not least, this study adds to the body of research analyzing how sensitive people are to various price changes when it comes to changing their mode of transport. It actually provides a similar conclusion to what many studies reached in the past, which is that reducing public transit fares is a second-best pricing scheme. In other words, more people would shift from car to public transport if the price of the former is increased (congestion charge, higher tolls, etc.) rather than if the latter is reduced to the same extent.

Still, a word of caution--we need to remember that this study is based on only four months of data so we should wait for further analysis based on a larger dataset to get a better understanding on the effectiveness of such a scheme in a setting of a large city. Until then, the jury is still out there, probably taking a free ride on the bus.

Image credit: my Life, the Universe and Everything, Flickr Creative Commons

Raz Godelnik is an Assistant Professor of Strategic Design and Management at Parsons The New School of Design. You can follow Raz on Twitter.