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Does the Demand Response to Transit Fare Increases Vary by Income

April 30, 2019

MC 7-860

  • Changes in ridership at individual stations on Chicago's mass-transit rail system following fare increases in 2004, 2006, 2009 and 2013 are analyzed to determine whether the ridership response varies with the per capita income in the neighborhood surrounding each station.  We find mixed results.

    For one of the four fare changes the decline in ridership is greater in lower-income neighborhoods than it is in higher-income neighborhoods.  However, the reverse is found for another fare increase.  For two of the increases there is no relationship between income and ridership response.  These mixed findings are in line with the prior literature that also found an inconsistent relationship. 

    We hypothesize that there are two competing forces at work.  On one hand lower-income groups are more constrained in their budget, but on the other hand they have fewer options for switching to other modes.

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    Northwestern University

    Ian Savage has been a member of the faculty of both the Department of Economics and the Transportation Center at Northwestern University since 1986. His research has been concentrated in two areas: urban public transportation, and transportation safety. He has published widely on the economics of transit finances and operations. He has conducted research into the safety performance, and the effectiveness of safety regulations, in most modes of transportation -- with particular emphasis on the trucking and railroad industries.

  • DIME is a World Bank-wide program to generate knowledge on the effectiveness of development policies. Working across 18 thematic areas, DIME collaborates with 300 agencies in 72 countries to improve the effectiveness of policies and programs and strengthen country capacity for real-time evidence-based policy-making. More »