EFFICIENCY AND EQUITY IMPACTS OF CURRENT TRANSIT FARE POLICIES

Abstract

Over the past decade, most transit operators in this country have switched from graduated and zonal pricing to predominately flat fares. Many have hypothesized that flat-fare systems are both inefficient and regressive. This paper statistically tests several hypotheses related to the redistributive effects of three California transit operators' current fare structures. Disparities between users' fares and trip costs were found to be greatest as a function of trip distance. Those traveling less than 2 miles tended to pay inordinately high fares per unit of service. Trips beyond 6 miles were generally cross-subsidized by short-distance users. Moreover, off-peak patrons were found to return between one-quarter and one-half more of their costs through the farebox than peak-hour riders. On the whole, redistributive effects of current pricing appeared to be only modestly regressive. Lower income, transit-dependent, and minority users tended to return a higher share of their costs than the average passenger, although equity impacts varied appreciably among study sites. (Author)