Alberto Mingardi  

Uber, taxis and the issue of safety

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Were all safety regulations only made for increasing safety, ours will be a much simpler world. But we know from experience that "safety regulations" are often a very tricky game. regs.jpg Such regulations may be imposed for the sake of raising barriers to entry to foreign competitors, or--more generally--they turn out to be barely-disguised barriers to entry enacted at the behest of special interests. They may be the inevitable result of strong popular pressure. They may ratify standards that were spontaneously reached by business actors, or drive a demand for newer appliances and instruments.

The New York Times recently made the case for harmonizing criminal background check requirements for taxis and companies like Uber or Lyft. The casus belli is offered by the New Delhi rape that we already referred to, that provided the French a ready-made excuse to ban UberX (UberPop, in Europe).
I am a bit puzzled, because it seems to me that "Taxi Apps" (Uber, Lyft, or whatever) should be expected to be safer than the older system. Imagine you got robbed by a taxi driver, or even that you simply end up forgetting your iPad in a car. With an App, you can immediately trace down the identity of your driver: and either give him a call or signal him to the police. Once again, this is nothing new: what the Apps do, is simply updating to the digital age a very old process, which is taking notice of a taxi's license plate.

But in the pre-App world, doing this is difficult. For one, you need to have pen and paper at your disposal, and look at the license plate right after you have reached your destination. If you were actually robbed, you were very likely to be too shocked to do so. If you just forgot something, typically you did not know you were forgetting it, when you got out the cab.
True, taxi cooperatives helped in getting hold of the driver, and some taxi drivers are very nice and decent people, and may look for you so that you could have your iPad back (we have no reason, however, to think that some Uber drivers may not be very nice and decent people too). But the process was clearly more difficult and less smooth than what happens now with an App, that basically keeps track of all your travels. This is not unlikely of what happens with your Amazon purchases, or PayPal transactions.

Now, a possible rejoinder to this might be that, whereas Uber may be safer "ex post", government-regulated taxi services are supposed to be safer "ex ante". Their background checks are more thorough because they are, well, performed by the government. My colleague Paolo Belardinelli looked at the background requirements for taxi drivers in the cities of Milan and Rome, in Italy (the paper is in Italian, I'm afraid) and was unimpressed. Basically all the municipalities require is that prospective taxi drivers have no conviction to jail terms longer than two years for non-intentional offences. But no psychological test is required, for example.

I suspect there is a sort of psychological bias against Uber drivers at work, too. The idea being that unregulated trade attracts almost by definition people that like to live on the hedge of legality. But is that really so? I would go with the less intriguing hypothesis that drivers that enroll in Uber are simply those that couldn't buy a taxi license because their number is artificially restricted, or are younger people that like to supplement their income but not necessarily desire to be taxi drivers for life. To put it differently, there are plenty of reasons you may like to be employed in a less regulated sectors (first and foremost, it's easier to get in), than presumably despicable motives.


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CATEGORIES: Regulation




COMMENTS (7 to date)
Ray Lopez writes:

If you think getting a taxi is tough in your town, you should come here to Manila, Philippines and see how bad it is. Most days I have to pay $25 US = 1000 pesos to go less than 10 miles across town, when an average wage here is about $5-$10 a day. And the traffic is terrible too.

SD writes:

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Tom West writes:

Perhaps the feared correlation is that young males are heavily disproportionately responsible for violent crime.

Young males are also disproportionately interested in technology.

Therefor, Uber drivers are disproportionately violent criminals!

Seriously, *if* Uber's drivers are more likely to commit some sort of crime (and I don't think there's enough data to support this claim), it's most likely to be because the psychology of driving for Uber is different from being a regular taxi driver.

Fred Anderson writes:

There's an interesting typo in the 2nd sentence of the last paragraph. It says, ". . . people who like to live on the HEDGE of legality."

I can imagine living *behind* a hedge (thicket?) of legalities, but living on one might be a little prickly.

ThomasH writes:

All good arguments. Maybe we don't need driver licensing at all, but surely is not a barrier to entry for Uber drivers to have the same checks as regular taxis. Not to surely feel unfair to taxi drivers.

Carl writes:

@ThomasH

If I am willing as a customer to ride with an Uber driver who does not have a background check but merely a good rating, that's really my business and no one else's, no?

Hazel Meade writes:

I've made the point before that the online ratings system has effectively negated the need for formal regulation of many economic activities. In the past, for instance, while travelling you would not know in advance the reputation of a restaurant or motel. So you might want some government agency to set minimum standards of cleanliness to make sure that you didn't catch lice or get ill trying some new place for the first and only time.

These days, you don't need that. You can just check the online reviews and ratings for a host. You can look on Yelp.

The net makes it possible to spread reputation effects orders of magnitude more quickly. It is possible to know by reputation information that a century ago would only be known to the locals in a small town.

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