4 ms·

I think he's actually wrong. It's definitely higher than marginal $5/hour, it's just not $5 net profit per hour. You take into account the fixed costs of ownin

I think he's actually wrong. It's definitely higher than marginal $5/hour, it's just not $5 net profit per hour. You take into account the fixed costs of owning and maintenance on the vehicle (which don't entirely vary directly with mileage driven) and it becomes a smart economic choice to drive Uber even if you're "losing money" each hour - because your marginal gross profit is higher than if you were sitting on the couch.

kunimu 9y ago
You don't need marginalism to explain that making some money doing Uber given fixed costs for your car is better than making no money at all and incurring same or similar costs.
hyper_reality 9y ago
I think you're right, and the article's claim that the drivers' ignorance is being taken advantage of is an unpleasant thing to say. It assumes that the drivers are financially naive, when in fact there are many legitimate reasons why they choose to drive. Many of them are supplementing their income in between other gigs, or enjoy driving more than other jobs available to them. Others have done well out of the referral, bonus schemes and tips that the author mentions. There are various other factors and incentives which the author does not seem to have taken into account. Much as I dislike the corporate practices of Uber, implying that the drivers are miscalculating the cost of driving and are therefore ignorant is a smug overgeneralisation.
- astura 9y ago
  That's Mister Money Mustache's writing style. I don't care too much for him myself either but he writes for his audience.
  - prawn 9y ago
    I liked when he talked about being a retiree, but also about being able to work like an executive from the back of a car to the airport.
    - astura 9y ago
      http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-vs-the-internet-retirement-police/ http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-...
redler 9y ago
Not to mention, you can't pay your rent with saved future dollars.
mcguire 9y ago
So you are saying you are losing $2.00 on each unit but making it up by selling a lot of units?
- erikb 9y ago
  No idea why people downvoted. This is exactly how people think, and in fact exactly how I was taught in university. We had an exercise in economics where we would be doing exactly that: Buying a machine to build car seats to sell which would make us -$2 profit. Total brain fart. And here's the thing that is really odd: some companies really survive that way exactly because they make lots of units. E.g. customers may shoot them a few months of costs, just because the customer doesn't want them to die, because they are so cheap and produce so many units.
enraged_camel 9y ago
>>it becomes a smart economic choice to drive Uber even if you're "losing money" each hour - because your marginal gross profit is higher than if you were sitting on the couch. Why are you comparing driving Uber to sitting on the couch? You should compare it to something more realistic, like learning a marketable skill and/or applying to full-time jobs. When you do so, the real opportunity cost of Uber becomes clear: the more you drive people around, the less employable you get.

kunimu 9y ago

You don't need marginalism to explain that making some money doing Uber given fixed costs for your car is better than making no money at all and incurring same or similar costs.

hyper_reality 9y ago

I think you're right, and the article's claim that the drivers' ignorance is being taken advantage of is an unpleasant thing to say. It assumes that the drivers are financially naive, when in fact there are many legitimate reasons why they choose to drive. Many of them are supplementing their income in between other gigs, or enjoy driving more than other jobs available to them. Others have done well out of the referral, bonus schemes and tips that the author mentions. There are various other factors and incentives which the author does not seem to have taken into account. Much as I dislike the corporate practices of Uber, implying that the drivers are miscalculating the cost of driving and are therefore ignorant is a smug overgeneralisation.

astura 9y ago
That's Mister Money Mustache's writing style. I don't care too much for him myself either but he writes for his audience.
- prawn 9y ago
  I liked when he talked about being a retiree, but also about being able to work like an executive from the back of a car to the airport.
  - astura 9y ago
    http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-vs-the-internet-retirement-police/ http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-...

redler 9y ago

Not to mention, you can't pay your rent with saved future dollars.

mcguire 9y ago

So you are saying you are losing $2.00 on each unit but making it up by selling a lot of units?

erikb 9y ago
No idea why people downvoted. This is exactly how people think, and in fact exactly how I was taught in university. We had an exercise in economics where we would be doing exactly that: Buying a machine to build car seats to sell which would make us -$2 profit. Total brain fart. And here's the thing that is really odd: some companies really survive that way exactly because they make lots of units. E.g. customers may shoot them a few months of costs, just because the customer doesn't want them to die, because they are so cheap and produce so many units.

enraged_camel 9y ago

>>it becomes a smart economic choice to drive Uber even if you're "losing money" each hour - because your marginal gross profit is higher than if you were sitting on the couch. Why are you comparing driving Uber to sitting on the couch? You should compare it to something more realistic, like learning a marketable skill and/or applying to full-time jobs. When you do so, the real opportunity cost of Uber becomes clear: the more you drive people around, the less employable you get.