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To: FUBHO who wrote (584)9/22/2017 5:20:29 PM
From: Glenn Petersen
   of 664
London's Uber Ban Is a Big Brexit Mistake

Why would tech companies want to invest in the U.K. and subject themselves to such a slap in the face?

by Tyler Cowen
Bloomberg View
September 22, 2017

How much to Heathrow?
Photographer: Dan Kitwood/Getty Images

Prime Minister Theresa May made a big speech Friday on Brexit negotiations, but the bigger news coming out of London may have been that the transit authority, Transport for London, decided not to renew the license of Uber Technologies Inc. to operate inside city limits. The decision is a clear statement that the future of both London and the U.K. are less bright than we might have thought even a few days ago.

Banning Uber shows that a post-Brexit nation won’t be the libertarian paradise that many Brexit advocates have been predicting or at least clamoring for. The notion was that European Union regulation was horribly restrictive, and British business would blossom under a reign of newfound freedom, if only it could be left to its own devices. Although that was never very plausible to begin with, it was a common argument from Brexit supporters such as MP Daniel Hannan. It’s now hard to raise that point with any credibility.

The new Britain appears to be a nationalistic, job-protecting, quasi-mercantilist entity, as evidenced by the desire to preserve the work and pay of London’s traditional cabbies. That’s hardly the right signal to send to a world considering new trade deals or possibly foreign investment in the U.K. Uber, of course, is an American company, and it did sink capital into setting up in London -- and its reputational capital is on the line in what is still Europe’s most economically important city. This kind of slap in the face won’t exactly encourage other market entrants, including in the dynamic tech sector that London so desperately seeking.

A striking feature of this decision is the use of an outright ban rather than a gentler negotiation. Whether or not you agree with them, there are plausible criticisms of Uber. You might think the drivers need stronger security checks, the company needs to be removed from congested areas, it should pay more for local infrastructure, its drivers face subpar labor standards, and so on. Those worries, to the extent they are true, would suggest some mix of higher regulations and taxes for Uber. Yet the announcement of a pending ban is sending a broader signal to London and indeed British business that due regulatory process might be weak moving forward. It’s enough to make one long for the arduous, multistage regulatory decision processes of the EU.

The good news is that the announcement did seem to leave open the possibility of revision through the appeals process. The London transit authority cited Uber’s approach to crime reporting and medical certification, as well as a lack of transparency to regulators as reasons for the ban. That suggests a revamped Uber might stand a chance. In the meantime, the service is up and running.

But is the best way to deal with business regulation to take dramatic moves that grab headlines and fill my Twitter feed? Or does this tend to politicize and polarize opinion on what should be more narrowly technocratic issues?

The Uber ban might seem like a kind of populist measure, but from the consumer side it is likely to harm wealthy Londoners the least, or perhaps even benefit them. I’ve taken many cab rides and Uber rides in London, and in general I find the cabs to be pretty expensive. But they offer better service. You can find one right away, the drivers have a remarkable and indeed fabled knowledge of London roads, they are on the whole good drivers, and the vehicles are large and comfortable. I prefer to take London cabs over London Uber, even when Uber might be cheaper.

Over time, let’s say Uber would continue to encroach upon the cab business. It then becomes harder to hail cabs, as arguably is already the case. Uber fares might be lower, but the average quality of the ride would be lower too. That’s a better deal for poorer people, and an inferior deal for the well-off. Wealthy people are just fine with paying more and getting the better service. So in essence the Uber ban is locking in a system that harms poorer Londoners the most. Keep in mind the London Tube is not 24/7, and cabs are often more reluctant to pick up customers from dicier neighborhoods.

Of course, London cabbies are better off from the ban, and there are anecdotal reports of them celebrating in the streets. That’s sooner a sign of bad public policy than a beneficial act for London users and riders, numbering about 2.5 million for Uber. Although cabbies are likely to see higher incomes, an estimated 40,000 people are driving for Uber in London. They will have a harder time making ends meet.

Unfortunately, the U.K. is in a position where it can’t afford too many more mistakes. It just made one.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Tyler Cowen at

To contact the editor responsible for this story:
Stacey Shick at

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To: Glenn Petersen who wrote (585)9/22/2017 5:26:14 PM
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I'm confused why that writer is equating the London ban with nationwide policies.

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From: FUBHO9/23/2017 9:44:22 PM
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Khan could be in breach of equality rules as UBER fights ban...

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From: FUBHO9/27/2017 3:46:32 PM
1 Recommendation   of 664
IT’S A SHAKEDOWN: More evidence that the London Uber ban is about politics and demanding concessions, not safety. You can read my take here if you haven’t seen it already.

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From: Glenn Petersen9/28/2017 10:37:08 PM
   of 664
Ikea has bought TaskRabbit

The Swedish home goods giant is looking for some digital help from the contract labor marketplace.

by Kara Swisher and Theodore Schleifer
Sep 28, 2017, 11:35am EDT

The heads of TaskRabbit and Ikea Group: Stacy Brown-Philpot (left) and Jesper Brodin Ikea

Swedish home goods giant Ikea Group has bought TaskRabbit, according to sources close to the situation.

The price of the deal could not be determined, but the contract labor marketplace company has raised about $50 million since it was founded nine years ago. Sources added that TaskRabbit will become an independent subsidiary within Ikea and that CEO Stacy Brown-Philpot and its staff would remain.

Sources also noted that Ikea would add capital to the company, although that amount could not be determined. TaskRabbit, which is now profitable, will also be able to strike other partnerships, such as one it already has with Amazon.

TaskRabbit is one of the best-known startups in the so-called “gig” economy that links freelance workers with jobs, from handymen to movers to assistants. It has about 60 employees, but over 60,000 independent workers use its platform.

The purchase of TaskRabbit was fueled by Ikea’s need to further bolster its digital customer service capabilities to better compete with rivals likes Amazon, which has stepped up its home goods and installation offerings. The purchase is Ikea’s first step into the on-demand platform space.

TaskRabbit had already struck a pilot partnership with Ikea around furniture assembly in the United Kingdom and also had marketed its workers’ ability to put together Ikea items in the U.S. and elsewhere.

But a purchase of TaskRabbit will get Ikea even more deeply into the tech space, although it has not been without some tech innovation of late. The company — which has sales of more the $36 billion annually and 183,000 workers — recently announced an initiative to shift its 389 stores worldwide to electric car transportation and infrastructure.

And this week, it released a nifty augmented reality app for the Apple iPhone, called “Ikea Place.” Using the phone’s camera, a customer can scan a room and then place Ikea furniture virtually to see how it looks (see below). It has gotten positive reviews.

The cool new augmented reality app from Ikea helps you decorate virtually Ikea Previous acquisitions by Ikea have ranged in price from $20 million to $90 million, according to PitchBook data.

The TaskRabbit acquisition, which was finally completed this week, comes six months after Brown-Philpot said that the company had been responding to sales interest from strategic buyers.

“It’s opportunistic,” said Brown-Philpot in an interview with Recode, but declined to provide more details about the process. Sources said over the last several months there was other buyer interest, including from Yelp, Google and IAC.

The deal came together as the San Francisco-based company was in the process of raising another round of funding; TaskRabbit used Bank of America Merrill Lynch as advisers.

TaskRabbit’s investors include venture firms like Shasta Ventures, Lightspeed Venture Partners and Founders Fund. Sources said the company did another small financing last year from an international investor.

That was all to continue its expansion of cities in the U.S. to 40 from its current 24 locations. In a Recode Decode podcast last September, Brown-Philpot said TaskRabbit was cash flow positive in its cities, and close to reaching profitability overall.

Brown-Philpot, a former Google exec and a board member at HP Inc., took over the top job at TaskRabbit from founder Leah Busque in mid-2016. Busque, as Recode reported earlier this week, has recently joined the seed-focused Fuel Capital as a venture partner. Busque founded TaskRabbit, originally called Run My Errand, in 2008.

For those who do not know the massive retailer — or have never spent hours assembling one of its Kallax shelves using those tiny little L-shaped hex tools — the Ikea Group is led by Jesper Brodin. The longtime company veteran had previously run its Swedish unit and replaced Peter Agnefjall, who led the company for only four years.

TaskRabbit and Ikea declined to comment.

Update: Ikea and TaskRabbit have confirmed the deal to Recode.

“In a fast-changing retail environment, we continuously strive to develop new and improved products and services to make our customers’ lives a little bit easier. Entering the on-demand, sharing economy enables us to support that,” Ikea chief Jesper Brodin said in a statement. “We will be able to learn from TaskRabbit’s digital expertise, while also providing Ikea customers additional ways to access flexible and affordable service solutions to meet the needs of today’s customer.”

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From: TimF9/30/2017 10:41:43 PM
   of 664
Why You Can't Always Trust a 5 Star AirBnB
Why AirBnb's review process is pressuring guests to give positive reviews.
by Charity-Joy Acchiardo

Originally published at

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From: Glenn Petersen10/1/2017 10:36:42 PM
   of 664
Inside the Latest Power Struggle at Uber

New York Times
October 1, 2017

The latest board fight at Uber is over a proposed plan that would expand the powers of the company’s new chief executive, Dara Khosrowshahi. Credit David Ryder/Bloomberg

SAN FRANCISCO — The phone calls began late Friday among Uber’s new chief executive, Dara Khosrowshahi, and the ride-hailing company’s executives, as well as board members and a raft of lawyers. They were facing an emergency.

The problem was that Travis Kalanick, Uber’s former chief executive and a board member, had appointed two new directors — Ursula Burns, the former chief executive of Xerox, and John Thain, the former chief of Merrill Lynch — to the privately held company without informing them. The moves, which pushed the nine-member board to 11 people, gave Mr. Kalanick new potential allies on major decisions at Uber.

Mr. Kalanick’s actions were “disappointing,” Mr. Khosrowshahi wrote on Friday in a letter to employees that was obtained by The New York Times. “Anyone would tell you that this is highly unusual.”

The trigger for Mr. Kalanick’s move — one made possible by a board vote last year giving him control of three seats — was a proposal that Mr. Khosrowshahi and the investment bank Goldman Sachs, an Uber shareholder, brought to the board on Thursday. The proposal, which is set to be discussed by directors on Tuesday, includes measures that would shift the power on Uber’s board by reducing Mr. Kalanick’s voting clout, expanding Mr. Khosrowshahi’s powers and imposing a 2019 deadline on the company to go public, according to three people with knowledge of the proposal who asked to remain anonymous because they were not authorized to speak publicly. Parts of the proposal were also read to The Times.

The power shift proposed by Mr. Khosrowshahi and Goldman Sachs spurred Mr. Kalanick to act to reassert control, according to a statement Mr. Kalanick issued on Friday. That has now plunged Uber into another period of uncertainty and a corporate governance crisis, at a time when the company had been trying to move beyond its controversial past with a new chief executive on board.

Uber is “attempting to copy some things that characterize good governance at a public company,” said Charles M. Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. But, he added, parts of the proposal “typically show up when you have poor management and are generally opposed by public shareholders.”

The governance plan that touched off the latest politicking was created by Mr. Khosrowshahi and Goldman Sachs as part of a bigger effort to finalize a deal to sell billions of dollars of Uber stock to the Japanese conglomerate SoftBank, according to a person briefed on the proposal.

That deal depends on the participation of some early Uber investors, who have said they will not sell their shares to SoftBank unless Uber’s governance structure changes and Mr. Kalanick is barred from returning as chief executive. Those investors include the venture capital firm Benchmark, which put money into Uber early on and has more recently been warring with Mr. Kalanick over his control of the company.

Here are some of the specifics of the proposal that Mr. Khosrowshahi and Goldman Sachs put before the board on Thursday, including details that are in flux, according to the three people briefed on the proposal and the parts of the plan that were read to The Times. Some parts of the proposal were earlier reported by Recode.

¦ According to the proposal, if the Uber board seats currently held by three directors — Ryan Graves, Arianna Huffington or Wan Ling Martello — are vacated, Mr. Khosrowshahi gains the power to nominate directors for those spots. The new directors must be approved by a majority of the board and by a majority of all shareholders.

¦ The plan also includes a proposal to remove the outsize voting power carried in two categories of Uber stock, the Class B common shares and the preferred shares. Class B common shares currently offer their holders 10 to 1 voting power, for example. But under the proposal, that would change to one vote per share. The change would diminish the power of some current shareholders, like Mr. Kalanick, as well as that of Benchmark and other venture investors.

¦ The proposal also suggests that Uber elect only a few board members each year, in effect setting a cap. That would make it hard for an activist shareholder to take over the board.

¦ One part of the proposal takes direct aim at Mr. Kalanick. The measure states that any person who has previously been an officer of Uber can return as chief executive only if he or she can get the approval of two-thirds of the board and 66.7 percent of all shareholders.

¦ The proposed plan also imposes a 2019 deadline for Uber to go public. To ensure that the public offering happens at that time, there is a provision that if more than one third, but less than one half, of the board wants an I.P.O., they can add directors until they have the control over the board they need to make the public offering happen. This provision may be dropped.

¦ The plan does allow Mr. Kalanick to keep his board seat, subject to the approval of Mr. Khosrowshahi. Of the two other board seats that Mr. Kalanick controls, one would be given to SoftBank while the other would be filled by the chief executive of a Fortune 100 company, if approved by the majority of the board and a majority vote of all shareholders. If for some reason Mr. Khosrowshahi rejected the proposed board member three times, he could designate someone for the third seat himself.

For now, most of Uber’s directors are reluctant to oppose the new board appointments of Mr. Thain and Ms. Burns made by Mr. Kalanick, according to two people who were briefed on the calls. Ms. Burns, the first African-American woman to helm a Fortune 500 company, and Mr. Thain, who also ran the New York Stock Exchange, could potentially help Uber address issues around company culture and diversity, and better prepare it to go public.

To employees, Mr. Khosrowshahi wrote: “Just know that the most important work here is the hard work you’re doing on behalf of our company. Keep focused, keep together, and keep going.”

Correction: October 1, 2017
An earlier version of this article misstated the number of members on Uber’s board. The board had nine members before the two new appointments raised it to 11; it was not an eight-member board.

Follow Katie Benner on Twitter @ktbenner and Mike Isaac @MikeIsaac.

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From: Glenn Petersen10/4/2017 6:54:59 AM
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Uber, but for Grandma

Rideshare startups tackle the senior-transport crisis, and test problem-solving the limits of tech.

09/27/2017 05:03 AM EDT

Kate Francis for POLITICO

After experiencing two seizures while behind the wheel—first plowing her car into the side of a drugstore and then, less than a year later, into a stone wall—Connie Godby gave up driving for good late last year. Even when she can control her seizures, vestiges of a brain tumor she suffered more than a decade ago, the arthritis curling her left hand makes it hard to grip the wheel. She recently moved from Kentucky to the Maryland suburbs of Washington, D.C., to live with her daughter and son-in-law, busy professionals with two small children and scarce time to ferry her around. So she does it with an app. She is now one of a growing number of seniors using ride-hailing services like Uber and Lyft to get around.

A graying America is also an America that is gradually, reluctantly, sometimes painfully giving up its keys. Driving can be dangerous for people with slowed reflexes and cognitive functioning, but not driving can be dangerous too: A lack of independent mobility leads many seniors to miss medical appointments and can isolate them from the social support network that is clinically shown to prolong life. Unfortunately, the nation’s transportation infrastructure relies heavily on cars. Faced with long rides on multiple trains and buses with unpredictable schedules, many seniors end up just staying home.

But today’s seniors are also aging at a time of rapidly multiplying transportation options in the private sector, with ride-hailing companies like Uber and Lyft at the front of the pack. Those companies blossomed amid the millennial-oriented sharing economy, serving wired young urbanites accustomed to meeting all their needs via smartphone. For some seniors, they represent the same kind of lifeline—although they also pose some new challenges.

The companies themselves have recognized the business potential of tapping into America’s rapidly growing senior population: Uber and Lyft are both busily building partnerships with senior care facilities and hospital centers. It's not always easy, though, and their struggles are a window into the challenges of delivering tech-based solutions to a population that grew up in a very different world.

Godby uses a walker that folds up easily, not a wheelchair, which requires an entirely different kind of vehicle. And she uses a smartphone, but she’s in the minority—just 42 percent of Americans over 65 own a smartphone, compared with 77 percent of the general population.

To bridge that gap, some third parties, with names like GoGoGrandparent, have created hotlines seniors can call if they can’t or don’t want to use a smartphone to hail a ride—though they add a significant fee to the cost of each trip. Uber is sending representatives down to retirement homes in Florida to preach the gospel of ride-sharing to the senior set. All these are attempts to connect a useful mobility solution with a population that desperately needs one—but there’s still much to figure out.

TRANSPORTATION MIGHT SOUND like a secondary issue for older Americans, compared with massive needs like health care, but it's almost as essential and gets far less public investment and policy attention. Getting around often represents the single biggest challenge of being old. Resource hotlines for elders report that transportation is the No. 1 reason people call—and often, they’re desperately looking for a ride to the doctor the next day. Lack of transportation access is a primary reason older people move into assisted-living facilities, a life change many would prefer not to make.

Public transportation can sometimes be an option for seniors, but the great majority live in suburban areas that are poorly served by transit. Even for those lucky enough to have convenient public transportation options nearby, simply learning to navigate a transit system—including all its accessibility options—can be intimidating; so much so that some systems, like Washington, D.C.’s, WMATA, have started providing customized transit trainings for senior citizens and people with disabilities.

A handicapped woman with crutches waits at bus stop. Transportation is often a major problem for seniors, even if we don’t often think of it that way. Ridesharing companies like Uber or Lyft could be the solution. | Getty Images

Paratransit—on-demand, door-to-door minibus services run by transit authorities to supplement fixed-route bus and rail lines—is limited, expensive to run and generally doesn't extend far beyond existing bus routes. Riders don’t like paratransit much either, since rides usually need to be booked at least 24 hours in advance. Even just going through the process of getting approved to use the service can be an ordeal.

All of this is what makes private vehicles such an attractive option—and cities are taking notice. This doesn't always mean the newer ride-hailing companies: Last week, Washington, D.C., launched its “Abilities-Ride” service, which subsidizes taxi rides that people can use in place of paratransit. (The city chose the taxi companies over Uber and Lyft in part because of the better availability of wheelchair-accessible vehicles.) Arlington, Virginia’s, Area Agency on Aging also chose taxi companies—not ride-hailing companies—for its voucher program, selecting the companies it did because they had a track record of respectful customer service that went the extra mile for older customers, like helping people in and out of the car. Most importantly, though, they are willing to accept the vouchers, which don’t include tips.

But popular ride-hailing app-based services Uber and Lyft want a piece of the action, too. Lyft has staff dedicated to health care partnerships, and Uber has people focused on “mobility,” including access for the elderly and people with disabilities.

“On-demand transportation will really not just serve 18- to 25-year-olds who are out late at night," said Allison Wylie, an Uber employee who works to strengthen connections with the senior community. "It’s something that can improve the lives of people who lose their keys.”

Boston’s Massachusetts Bay Transportation Authority is supplementing its paratransit program by using Uber and Lyft, which it subsidizes for qualified riders who don't need the full assistance that paratransit provides. Riders who need help getting to or into the vehicle, or who use a wheelchair, are advised to stick with paratransit.

Those limitations illustrate the growing pains the ride-hailing companies are experiencing as they seek to serve a population with more complicated needs than the nimble young urbanites they’d grown accustomed to dealing with. Both companies provide wheelchair-accessible vehicles, but only in a very limited number of markets—and even those markets often have far too few vehicles. Uber, for its part, launched an UberAssist option in 2015 for people who need additional help, where specially trained drivers can help passengers in and out of vehicles, but it’s still operating at a small scale.

Lyft is working on ways for seniors without smartphones to use the service, but for now, the most widely available option is available only on the large-font, simple-screen Jitterbug phone target-marketed to the elderly. Riders press “0” on the phone to talk to an operator, who then orders the Lyft. The company clearly sees this as a growth area: It built a new platform, called Concierge, that allows the operators to request rides for others, and it has also brought the Concierge service to senior care centers and hospitals, making it easier for those facilities to request a ride on behalf of their clients. Similarly, Uber noticed that a lot of people were requesting pickups for a location other than their own—indicating that they were for someone else, often a parent or grandparent—and smoothed that process, a new feature it internally calls “UberBounce.” But neither of those are a full solution for app-averse seniors.

AFFORDABILITY IS ANOTHER barrier. Seniors often don't have much discretionary income, and paratransit is heavily subsidized. Ride-hailing services are often cheaper than taxis, but the costs still add up, limiting mobility in a different way.

Some medical facilities and health insurers have started trying to pick up the burden themselves. Older patients miss subspecialty doctor appointments as much as 30 percent of the time, according to AARP, which can lead to costly emergency-room visits and ambulance rides. Some health care companies believe that driving down those no-show rates is worth the cost of an Uber ride. Hospitals in New York City and the Washington, D.C., metro area have started facilitating ride-booking to non-emergency medical appointments, with Medicaid and other insurance plans sometimes picking up the tab. BlueCross BlueShield has identified “transportation deserts” where medical care is hard to access without a car and are offering patients in those areas free access to Lyft as a way to reduce the number of missed appointments.

A woman uses the Massachusetts Bay Transportation Authority's paratransit, service, The Ride. | Getty

The trend has been aided by a recent ruling by the Department of Health and Human Services that it’s not a “kickback” for hospitals to pay for patients’ transportation, which could dramatically increase the medical sector’s participation in paying for on-demand rides.

In a more ambitious experiment, AARP Foundation just announced a new pilot program with UnitedHealthcare, Lyft and the University of Southern California to give free, unrestricted rides to people at high risk of missing a medical appointment. Participants will get three months of free rides for any purpose—not just medical—and their physical activity will be tracked on a FitBit. It amounts to a bet that increasing mobility will have positive effects beyond just making the appointment. Similar pilot programs are being considered for Chicago and Atlanta next year, but as of now it’s just a tiny test group.

Uber has suffered a slew of PR disasters, including the devastating #DeleteUber campaign, giving the company an extra incentive to show some compassion by providing services to a more challenging population. But it’s not all charity: It sees expanding the service to serve seniors, a rapidly growing slice of the population, as a good business investment.

Is it sustainable? That's not clear yet; as big as they are, Uber and Lyft are still money-losing startups that compete with taxis by keeping their rates artificially low. For riders, those rates are a big part of the draw. The times she’s had trouble with the apps and ended up taking a taxi, Godby says she was floored by the high prices. And she finds that Uber and Lyft drivers almost always jump out to help her when they see her standing in front of the house with a walker.

“I’m not the bravest when it comes to making a change,” Godby said. “I don’t have many apps; I don’t want many apps. But it works.”

Tanya Snyder is a transportation reporter for POLITICO Pro.

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From: Glenn Petersen10/9/2017 9:35:50 PM
   of 664
Uber vs. Taxi: A Driver's Eye View

Joshua D. Angrist, Sydnee Caldwell, Jonathan V. Hall

NBER Working Paper No. 23891
Issued in September 2017
NBER Program(s): IO LE LS PE

Ride-hailing drivers pay a proportion of their fares to the ride-hailing platform operator, a commission-based compensation model used by many internet-mediated service providers. To Uber drivers, this commission is known as the Uber fee. By contrast, traditional taxi drivers in most US cities make a fixed payment independent of their earnings, usually a weekly or daily medallion lease, but keep every fare dollar net of expenses. We assess these compensation models from a driver’s point of view using an experiment that offered random samples of Boston Uber drivers opportunities to lease a virtual taxi medallion that eliminates the Uber fee. Some drivers were offered a negative fee. Drivers’ labor supply response to our offers reveals a large intertemporal substitution elasticity, on the order of 1.2. At the same time, our virtual lease program was under-subscribed: many drivers who would have benefitted from buying an inexpensive lease chose to opt out. We use these results to compute the average compensation required to make drivers indifferent between ride-hailing and a traditional taxi compensation contract. The results suggest that ride-hailing drivers gain considerably from the opportunity to drive without leasing.

The fill working paper:

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From: TimF10/14/2017 1:49:45 PM
1 Recommendation   of 664
How much do Uber drivers value flexibility?
Daniel Pryor

Uber drivers often explain why they choose to drive for the company in terms of more flexible working arrangements. Last month, an independent poll revealed that 80% of Uber drivers in the UK would prefer to remain as contractors, but the unions campaigning to give these drivers worker status don’t seem to care about the views of the people they’re claiming to help.

In most U.S. cities, Uber’s ride-hailing model provides greater flexibility than traditional taxi models because (among other things) it doesn’t use a medallion system. Most taxi companies make money by renting medallions to drivers, who pay a daily or weekly fee for the right to drive. Instead, Uber charges a percentage commission on each journey, which means drivers who only want to do a few rides can do so without losing out. To assess how much drivers value the commission fee model over the medallion system, two MIT economists and an in-house economist from Uber offered 1,600 randomly selected Uber drivers in Boston the opportunity to lease a virtual medallion that eliminates Uber’s commission-fee. People might be sceptical of a working paper co-authored by an Uber economist, but their study was released on the reputable, non-partisan NBER last month. The other co-authors are also eminent, non-partisan economists.

The researchers offered Uber drivers a range of medallions at different prices, recording their opt-in rates and logging the amount they worked. Using this data, they were able to estimate how much these drivers prefer Uber’s commission model to a traditional taxi medallion system. This can be expressed in monetary terms as “compensating variation” (CV): how much money it would take for Uber drivers to be indifferent between the commission model and the taxi medallion system.

Using the most realistic estimates of wage gaps between Uber and taxi drivers, as well as medallion costs, the study finds that average CV is $437 per week. Boston’s Uber drivers place significant value on a more flexible commission model. For Uber drivers who don’t spend many hours working per week, this makes intuitive sense. The fixed cost of a medallion would outweigh the gains from driving fee-free. But even among drivers who would have expected to earn more per week with a medallion system, many did not opt to use it. This could be explained by a combination of loss aversion and risk aversion: the former being the idea that “the decision to buy a lease may be a gamble that drivers hate to lose” and the latter being drivers’ reluctance to gamble money upfront in exchange for uncertain gains during the week.

Although the study’s conclusions are more directly relevant to U.S. lawmakers, they are also a reminder to UK regulators that Uber’s more flexible working arrangements are highly valued by its drivers. They care about having greater freedom to choose their own hours: so much so that they are willing to trade off potentially higher earnings in order to preserve that freedom. The same is also true of Uber's customers, who benefit from the influx of supply during predictable peak hours that Uber's flexible surge-pricing model makes possible. If Uber loses its appeal against last year’s ruling that its UK drivers are workers rather than contractors, many of the benefits of flexibility will be lost.

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