Valuing the Welfare Gains of Uber

28 Pages Posted: 2 Jan 2019

See all articles by Christos Makridis

Christos Makridis

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Yongwook Paik

KAIST College of Business, Korea Advanced Institute of Science and Technology (KAIST)

Date Written: December 11, 2018

Abstract

Ridesharing has become ubiquitous throughout the United States. We exploit quasi-experimental variation in the staggered entry of Uber into different metropolitan areas between 2010 and 2016. Using a combination of housing price data from Zillow and social well-being (SWB) data from Gallup, we find that the entry of UberX into a metropolitan area leads to a 3% rise in median housing prices, a 1.5% rise in economic optimism, and a 0.8% rise in life satisfaction. Our estimates are identified based on within-metropolitan comparisons before versus after their entry into the market, conditional on semi-parametric location-specific controls. Using our hedonic pricing elasticity, a back-of-an-envelope calculation suggests that the entry of Uber is associated with a welfare gain of over $633.5 million.

Keywords: housing prices, life satisfaction, ride sharing, Uber, welfare

JEL Classification: E61, H41, L24, R23, R31

Suggested Citation

Makridis, Christos and Paik, Yongwook, Valuing the Welfare Gains of Uber (December 11, 2018). Available at SSRN: https://ssrn.com/abstract=3299228 or http://dx.doi.org/10.2139/ssrn.3299228

Christos Makridis (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Yongwook Paik

KAIST College of Business, Korea Advanced Institute of Science and Technology (KAIST) ( email )

85 Hoegiro, Supex Building Room 482
Seoul, 02455
Korea, Republic of (South Korea)

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