Are Flat Public Transportation Fares Regressive?

Abstract

Public transportation is found across almost all major cities and differ widely in structure. Notably, transportation agencies adopt different fare structures to suit the idiosyncratic needs of cities. In the United States, the two most common fare structures are: distance based fares, and flat fares. This study evaluates the fairness of these two structures through the lens of consumer surplus and how it varies across different levels of poverty under each structure. Using ridership and demographic data from Washington D.C.'s "Metro" network, price elasticities of demand across demographic groups are determined and then applied to estimate the results of a hypothetical switch in fare structure. The resulting changes in consumer surplus are then compared between stations with different levels of poverty to determine whether one structure is more regressive than the other. The results of this analysis suggest that flexible fares such as distance based fares are more equitable as they charge higher prices for high-income individuals, who are also more price inelastic.