Means-Tested Public Transportation Subsidies: Causal Evidence and Implications

• In Event: Understanding Food and Transportation Security and Policies to Address Them

Abstract

Means-tested transit fare programs have grown in popularity and spread among cities around the world. Such programs offer free or reduced-price transit based on an individual's income or socioeconomic status. By offering lower fares to relatively disadvantaged populations, these programs aim to reduce disparities in access to urban amenities and employment opportunities as well as decrease overall reliance on private vehicles. Whether means-tested transit fare reductions meet these goals depends on the extent to which travel behavior, and other downstream outcomes, respond elastically.

In this paper, we evaluate the effects of a novel and large-scale program in King County, Washington that provides free public transportation to individuals with low incomes. The "subsidized annual pass'' (i.e., annual pass) program provides fareless transit to individuals who have income at or below 80% of the federal poverty line and participate in at least one of six social assistance programs. We run a randomized controlled trial (RCT) in which individuals who meet the 80% income threshold but do not participate in qualifying programs were randomly offered the annual pass for one year. We compare mobility outcomes as well as downstream health, employment, and other outcomes for those who did vs. did not receive the pass.

We find that providing free transit has very limited effects on mobility or downstream outcomes related to health and well-being for the targeted population. We observe marginally significant increases in transit boardings using electronic fare cards in response to free transit; relative to those in the control group, who had to pay $1 per bus ride, those in the treatment group boarded transit an additional 0.058 times per day, which translates into approximately one additional boarding every three weeks. The implied price elasticity of demand for transit is no more than 0.20. As a result, primary downstream measures of mental distress (Kessler 6) and overall subjective health do not change noticeably.

We examine potential explanations for the modest effects of fareless transit on mobility, which contrast with findings from previous work in a similar context but pre-dating the COVID-19 pandemic. The price elasticity of transit travel in Brough et al (2022) is over three times greater than that in the present RCT, despite the fact that they study similar means-tested transit subsidy interventions in King County. We find that differences across studies in the socioeconomic characteristics of the populations served, in take-up rates, and in the fare paid by the control group together explain only a small portion of the differences in results. Instead, we find suggestive evidence that a key reason for the differences in results is changes in the external environment, including post-pandemic changes in norms around fare evasion that may have been instigated by an extended period of limited fare enforcement during COVID-19. These changes appear to have made demand for travel by transit among individuals with low-incomes less price elastic.

Author

• David C Phillips, University of Notre Dame
  Presenting Author