Why price isn’t everything when it comes to public transport

Researcher Oded Cats is leading a study of Tallinn's free public transit policy.

Oded Cats is a transportation researcher at the Royal Institute of Technology in Sweden. He’s also the lead author of a study assessing a year-old policy in Tallinn, Estonia to offer citizens free public transit. Citiscope’s urban innovation feature this week looks at how Tallinn’s experiment is going.

Cats’ initial findings suggest that free-transit pricing is having a more modest impact than many expected. For example, the bump in ridership attributed to the fares was just 1.2 percent. The study period was from January to April of 2013. Results of a more detailed analysis of individual travel patterns are due out in a few months.

I spoke with Cats about the research and what cities around the world should take from Tallinn’s experience. This Q&A has been edited for length and clarity.

Christopher Swope: What is it about Tallinn that makes it a good case study for you as a researcher?

Oded Cats: One reason is the scale  Tallinn is the largest city in the world to offer free public transport. And the other is, it’s universal. So it’s for all residents, unlike previous attempts at free public transport that were focused on students or pensioners or youth, which are the typical target groups. In this case it was for all residents of Tallinn.

The other advantage is that very often these kinds of projects are implemented jointly with other improvements in the public transport supply increases in frequencies, changes in network design and so forth. And this makes it difficult to distinguish what is the impact of free public transport per se. In Tallinn’s case, the network has mostly remained the same. There were some changes in frequencies, which we were able to account for in our analysis because they were introduced throughout the analysis period. So we could distinguish its effects.

Q: Let’s go to the results. What do you see as the most significant findings from that first three months?

A: The most important finding is that the sensitivity to price, which we can measure in terms of increase in ridership, was much smaller than one would anticipate. And in fact, the sensitivity to frequency was much more significant. In other words, a larger increase in ridership was due to an increase in frequency rather than the removal of the transit fare.

Now I do have to say that this is limited to three months, and we know that it takes time for people to adjust their travel patterns and habits. So it may be different if we look now, a year afterwards.

Q: And you did not find any impact on automobile traffic?

A: We have not found any changes in travel speeds. However, we didn’t have access to traffic counts. What we can only say at this stage is we haven’t seen any speed changes in the network.

Q: But you did find some evidence of social impacts in terms of access to the city. You note that in an area called Lasnamäe, where the unemployment rate is relatively high, ridership went up the most.

A: That was something we really wanted to look into because one of the objectives of this policy was to help in particular the disadvantaged groups.

What we are doing now is we have collected travel diaries from 1,500 households in Tallinn from 2012 and 2013. This means people report their daily travel patterns, where they go, with what mode and so forth. And by doing that, we can analyze not only the overall changes but also who are those who have benefitted the most.

And this increase in public transport use, does it come from public transport users that increase their trip rate? Or is it from people who switched from walking to public transport? Or from car to public transport? So looking into this accessibility change is something that we’ll be able to do soon. But at this stage we can only say there are some variations and it seems like those areas which are the most deprived have benefitted the most.

Q: Most articles I’ve seen on this subject have cited Tallinn city officials claiming that transit ridership has gone up by about 15 percent and traffic has gone down by about 15 percent. But your study suggests much more modest results. What explains the differences?

A: The first thing to keep in mind is what are the specific circumstances Tallinn had to start with. The public transport fare was already pretty low it was already reduced by 40 percent in 2003. And already about 40 percent of all residents were exempted from paying for public transport, including all the groups I mentioned. And other groups had discounts. So quite a large portion of the population, the majority in fact, didn’t pay the full price before public transit became free.

When it comes to figures that have been mentioned elsewhere, we account for the change in frequencies, the different times of the year and so forth. So this is the most robust analysis in that respect. Others were only looking at one period versus another.

Q: So there’s a comparing apples to oranges problem?

A: Yes, very much so.

What is important is that those who do travel public transport have a higher level of service than they used to have. In terms of the frequency they experience, in terms of the crowding levels they experience on board, in terms of the speed there’s been a slight increase in the main areas. So there are some benefits to traveling by public transport. But there’s no strong evidence that the market share has increased much. Yet.

Q: Your study suggests that if there’s any evidence of a modal shift going on, it’s from walking to riding transit. What explains that?

A: That was one of the main concerns policy makers had even before introducing this policy, is that the modal shift would be mostly from people shifting from soft modes such as walking and cycling, to public transport.  At this stage we cannot be too conclusive about it. Because for this we have to look at individual travel patterns and how they have changed.

We only have these aggregate results, but what we can say is that the average trip length has been reduced quite significantly. It decreased by 12 percent. And this could be due to several reasons. One could be that people take public transport more for shorter trips now than they used to because it’s free. Maybe they transfer more, so someone who used to take a long trip and then walk now takes two short trips. But it can also be because of people shifting from walking to public transport. We have to verify that from the individual reports.

Q: What should other cities take away Tallinn’s experience? Is there a lesson to be learned from this yet?

A: I think the most important lesson is the importance of financial stability, and being able to do something sustainable in the long run. Because you not only have to replace the income lost to fare collection on an annual basis, but you also need this kind of income sometimes to guarantee that you can extend the network and improve the level of service. So doing this requires a municipal or national government that is very committed to allocating these resources.

In Estonia, a very large share of the local budget comes from municipal taxes. And that’s part of the motivation for the city of Tallinn to introduce the scheme. Because now in order to be entitled to free public transport, you have to be registered as a resident of Tallinn. And they estimated there are about 20,000 or 30,000 people who live in Tallinn but aren’t registered as residents of Tallinn. So this was an incentive for them to register as residents to get free public transport but then also the city of Tallinn will get more taxes.

Q: In the study, you call reducing transit fares a “second best strategy” for reducing auto use. Can you elaborate on that? How does free transit fit into the broader options cities have when thinking about broad goals of reducing traffic congestion and reducing greenhouse gas emissions?

A: When you make these decisions, you always have to think what are the alternatives in terms of costs and benefits. In the case of motorists, they’re more sensitive to the price of cars than to the price of public transport when making their decisions. In other words, if you increase the price of using a car by raising fuel taxes or parking fees or a congestion charge by a certain percentage, people will react more to this than if you decrease the price of public transport by the same percentage. And this is something that has been well studied and reinforced in many studies worldwide. If you think of carrots and sticks, sometimes the stick is more efficient.

Other carrots that could be used include increasing the frequency. That may also be cheaper and have the same impact. Because people are more sensitive to changes in frequency than to changes in price.

Q: It’s been said that Tallinn was well positioned to make transit free because the system there was already so highly subsidized. They didn’t depend on the farebox revenue much. How does that compare with other parts of the world?

A: When  it comes to subsidy levels, there are very big differences in different places. North America is actually the highest worldwide. The share of operational costs of public transport, which are covered by the states, is something like 70 or 80 percent. Of course it varies from city to city. In the case of very big efficient systems such as New York it’s lower. In Europe it also varies, but it’s typically about 40 or 50 percent. And then in the cities of the far East — in Japan, Hong Kong, Singapore, South Korea — transit typically is fully self-sufficient without any subsidy from the state. So there are very big differences worldwide.

Q: So hypothetically, if you put politics and public attitudes aside and just talk about money, wouldn’t North America be the most feasible place to do this? Just in terms of the budget hole you’d create through a free-fare policy, it would be less substantial in Atlanta than in one of these Asian systems that run on fare revenue. North America will become the free transit capital of the world!

A: I wouldn’t count on it.



Mixed results from free transit in Tallinn

Oded Cats on research from Tallinn 

Free transit in the U. S., for college students

Back to top

More from Citiscope

Christopher Swope is managing editor of Citiscope. Full bio

Get Citiscope’s email newsletter on local solutions to global goals.