Wednesday, March 25, 2009
Are NYC taxis countercyclical?
The NYC Taxi Commission released some data that shows that NYC taxis are not suffering in the economic downturn. The number of taxi rides in the city over the past few months have been slightly higher than the average of 400,000-450,000 daily rides. The Commission makes two points that help explain why this is, considering that taxi fares seem like a logical place to cut discretionary spending for individuals. First, there has been a sizable jump in fares paid by credit cards. Since November all cabs are equipped with a credit card reader, and now 20 percent of fares pay this way. The second thing is seemingly related to the first, and that is businesses are substituting taxis for black cars (limos). Taxis are cheaper, and now that the can be easily expensed on a corporate card they are preferred. This claim is supported by a 30 percent decline in black car rides. This is a great example of unexpected benefits from technological adoption of card reading machines. Of course the limo drivers see it differently, but it seems a more efficient use of the existing taxi fleet.