An attempt to perform some economic analysis of why autorickshaws refuse fares.
Udhay
http://6ampacific.com/2007/09/01/auto-rickshaws-in-mumbai/
Auto-rickshaws in Mumbai
September 1st, 2007 by Basab
There is much good to be said about autos in
Mumbai. They are generally available in plenty at
all times of the day. And to a lesser extent even
in the middle of the night. They generally charge
by the meter, which is more than can be said
about Delhi or Bangalore. And they (again
generalizing here) have a more positive attitude
towards their passengers and humanity at large
than their brethren in other metros.
But at the end of the day, they are, like all of
us, slaves to economics. While I am in India, I
often take an auto from our office back to the
guest house in Malad which is less than two kms
away. For reasons that we will explore further, I
have to ask an average of a dozen auto wallahs
before one of them agrees to take me to my
destination. In the process you learn many
important life lessons. For instance, how to take
rejection well (Chin up, move on to the next
auto). Or why you shouldnt take some things
personally (He likes you, just doesnt like where
youre going). Although the looks I sometimes get
when I ask the question D-mart jaoge dont make
me feel loved. Some dont even bother with a
response. They just look away. You just know they
are saying to themselves Kahan, kahan se uth ke aa jaate hain!
Although, all this is character-building and all
that, I decided to go a little deeper and look at
the economics of this. I am sorry to say that I
dont have a solution for the problem. But still here goes
An auto wallahs decision whether to take a
passenger or not depends upon many variables.
Some are actually system constants like the
running cost per km. Some depend upon the
situation like the expected wait for a passenger
at a particular location or the distance of the
passengers destination. The only variables that
can be changed by the administration are the
meter fare per km. and the minimum fare.
Interestingly, the time cost of an auto (the
rental the auto driver pays the auto owner) does
not matter. Nor do the drivers own expectations of profit.
We define a variable called fare contribution per
min (FC) which is the price per km. less the
running cost per km. and assumes that the auto
moves at a certain constant speed only (which is
pretty close to being fact in this traffic!). In
making decisions of Wait or Ride the auto
wallah is basically trying to maximize total Ride time over the day.
This sounds simple. Price per km. doesnt matter.
It is simply a trade off between taking a short
fare vs. waiting to get a longer fare. Keep
making these trade-offs in order to maximize Ride time over the day.
But there are other complexities. A ride shorter
than the minimum fare gives an opportunity to
make a higher FC than for full fare rides. Also,
a major wrinkle is that the auto wallah can
always ride empty from a long wait location to a
short wait location. When riding empty the FC is
actually negative. In a city like Mumbai, where a
low wait location is seldom far away, the
relation between Ride FC and Empty FC is, I would
guess, the biggest driver of passenger refusal.
However, I couldnt say if it was big enough to
change behaviour if we raised the fare a little
or increased the minimum fare. Wed need a lot
more data to arrive at that conclusion. But my
suspicion is that a fare increase will reduce but
not eliminate passenger refusal. Of course, most
people who travel to and from the train station
and generally dont face this problem would
rather not see a fare increase, thank you very
much. So the discussion is very academic. But it
is nevertheless satisfying to know that my
suffering is for a greater cause. By tolerating
constant rejection, I support lower auto prices in Mumbai.
Posted in Indian Economy |
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((Udhay Shankar N)) ((udhay @ pobox.com)) ((www.digeratus.com))
