Has Ridehailing Exacerbated Inequalities in Local Spending? Analysis of Ridehailing Usage and Consumption Patterns in 2012-2016

Abstract

Ridehailing services are IT-enabled transportation innovations that have become popular globally. In our first research question, we analyze if there are spillovers to the local economy connected to ridehailing use, and if so, their size. While existing survey evidence on this is uncertain, using a detailed panel of individual consumption activity, we estimate each ridehailing ride is significantly associated with point estimates of between 0.25 to 0.42 additional offline transactions. These motivate the second question of this paper: it is a concern of the recent growth of the app-economy, including ridehailing, that it may be overly targeted towards wealthier consumers and may exacerbate existing inequalities. We analyze if the consumption changes associated with ridehailing are disproportionately larger for wealthier consumers or more popular, superstar merchants. We observe the opposite. The changes observed with ridehailing are stronger for less-wealthy consumers and less-popular merchants. We also find evidence of increased activity by suburban consumers at urban merchants, suggesting potentially increased VMT associated with ridehailing by suburban consumers. Our paper's results have policy implications, illustrating the potential positive local spillovers if ridehailing is subsidized to low-income groups, which is currently being piloted. This paper's analysis of distributional consequences also extend to management and policy considerations of future micro-mobility services, such as fleets of autonomous ridehailing.

Keywords: ridehailing, urban consumption, distributional consequences of IT, sharing economy