The Effect of Public Transport Subsidies on Travel Behavior and Welfare: A Large-Scale Randomized Controlled Field Experiment in a Developing Context

36 Pages Posted: 19 Jan 2023

See all articles by Luis A. Guzman

Luis A. Guzman

Universidad de los Andes, Colombia - Department of Civil and Environmental Engineering

Santiago Gómez Cardona

affiliation not provided to SSRN

Jorge Luis Ochoa Rincón

Universidad de los Andes, Colombia

Abstract

Few studies have evaluated the impacts of public transport subsidies in Latin America, and even fewer studies have used randomized controlled field experiments on a large scale. Understanding the effectiveness of subsidies is important, especially in Latin American cities, where public transport systems are utilized by a large part of the population and particularly by those with low incomes, who have particular travel patterns and preferences, affordability issues, and financing issues. Here, a case study using a large-scale randomized controlled field experiment (N=1,607) is presented in Bogotá, Colombia. Using a unique controlled field experiment in which a randomly selected group of frequent public transport users received a transport voucher for four months, we estimate the causal mechanisms of the effects of providing cash transfers to travel cards on travel behavior and derived welfare. In this case study, public transport vouchers stimulate ridership more than the current fare discount public transport subsidy. We find that the vouchers increased ridership by up to 8.7% on average compared to the control group. This increase is concentrated during weekdays and peak hours. In addition, by measuring welfare using a consumer surplus approach, we found evidence that vouchers are effective when it comes to inducing positive welfare effects for commuters while a fare discount is not. This is most beneficial for low-fare-demand elasticity populations; these populations represent the main users of public transport. Overall, our results suggest that alternative public transport subsidies can be an effective way for increasing public transport use, which also translates into welfare gains, and cost-effective policy.

Keywords: public transport, RCT, Public transport pricing, Travel voucher, Bogotá

Suggested Citation

Guzman, Luis A. and Gómez Cardona, Santiago and Ochoa Rincón, Jorge Luis, The Effect of Public Transport Subsidies on Travel Behavior and Welfare: A Large-Scale Randomized Controlled Field Experiment in a Developing Context. Available at SSRN: https://ssrn.com/abstract=4330371 or http://dx.doi.org/10.2139/ssrn.4330371

Luis A. Guzman (Contact Author)

Universidad de los Andes, Colombia - Department of Civil and Environmental Engineering ( email )

Santiago Gómez Cardona

affiliation not provided to SSRN ( email )

No Address Available

Jorge Luis Ochoa Rincón

Universidad de los Andes, Colombia ( email )

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