Should Public Transit Be Free?

It boosts economic opportunity and social mobility. It’s good for the environment. So why do we charge people to use it? The short answer: it’s complicated. Also: We talk to the man who gets half the nation’s mass-transit riders where they want to go (most of the time).

This article comes from?Freakonomics Radio.?You can listen and follow our weekly podcast on?Apple Podcasts,?Spotify, or?elsewhere.

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How important is public transportation where you live? In most of the U.S. at least, the answer is: not very. But in New York City?

Janno LIEBER: In New York, transit is like air and water. You need it to survive. And so we’ve done, I think, a pretty good job of making transit affordable in New York. It’s between 10 and 15 percent the cost of owning an automobile.

That is Janno Lieber.

LIEBER: I’m the chair and C.E.O. of the M.T.A. in New York City.

Also known as the Metropolitan Transportation Authority.

LIEBER: M.T.A. is the New York state agency that operates the subways, the buses, the paratransit operation, and the commuter railroads, as well as a lot of our tolled bridges and tunnels in the New York area.

So yes, public transit in New York is pretty important. Maybe not quite as important as air and water, like Lieber says, but still: before Covid, the subway system had 5.5 million riders every weekday, and another 2 million on buses. The agency’s annual operating budget is around $20 billion. And how much of that comes from the fares paid by riders? Not as much as you might think!

LIEBER: About 25 percent of our budget is pure farebox from mass transit. Tolls are about $2.5 billion, and then the balance is a mix of dedicated taxes and fees, some state and local government support.

There is a growing argument that public transit is good for the environment, good for economic opportunity and social mobility, basically good for everybody. So we thought it might be worth asking: should public transit everywhere be free?

LIEBER: Well, we’re studying it right now, so it’s premature for me to have formed an opinion.?

Ah, but other people have formed their opinions. Haven’t they?

Brian TAYLOR: I cannot answer that without context.?

Today on Freakonomics Radio, one large serving of public-transit context. This is an updated version of an episode we first ran in the summer of 2022.

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Marcus FINBOM: My name is Marcus Finbom, and I work as a traffic planner in Stockholm, Sweden.

Marcus Finbom didn’t just dodge fares himself, and encourage others in Stockholm to do the same; he and his comrades at Planka also had a scheme to mitigate the risk of fare-dodging.

FINBOM: We mainly did this by organizing a solidarity fund. So if you got caught and you got a quite hefty fine — at the moment, I think it’s somewhere in the vicinity of $150 — the solidarity fund would pay this.

It’s a clever idea, this fare-dodging insurance plan. But that wasn’t Planka’s only goal, or at least its primary one. They wanted to challenge the idea that anyone should pay for public transit. For Finbom, this gets at some bigger questions about the relationship between transit and society.

FINBOM: What kind of city do you want? Do you want one open and accessible for everyone? Or do you want one with barriers and borders that hinder some and makes life just more miserable for some??

Marcus Finbom is not the only one asking such questions. Let’s move from Stockholm back to the U.S., to Boston.

DUBNER: If I were to ask you, let’s say, 10 years ago, which would you say was less likely: that the mayor of Boston would be Michelle Wu or that all public transit in Boston in, let’s say, 2030 would be free???

That is Michelle Wu and she is the mayor of Boston. She grew up in Chicago, came to Harvard for undergrad and law school, then served on Boston’s City Council for eight years before winning the mayoral election in 2021. As mayor, she wants to be aggressive.

WU: It’s very easy to be just reactive in these roles, and we have to exercise every bit of planning and capacity and organizational muscle to be proactive. I keep a countdown clock, a little widget on my phone, that shows me exactly how many days are left in the term, because every single day should count, and we have to move at a pace that is closer to the urgency in the communities as opposed to the usual pace of government.?

It’s not just the pace of government Wu dislikes; it’s how little risk they usually take on.

WU: If you maximize the chance that nothing will go wrong, then we won’t get close to the scale of change and transformation that’s needed.

If Boston were to eliminate transit fares, it would become the biggest American city to do so. Michelle Wu would therefore steal those bragging rights from this man.

Robbie MAKINEN: Robbie Makinen. I’m president and C.E.O. of the Kansas City Area Transportation Authority.

Actually, Makinen is now the former president and C.E.O. He left his job not long after we spoke with him. But on his watch, Kansas City, Missouri, became the first major city in the U.S. to make the move to free public transit.?

MAKINEN: We didn’t just flip a switch and say, “Hey, everything’s free.” We did a methodical, strategic process. We first made transit zero-fare for our veterans. All you had to do was show your veteran’s card and come on board. Next we went to the school districts, and we said, if a child wanted to stay after school for a chess club or football or whatever, and they missed that one yellow bus at 5:30 to get home, well, then what was going to happen? Mom would have to come get them, or they’d have to walk, so just giving them access to public transit was a big deal, and they enjoyed that. The third step was, we went to our safety-net providers — mental-health agencies, domestic-violence shelters. So by the time we got to where we were going to flip the switch to make zero-fare throughout the region, we were already 60 percent there.

Now, you may be asking yourself: when a transit agency stops charging its passengers, where does the money come from to run the system —?to buy and maintain buses and trains, to pay drivers and other employees?

MAKINEN: We have a $100 million budget. Less than 10 percent of that we were getting from the fare box.

Among transit people, this is called the fare-box recovery ratio. And it varies a lot from place to place. Here’s Brian Taylor, a transportation scholar at U.C.L.A.

TAYLOR: People often may not have an idea of how much the fare they pay goes for the cost of transit. Nationwide, fares cover about a third of the operating costs of a system, but they don’t cover any of the capital costs. So the buses, the trains, the equipment, the stations are all paid for with federal grants. And the cost of operating the service — the operators, the drivers and the mechanics, fuel, tires, wear and tear, things like that — about a third of that is covered out of fares and about two-thirds by government subsidies.?

But as we said, the fare-box recovery ratio can vary. As Janno Lieber told us, in New York it’s around 25 percent. Consider the pre-Covid numbers for two big California transit systems: Los Angeles Metro and BART, or Bay Area Rapid Transit.

TAYLOR: L.A. Metro is down in the teens, where BART is closer to 50 percent. ?

And remember what Robbie Makinen told us about the $100 million transit budget in Kansas City.

MAKINEN: Less than 10 percent of that, we were getting from the fare box.?

Meaning the vast majority of the operating costs were coming from federal, state, and local funding.

MAKINEN: And if you’re down that low from a fare-box recovery standpoint, you cannot tell me that I couldn’t walk in there and find that 10 percent. You can’t tell me there’s not a way to help the folks that need it the most. ?

Who need it the most financially, he means. The demographic makeup of public-transit ridership also varies from place to place, depending on the geography, the economics, even the history of a given city. In places like San Francisco and Boston and New York, traveling by car is time-consuming and expensive; therefore, more middle- and high-income people in those places use public transit. In Kansas City, meanwhile, where driving is easier and cheaper, there is a much larger share of low-income transit passengers.

MAKINEN: And to me, charging a fare is a regressive tax on the people who need it the most. When we started down this road, everybody wants to go back to some study that was done in 19- whatever the hell, excuse my language. Everybody said, “Oh my gosh, you can’t do it. Society’s going to break down.” You know, “crime everywhere.” “Cats living with dogs. Mass hysteria. That’s what’s going to happen.” Well, let me tell you, exactly the opposite happened here in Kansas City. And I’m going to tell you why. Over 75 percent of any incident we ever had on a vehicle was over a fare-box dispute, okay? Think about that. And since we took the fare away, we’ve had less than 20 incidents out of 10 to 13 million rides. That’s fantastic. And then the other part was they said, “Yeah, but now the houseless folks are just going to get on and stay on and live on your vehicles.” Well, you know what? First of all, there but by the grace of God go I and you, right? These folks are people, and they’re just people that need help. So what we’ve done is invent a pilot program where some of the homeless providers are putting case-management teams on our vehicles — based upon heat maps of where we need the most help —? and they can help them get to the shelters and the services that they can actually use. Rather than just putting more police with guns on a vehicle.?

Once Kansas City went fare-free, Makinen and his transit agency did have to make up a $9 million budget shortfall. They got $5 million from the municipal government and used federal COVID-relief funds to cover the rest. But that money will run out soon, and with Makinen — the program’s main champion — out of his job, the future of free transit in Kansas City is uncertain. The agency says it’s currently studying whether to start charging again. But advocates of free transit like to point out that eliminating fares can actually save money —?by saving time. Here again is Boston mayor Michelle Wu.

WU: We’ve already seen significant operational savings from the cost efficiencies of making our routes run faster.

In early 2022, Wu helped start a pilot program that eliminated fares on three bus lines that serve lower-income areas: Routes 23, 28, and 29.

WU: And you save some of the costs of fare collection.?

This is all starting to sound pretty convincing in favor of fare-free transit. You’ve got easier and cheaper access for passengers, especially low-income passengers; you’ve got fewer private cars, theoretically at least, and the congestion and pollution they create; even the price tag sounds manageable. So, coming up, does this mean that all transit should just be free?

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TAYLOR: The thing about transportation is that everybody does it, and so everyone thinks they’re an expert at it.?

That, again, is Brian Taylor.

TAYLOR: I go to a party and people come up and say, “You know what they ought to do? They ought to put a monorail down the middle of the freeway.” And I said, “Well, what do you do?” And they said, “Well, I’m a cardiologist.” I said, “You know what you ought to do? You ought to do more angioplasties and less coronary-artery bypasses.” “Well, why do you say that?” I said, “Well, I have as much expertise in cardiology as you do in transportation. I have a heart.”??

So what are Taylor’s transportation credentials?

TAYLOR: I’m a professor of urban planning and public policy, and I direct the Institute of Transportation Studies at U.C.L.A.

Okay. Let’s do a thought experiment. Imagine you run a big-city transit agency and you get a financial windfall, like a few hundred million dollars extra from the federal government, which happened quite a bit as part of the Covid response. Considering what Brian Taylor just told us —?that “people are at least as service-elastic as they are price-elastic,” how do you want to spend that windfall?

TAYLOR:? One thing we could spend it on is making the service free to everyone, and that might encourage more people to ride. Another thing we could do is to have more frequent service. And we know that people hate to wait and that more frequent service would also encourage people to ride.

Ah, the way we charge for fares. This is one of Brian Taylor’s pet peeves about public transit. A few years ago, he took his daughter to Boston to look at colleges.

TAYLOR: We did not wonder how we would pay for the hotel we stayed in. When we walked in at a restaurant, we didn’t say, “Do you take cash or credit cards or what? How will we pay for this?” There was no uncertainty.?

But when it came to the public transit in Boston …

TAYLOR: We walked out to get on the T —?and I’m someone who works in this field — we had no idea what to do. Absolutely no idea what to do. There was eight-point type laying out all of the fare policies. And I needed to go to a convenience store and buy a card. Could I pay cash? I didn’t know, there was confusion. Why public transit should it be so complicated and difficult to figure out? I have cards from Sydney, Australia, from Brisbane, from London, from Tokyo, from Shanghai — all of which are different, all of which have different rules.

To be fair, some of these places are much easier than others, and some use technology better — including, and this may surprise you, New York City.

TAYLOR: In New York, recently, I was visiting my daughters. I used Google Pay to use the train. What a breakthrough that was.?

So why don’t all transit systems let you just use an app on your phone to pay?

TAYLOR: The problem is, because public transit is publicly owned and operated, and we see as our goal to give mobility to everyone, not everyone has access to a smartphone or to a credit card. So in our efforts to try and be as inclusive as possible, we end up making paying to use transit as confusing as possible. And that’s a serious problem.

Coming up: as we consider free public transit, we also need to ask: where do cars fit into all this?

TAYLOR: I want to make driving great, but rarer.?

And: if you’d like to hear some earlier Freakonomics Radio episodes about transportation, I would suggest Episode 548, “Why Is the U.S. So Good at Killing Pedestrians?”; Episode 454, “Should Traffic Lights Be Abolished?”; and if you want to go way back in the archive: Episode 118, which we called “Parking Is Hell.” You can get all our podcasts on any app, for free.

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WU: I think we often talk about economics and policy and decision-making through data and graphs — and that’s all really important.

That, again, is Michelle Wu, the mayor of Boston.

WU: But it’s really hard to actually conceptualize what this means for people unless you experience it directly. Unless you are a daily commuter or need to get to work with a big, double stroller with two little children under the age of three in it on our public-transportation system.?

Wu wants to make public transit in Boston free.

WU: Fare-free transportation is funding public transportation as a public good and recognizing the right to mobility for every person to belong in every space and to be able to benefit from all that our city has to offer.

So that’s Wu’s argument for Boston. But again, different places have different transportation needs, and styles.

TAYLOR: The thing to understand about public transit is that public transit is very context-specific.

And that, again, is Brian Taylor, a transportation researcher at U.C.L.A.

TAYLOR: We operate public transit in places like Bakersfield, California, and Tulsa, Oklahoma, and its relative utility compared to private vehicles is a fraction of driving, because the environment in those places is around rewarding having an automobile and punishing its absence. So when we talk about public transit, abstracting it from the environment within which it operates is almost meaningless. Overall, the use of public transit is highly asymmetric —?that is, it’s not everybody rides a little bit. A very small share of the population rides a lot, another chunk of the population rides occasionally, and most people don’t ride at all. The thing you have to understand about public transit is there’s New York and everything else. And in fact, I just reviewed an academic paper where they simply held New York out of the equation because New York accounts for about four out of 10 transit trips in the entire United States.?There was a period where New York was gaining riders during a boom time, a decade or so ago, and much of the country was losing riders. But it appeared, if you looked at the top-line figures, that public transit was doing very well. New York was so big it could, by itself, move the needle.?

Not long ago, Taylor and his colleagues were approached by the Southern California Association of Governments to figure out another drop in transit ridership.

TAYLOR: Los Angeles, Southern California in fact, the state — was on a pretty good run of increasing investment in public transit, and rolled out a lot of new rail lines, improved bus service. And yet ridership was eroding at an accelerating rate.?

What’d they figure out?

TAYLOR: There were many factors associated with the eroding ridership, but the most important one was that households with no access to motor vehicles were gaining access to motor vehicles. You had lots of low-income households, immigrant households that were quite low-income, that over time the economy had been doing reasonably well and people were accumulating assets, and among those assets were motor vehicles. And even in middle- and higher-income households, you were going from one vehicle and two adults to two vehicles and two adults. ?

The colleague he’s referring to is in fact his wife, Evelyn Blumenberg —?another transit scholar at U.C.L.A.

TAYLOR: Better access to food, better access to healthcare, to education, which many concerned about the problems of dependence on automobiles chafe against that and say, “Well, that’s a problem.” Her response is that we shouldn’t balance our environmental policy on keeping poor people out of cars. “You all have spent the last century building cities around automobile travel. Why should it surprise you that when low-income people get access to cars, they’re better off?” We can say that low-income travelers drive too little and most of us drive too much.?

When Taylor says that we don’t make drivers responsible for the cost they impose on society — he’s really talking about two things. The first is that car travel produces a lot of what economists call negative externalities — things like pollution and congestion and accident risk that are not priced into the cost of travel. But there’s also the fact that most of our roads are essentially free; they aren’t priced according to supply or demand.

Shashi VERMA: The argument forever has been that you can’t price for roads because it’s a public good, and that’s fundamentally not true.

That is Shashi Verma, a longtime senior executive at Transport for London, which oversees pretty much the entire transportation network in London, including the roadways. And some of those roadways now cost a lot of money to use.

VERMA:?The congestion charge came in 2003 to discourage people from driving into central London.

The congestion charge today means it will cost you 15 pounds — that’s around $19 —?to drive into central London during the day. It’s estimated that this has helped reduce roadside emissions by up to 44 percent.

VERMA: If you could get cars out of the way and get more buses on the road, that is an overall benefit for society. It’s also a benefit for all the other things for which roads need to be used, which nobody would ever argue against. You wouldn’t want to be in an ambulance caught up in traffic.

So did congestion pricing in London increase public-transit use? That question is not so easy to answer.

VERMA: It’s very difficult to distinguish between the effect of the congestion charge versus other improvements we were making on buses.

That’s because at the same time congestion pricing came online for private vehicles …

VERMA: We were improving the quality of the bus network to give people an alternative anyway.

That made it hard for researchers to isolate the effect of congestion pricing. Still if you look at things in the aggregate:

VERMA: The aggregate impact of all of those things was that bus ridership increased by 60 percent, 6-0 percent, in a six-year period, from 2000 to 2006.

Does this mean the key to increasing public transit everywhere is just to make driving painfully expensive?

VERMA: The negative incentive is very much on driving, but the answer cannot be, “Well, we’ve started charging you, and go to the public transport system that already exists, which is now going to become worse because there are more people using it.” That cannot be the answer. So the two things — the incentive and the disincentive —?have to go hand in hand. If you tell people you can’t use your cars, you also have to give them an alternative.

And that, again, is Marcus Finbom, the Swedish traffic planner who used to be a fare dodger.

FINBOM: By decreasing the cost of public transit and at the same time increasing the cost of car, you will definitely switch riders. One really good example is when they introduced the congestion fees in the Stockholm region here. At the same time, they built a lot of park-and-ride systems. So if you lived in the outer parts of the region, you would take your car and park it and then take one of the new express buses directly into the city. And at the same time, they also introduced a one-zone system — with just $2 you could jump on the bus from anywhere. And this really increased the attractiveness of the public transit. And if you compare this with when they introduced the congestion fees in Gothenburg, it was quite contested.

Gothenburg is Sweden’s second-biggest city, after Stockholm.

FINBOM: And it’s the main port city of Sweden as well. And they did not put as much resources into getting new access to public transit. So it just made car ridership more expensive. And this got people really, really angry and actually shifted the whole political situation in the local parliament in Gothenburg. The ruling party lost power — it had a big effect.

Brian Taylor, from U.C.L.A., has also looked at the relationship between congestion pricing and public transit in Sweden.

TAYLOR: If you’ve ever been in Stockholm, it’s shocking. Public transit gets around very quickly and easily. People do drive there, but the streets aren’t packed with traffic. You can choose to drive in and out of central Stockholm, but you have to pay for it. And because of that, when you can take public transit or bike or walk or travel by some other means, people do it. So it’s not that it’s an unpleasant place to drive, it’s that it’s an expensive place to drive. It’s the same thing as flying over Thanksgiving or Christmas or staying at a hotel during peak holiday periods — the price goes up and down to bring supply and demand in line. Otherwise, we’d just have people queuing up, and that’s what we do now.?

So, what do you think about this wrestling match between public transit and private automobiles? Your answer probably depends on where you live, how old you are —?and how much you like your car, if you have one. And what do you think about the idea of making public transit free? For that, let’s go back to the man who oversees nearly half of all mass-transit riders in America.

LIEBER: I’m Janno Lieber. I’m the chair and C.E.O. of the M.T.A. in New York City.?

But Lieber’s portfolio is even broader than mass transit. It covers road tolls as well —?and the M.T.A. is finishing up a plan to charge drivers extra to come into parts of Manhattan, like the London congestion charge we heard about earlier.

LIEBER: In 2019, the New York state legislature adopted congestion pricing, where we’re going to toll the busiest area of the central business district of Manhattan —? so, south of 60th street in Manhattan, there’ll be a toll. What it will do is to capture that revenue, which is projected and expected to be, under the legislation, to be about $1 billion a year, which we’re going to invest in fixing the mass transit system and improving the mass-transit system. And even people who drive, who have to drive, or trucks that come in because they can’t take mass transit and they need to serve the business district, will benefit because they’re not going to sit in traffic for an extra hour.?

So, is any of that new money going to make buses or trains free? And what does Lieber make of the free-transit argument generally?

LIEBER: Is it the best way to benefit riders? All of the evidence that we’ve gathered so far is the thing that riders want, and that really turns them on the most is more service, more frequent service, more reliable service, and faster service. The best move may be to invest in service rather than investing in free.

That said, New York City has recently begun a pilot program, like Boston, on a few bus routes.

LIEBER: There is one bus line in each borough of the city of New York, each of our five counties, that is free. So we’re experimenting to see if that does impact on ridership, how it affects people’s usage of the system. So we’re in the middle of that.

On his way out of the studio, Janno Lieber made one more good point about the debate over fare-free public transit. For politicians, he said —?and I would put transit activists in this camp as well —?supporting free transit is an easy win; it makes them look good and it costs them almost nothing. But when you talk to transit scholars, and the people who actually run the systems —?like Lieber — well, like most things in life, it’s complicated. Speaking of complicated arguments: that’s kind of what we do on this show. And if you’re a die-hard on one side of an argument or another, that might leave you unsatisfied. This isn’t how a lot of media works these days. They tend to preach to one choir or the other. What we do —?or at least what we try to do — is a bit different: we mostly go after stories that we find interesting, and are hopefully important; and then we find people who know a lot more about those stories than you or I do, and we ask them questions, and we listen to their answers. This seems pretty basic.

Anyway, I just wanted to say that I appreciate your listening to our work. One thing I love about making this show is that we’ve got one of the most interesting audiences in modern media. It’s a very balanced audience, and diverse in a lot of different ways: politically, economically, philosophically; also demographically — we’ve got young and old, female and male; U.S. and international. And reading your emails, I see that you’re also an extraordinarily diverse audience in terms of what you do for a living and what you do for fun. What happens around here shouldn’t be rare, but I believe it is: having conversations with smart people about complicated things, knowing that there are a couple million smart listeners out there who want to hear that kind of conversation. So, I appreciate that, and I appreciate you.

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Freakonomics Radio?is produced by Stitcher and Renbud Radio. This episode was produced by?Ryan Kelley; we had research help from Samantha Resnik. Our staff also includes?Alina Kulman, Eleanor Osborne, Elsa Hernandez, Gabriel Roth, Greg Rippin, Jasmin Klinger, Jeremy Johnston, Julie Kanfer, Lyric Bowditch, Morgan Levey, Neal Carruth, Rebecca Lee Douglas,?Sarah Lilley,?and?Zack Lapinski.?Our theme song is “Mr. Fortune,” by the Hitchhikers; all the other music was composed by?Luis Guerra.