10 ms·

MIT study that found low pay for Uber drivers to be revisited

122 points by uptown 9y ago

prepend 9y ago
I was surprised the study was from MIT as there were pretty serious flaws. The bigger question is how it passed peer review when they ran the analysis and checked the methods. The response from the lead author was pretty reasonable and I will camp on his response. I was expecting something defensive rather than “yeah, maybe, let me double check my work.”
- JorgeGT 9y ago
  The answer is that it has not passed any peer review, it is a "working paper" only available to "associates" of MIT-CEEPR: http://ceepr.mit.edu/publications/working-papers/681 http://ceepr.mit.edu/publications/working-papers/681 If you read the back-cover of any of these CEEPR working papers, it includes a disclaimer stating that they have not passed any peer review: CEEPR releases Working Papers written by researchers from MIT and other academic institutions in order to enable timely consideration and reaction to energy and environmental policy research, but does not conduct a selection process or peer review prior to posting
stochastic_monk 9y ago
‘“I’m re-running the analysis this weekend using Uber’s more optimistic assumptions and should have new results and a public response acknowledging the discrepancy by Monday,” he wrote.‘ Re-running analysis with more optimistic assumptions is not how science works.
- dekhn 9y ago
  No, that's precisely how it works. All of science is based on making assumptions.
  - xiphias 9y ago
    If an assumption can give 2x difference, the whole study is flowed. He should extend the study to check the assumption itself.
  - nopriorarrests 9y ago
    OK, let's imagine he we will re-run the study with optimistic assumptions and the result would be that Uber drivers are compensated lavishly (and if we take more moderate assumptions, they are making adequate money). And with another set of assumptions result was that they are serverly underpaid. So, exactly what we have learned here, other then different assumptions yield different results?
    - Eridrus 9y ago
      We learn that the outcome we care about is highly sensitive to the initial assumptions and we should get data on those assumptions.
    - 1337biz 9y ago
      We learn that there are no absolutes when using quantitative methods to measure human actions.
    - twic 9y ago
      Nothing. But learning that different assumptions yield different results is useful in its own right. It tells you that this study is not capable of answering the question it set out to answer, and you will need to do a better study. Perhaps you have come across interval arithmetic: https://en.wikipedia.org/wiki/Interval_arithmetic https://en.wikipedia.org/wiki/Interval_arithmetic
      - deleted 9y ago
        [deleted]
    - dekhn 9y ago
      not much, which is a big part of the problem.
- amelius 9y ago
  I find that statement a bit disturbing too, but do we need "science" to determine people's average pay now?
  - stochastic_monk 9y ago
    I agree that it’s an awkward label, but “good research practices” felt worse. It was median, not average, as well, which makes sense as potentially being lower than an average wage.
    - walshemj 9y ago
      The median is better for things like pay as it removes the extreme outliers - I doubt you'd like it if your negotiation for a pay increase was denied because your lavishly remunerated c level execs skewed the average.
      - stochastic_monk 9y ago
        Exactly. Which is why the responses which focus on how the "average" pay is higher than the "median" pay the report mentioned is misleading at best.
- r3bl 9y ago
  > Re-running analysis with more optimistic assumptions is not how science works. String theory is nothing more than an assumption.
  - stochastic_monk 9y ago
    And is untestable.
  - richardknop 9y ago
    String theory is still just a speculation by some theoretical physicists, albeit some of them high profile. It's not part of a model accepted my mainstream physics so bad comparison.
- ballenf 9y ago
  The assumption is with regard to how respondents interpreted a vaguely worded question. Not an assumption of what 2+2 equals. This study has a huge human component since no single party has all the data needed to calculate the answer. Uber has a lot of data, but even they don't know total hours spent before or after shifts in prep for work nor expenses with regard to vehicle maintenance.
  - mseebach 9y ago
    > Uber has a lot of data, but even they don't know total hours spent before or after shifts in prep for work nor expenses with regard to vehicle maintenance. I would think Uber has exactly the data they would need to calculate this meaningfully, or at least the points you list aren't the decisive shortcomings. Most jobs require that you get yourself to work and prepared (to some degree, at least, but one that seems to apply fine to Uber drivers) on your own time. Also, in the blog post they state that they agree with the methodology around calculating cost of vehicle use, which regardless is not an area of great contention. There are stable and largely uncontroversial numbers published by tax authorities, and there are rental agencies that provide vehicles at fixed rates.
- walshemj 9y ago
  Its economics its not called the dismal science for nothing
jimrandomh 9y ago
Does anyone have a link to the actual study? The closest I can find is a "research brief" PDF that looks like a university press release; I'm not sure it's even been published at all? And why does Reuters think it's acceptable to not include any links in this sort of reporting?
- JorgeGT 9y ago
  The actual study link is http://ceepr.mit.edu/publications/working-papers/681 http://ceepr.mit.edu/publications/working-papers/681 but the full text is "for sponsors only": > As a benefit to our Associates, the latest Working Papers are embargoed for a period of up to six months before becoming accessible to the public. The list of associates can be found here: http://ceepr.mit.edu/support/associates http://ceepr.mit.edu/support/associates
  - OxO4 9y ago
    If you google for the paper, then a direct link to the full paper comes up, which works for me: http://ceepr.mit.edu/files/papers/2018-005.pdf http://ceepr.mit.edu/files/papers/2018-005.pdf
chx 9y ago
Much less scientific but interesting nonetheless: Mr Money Moustache ran some numbers on driving Uber and they are Not Pretty either. It's not even hard to find the relevant data on amortization and such: relevant government agencies will tell you what they think is reasonable. In Canada, that'll be this page. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/automobile/automobile-motor-vehicle-allowances/automobile-allowance-rates.html https://www.canada.ca/en/revenue-agency/services/tax/busines... > The automobile allowance rates for 2018 are: > 55¢ per kilometre for the first 5,000 kilometres driven > 49¢ per kilometre driven after that The logic goes -- you can be pretty sure to spend at least this much on your car, the taxman won't allow you to deduct more... So using these numbers, you can check the average Uber trip distance length, the time it takes you to drive it and the number of trips a month to figure out how much you are making. UberX in Toronto pays you 81 cents per km and 18 cents a minute. The Toronto minimal wage is currently 14 CAD an hour. If you do quite well and spend 30 minutes driving at a 30km/h average speed then you made 4.8 dollars on the per km part (.81-.49) x 30/2 and 5.4 dollars on the time part .18 x 30. The minimum fare won't save you because they don't deduct the 49¢ per kilometre car cost obviously. Note https://www.mrmoneymustache.com/2017/11/22/mr-money-mustache-uber-driver/ https://www.mrmoneymustache.com/2017/11/22/mr-money-mustache... used the rough equivalent of 40 canadian cents/km for the same cost above we used 49c for -- it's not too outlandish, everything in the US vehicle wise is cheaper and there's some guessing involved anyways.
- scythe 9y ago
  Mr. Money Moustache's cost estimates are wildly unrealistic. I ran a TCO on my own vehicle and it came out to about 35-40 cents per mile, much less kilometer. The MIT study uses 30 cents per mile, and this sounds right if you are being frugal and driving carefully, but apparently even this is being revisited. The idea that the government would not let you over-deduct is, in my opinion, a big mistake -- lawmakers know that people who work out of their cars are generally low-paid and therefore do not contribute much to the tax base in the first place, so it is a higher priority to avoid screwing over the poor than to nickel-and-dime them. Furthermore tax laws in America are influenced by some pro-car, anti-tax elements, who will of course act to make taxes lower for drivers.
mhb 9y ago
An Analysis of CEEPR’s Paper on “The Economics of Ride-Hailing” https://news.ycombinator.com/item?id=16513089 https://news.ycombinator.com/item?id=16513089
Symmetry 9y ago
Here's a pretty good explanation of exactly how the study calculated the number it did, it's pretty embarassing: https://medium.com/uber-under-the-hood/an-analysis-of-ceeprs-paper-on-the-economics-of-ride-hailing-1c8bfbf1081d https://medium.com/uber-under-the-hood/an-analysis-of-ceeprs... I'd previously read a paper by an economist using Uber pay data to analyze gender wage gaps. The numbers they had for both men and women were way higher than this study and it's usually best to trust administrative data over self reports. https://web.stanford.edu/~diamondr/UberPayGap.pdf https://web.stanford.edu/~diamondr/UberPayGap.pdf
- jakobegger 9y ago
  Thanks for the link. Those questions are worded in a pretty ambiguous way, making this survey pretty much useless. Who knows how the respondents really interpreted those questions?
- CydeWeys 9y ago
  That is flat-out embarrassing to report an hourly pre-tax income of $3.37, which implies accuracy down to the cent, when the actual reporting methodology is bucketing within ranges of powers of two. And then on top of that to completely screw up the accounting methodology anyway. Much more accurate would be to actually get real data from drivers, by giving them instructions to extract desired monthly data from the app itself showing income and hours online (I presume the driver-side apps include this data?).
- hinkley 9y ago
  This has some interesting numbers in it, but I live in a high rent part of the country and these statistics that throw around national averages leave me cold. In similar conversations you can encounter rhetoric about how we should tax people worth a million dollars. This logic doesn’t consider that a $million for a 40 year old dentist in rural Ohio is very different than for someone who just retired in New York. That’s all they have for the rest of their life. Financial policy decions need to consider money in terms of cost of living and also age of the people. Especially in a world where pensions are barely a thing now. Going after numbers without context ends up attacking the middle class. So for instance the $20 an hour would make more sense to Reason if it were restated as a multiple of minimum wage or the poverty line. Because if Ubuntu is concentrated in metropolitan areas that could mean most of their drivers are near the poverty line. Not as incendiary as $3.50/hr but still quite damning.
Gys 9y ago
A truly fair study would also research the real income of 'normal' taxi drivers in the same places. Because normal taxis are generally also part of some kind of organization that takes a cut from their earnings. From the drivers point of view there might less difference then implied.
joncrane 9y ago
It's easy to complain about the paper, but credit where credit is due: Stephen Zoepf listened to the criticism, considered it, and will be re-running some numbers. All within a few days of the paper being publicized. That's more than you can say for A LOT of analyses that are published. This is exactly how public discourse should work, so good job to everybody (so far).
- hackerman12345 9y ago
  The damage is already done though. Lawmakers and laymen will bring up this $3/h number constantly while making decisions that hurt Uber.
  - crankylinuxuser 9y ago
    Uber's already a scam to begin with. It's not a bad thing to force them to compensate properly within the law. 1. It is employment, not a contract. They punish you if you don't do X hours a week. 2. They don't pay minimum wage, or other employment things like workers comp, unemployment tax, or others. 3. They actively seek to undermine all laws that protect the taxis and the citizens who ride. 4. They actively encourage lack of awareness with regarding commercial driving and the law. If one does not have commercial insurance, you are driving uninsured. If in a traffic incident, your license will be suspended. It's just another company trying to socialize the risk and privatize the profit. And they're socializing the risk on the poor and needy by giving them hope and screwing them in ways they don't understand.
    - John_KZ 9y ago
      Exactly. At best, a company like Uber could provide a logistics service to taxi drivers and transport companies. Ride-sharing, optimized route planning, easy dispatching etc are all nice features and make the service cheaper by reducing overhead costs. However this is not what made Uber such a success. It was the unreasonably low prices it offered. How did it manage to do so? By externalizing a number of costs onto workers and society. And by the way, the article has a very deceptive title. Just because the author agreed to re-run the numbers with Ubers "hopeful" and "optimistic" assumtions doesn't mean the initial numbers where wrong or that the new numbers will be substantially better. They're still employing people for less than minimum wage.
rdlecler1 9y ago
Here’s the thing. (1) Uber is not a full time job for a lot of people. They have a couple of hours here or there that fits within their existing schedule. I don’t doubt that it’s helped put food on the table for a lot of families. Unfortunately In a few years driverless cars will take this opportunity away (2) Uber drovers are rational market participants. If they were really averaging less than $4/hour then this wouldn’t be attractive to driver given our current low unemployment rate.
- nicholas73 9y ago
  I talked to one guy who drives for Uber just for his hour long commute. If he was going to drive anyway, why not have someone else pay for it?
  - strangegecko 9y ago
    How does this work? He can't choose the passenger's destination.
    - eropple 9y ago
      I believe you can, twice a day.
    - nicholas73 9y ago
      You can tell Uber where you want to end up, and they will route you customers going that location. Also, I'm astounded at least two people bothered to downvote my factual reporting.
- poulsbohemian 9y ago
  >"Uber is not a full time job for a lot of people" I don't know this to be true without seeing a citation. In Seattle and Maui (two places I've used a car service recently), it has seemed to me at least the Lyft drivers I've encountered were all full-time drivers.
  - 9y ago
dpweb 9y ago
Uber has the data. They know all the trip prices, models of cars (costs can be calculated), and time that drivers are online. This could be figured out, but would you trust what they said?
- dmoy 9y ago
  There's also no upside for Uber to release the numbers if they're not really that high - it'd be discouraging to their future contractor pool.
  - ghaff 9y ago
    Costs are going to be a bit squishy but you're right that Uber has a pretty good handle on mileage, time, money paid out, etc. One suspects that if the average driver is making $25+/hr. after reasonable expense assumptions, we'd have heard about it loud and long. My suspicion with some back of the envelope calculations is that it probably ends up somewhere in the minimum wage range most of the time. Especially at the higher end of that range, it sort of makes sense. Assuming at least a reasonable percentage of drivers have some rational handle on what they make and their real costs, that's about where you'd logically expect pay to need to end up. To be clear, I'm sure some drivers don't really understand their costs or know that they're effectively borrowing from their future self who will have to pay maintenance bills--and feel they don't have an option. But it's a bit hard believing it's near universal behavior.
    - dpweb 9y ago
      Seems like the preventative maintenance person would be rewarded. I would also think the car mechanic since they can obtain a car at a lower price. For budgeting, I’ve tried to just arrive at a cost per month of ownership for a car with expected depreciation (not cost to purchase), ins., gas, and expected maintenance.
    - user5994461 9y ago
      >>> My suspicion with some back of the envelope calculations is that it probably ends up somewhere in the minimum wage range most of the time. Especially at the higher end of that range, it sort of makes sense. Assuming at least a reasonable percentage of drivers have some rational handle on what they make and their real costs, that's about where you'd logically expect pay to need to end up. Your assumptions are incorrect. The world is filled with people who can't estimate costs, it's actually pretty difficult. I've worked in online gambling before. I think it has a lot of similarities with Uber. It's entirely possible to have the vast majority of your customers lose money.
grantlmiller 9y ago
The problem is that the initial, flawed findings fit the biased narrative that the many in the media (both traditional and social) prefer to perpetuate. As a result, the surveys and stories that support their biases get top billing as headlines for days or weeks. People are often so eager to hear claims that support their beliefs that they don't investigate the credibility of the claims. When the truth comes out, the same media outlets will likely do nothing and at most will publish a small redaction (same goes for individuals who spread this on social media). I have no expectation that the true nature of this study will be widely reported or nearly as promoted as the initial false results. The world needs more rational skeptics. We have to hold each other accountable by ask probing questions about the nature of "facts" that are presented us. Seek truth.
- deleted 9y ago
  [deleted]
- tyingq 9y ago
  How far off will the refined results be though? The sensational number was half of minimum wage. Is 7/8ths that much different of an issue?
  - OiNG 9y ago
    the medium article claims pay was computed as follows: dollars_earned_driving * percentage_of_total_wage_from_driving assuming this is correct, the less drivers rely on driving as a primary source of income, the more incorrect the $3.37 figure would be. curious to see the updated results.
- johnhenry 9y ago
  Someone made a public claim using public data and methodologies. Someone else refuted it. That original someone is going to check again and get back to us. I agree that the world needs rational skeptics -- and yes, perhaps more -- but looks like the peer review process is working properly here. Don't see a need to blame media bias?
  - 9y ago
njarboe 9y ago
One might consider that the average drivers wage is highly depressed by a large number of people who are inexperienced or not very serious or not very smart at making money driving. I have a cousin who drives as his primary employment. If you have been driving for awhile, have an aptitude of understanding how to maximize your benefit in complex systems, and have a flexibility on when you work, one can do quite well. Knowing when and where surge is likely to happen. Knowing how to up your odds of getting a nice long trip on a freeway at your max Lux level when the traffic is clear. Having the skills and interest in buying used cars so you can get a good deal on the cheapest car that passes for UberXL or UberSelect. When and where to set your two daily destination options. Keeping up with all the bonus plans and other rules of all the ride sharing platforms in your area. Chatting up other skilled drivers to try to learn more tricks on upping your income. It does not seem like such a bad idea for society to have some entrepreneurial like jobs that are easy to get but don't pay very well until one becomes good at it.
- FLUX-YOU 9y ago
  >It does not seem like such a bad idea for society to have some entrepreneurial like jobs that are easy to get but don't pay very well until one becomes good at it. Until it gets abused by employers as a cheap source of labor and then sold to the public as "adding jobs". Those entrepreneurial jobs exist already as door to door salesmen and MLM people. If you can be this smart about Uber driving, you can be this smart about getting a decent salary job, so this doesn't make sense rationally because Uber ultimately has a low earnings ceiling for drivers.
  - njarboe 9y ago
    People being able to get transportation at times, places, or prices that were not available before seems like a positive endeavor. People bugging you at your door selling you things that you never would want and MLMs, not so much.
- hinkley 9y ago
  You seem to be equating gaming the system with making the system fair to the driver. The problem is that now not only is Uber taking advantage of your coworkers, but you’re indirectly taking advantage of them as well. Because you’re now exploiting the same thing Uber is. This doesn’t fix the system. In fact it probably makes it worse. Take your advice to the end: nodody should drive unless there’s a surplus of fares. That would cause much of the day to qualify as surge. The premium Uber pays for surge would drop substantially in order to protect their margins. Which means your earning potential would decrease. Now the first quartile of employees are barely making more than the third quartile. That sucks for everybody.
deleted 9y ago
[deleted]
gearhart 9y ago
Does anybody else find the Tweet response from Dara Khosrowshahi deeply childish? The in-depth response from Jonathan Hall is, whether you consider it to be biased or not, a well-researched, calm and explained piece of peer-review, but the CEO's tweet is pathetic and kitsch: "MIT = Mathematically Incompetent Theories (at least as it pertains to ride-sharing)"? Is that the level of communication that we expect from our leaders now? I've always held an image of the character that CEOs of large corporations strive towards as reasoned, rational and "stately", at least in their public role. This sounds like the outburst of a petulant adolescent, and is disturbingly reminiscent of a certain presidential figure. Is this a consequence of some societal shift towards communicating at the lowest possible denominator, or do I just have an overly conservative view of what is expected from people in those positions?
- crankylinuxuser 9y ago
  Well, it does go along with the recent decorum change with respect to "bigger buttons" and the like. Stately speaking has hit a new low. It's no surprise that CEOs and politicians alike are picking up on what I call Idiocracy-speech. There was a video a few years ago published on youtube by CCP Grey called "This video will make you angry". It explains how angry memes spread faster, and are more durable than other types. I'd surmise that this is true.
- m52go 9y ago
  You didn't cite the whole tweet. The real tweet is a bit longer, cites analysis written by Uber, and in context, does not come across as childish: MIT = Mathematically Incompetent Theories (at least as it pertains to ride-sharing). @techreview report differs markedly from other academic studies and @TheRideshareGuy recent survey. Our analysis: [https://t.co/S2aAqCuDR0 https://t.co/S2aAqCuDR0] https://twitter.com/dkhos/status/969805860594581509 https://twitter.com/dkhos/status/969805860594581509
  - gearhart 9y ago
    I apologise, that's totally true. I did cite only the bit that jumped out at me, and my implication that it was the whole tweet does make it seem worse than it was, but I would disagree that the context redeems the statement.
fenleyman 9y ago
I have a question on this study. The news rightfully claim it‘s an MIT study, because the respective institute is at MIT. However, when considering the authors of the paper, it looks like everyone currently has institutional affiliation with Stanford. Am I wrong?
wcr3 9y ago
"The Rideshare Guy." Oy.
AKifer 9y ago
Hopefully these firms haven't yet their shares listed on stock exchanges, otherwise all the ignorant sheeps would have all shorted, only to see their money gone into expert investors pocket a few days later.
deleted 9y ago
[deleted]
davecraige 9y ago
Paper updated: Looks like Uber pays 41%-54% of their drivers less than min wage https://twitter.com/yfreemark/status/970761011895652355 https://twitter.com/yfreemark/status/970761011895652355

122 points by uptown 9y ago

I was surprised the study was from MIT as there were pretty serious flaws. The bigger question is how it passed peer review when they ran the analysis and checked the methods. The response from the lead author was pretty reasonable and I will camp on his response. I was expecting something defensive rather than “yeah, maybe, let me double check my work.”

JorgeGT 9y ago
The answer is that it has not passed any peer review, it is a "working paper" only available to "associates" of MIT-CEEPR: http://ceepr.mit.edu/publications/working-papers/681 http://ceepr.mit.edu/publications/working-papers/681 If you read the back-cover of any of these CEEPR working papers, it includes a disclaimer stating that they have not passed any peer review: CEEPR releases Working Papers written by researchers from MIT and other academic institutions in order to enable timely consideration and reaction to energy and environmental policy research, but does not conduct a selection process or peer review prior to posting

stochastic_monk 9y ago

‘“I’m re-running the analysis this weekend using Uber’s more optimistic assumptions and should have new results and a public response acknowledging the discrepancy by Monday,” he wrote.‘ Re-running analysis with more optimistic assumptions is not how science works.

dekhn 9y ago
No, that's precisely how it works. All of science is based on making assumptions.
- xiphias 9y ago
  If an assumption can give 2x difference, the whole study is flowed. He should extend the study to check the assumption itself.
- nopriorarrests 9y ago
  OK, let's imagine he we will re-run the study with optimistic assumptions and the result would be that Uber drivers are compensated lavishly (and if we take more moderate assumptions, they are making adequate money). And with another set of assumptions result was that they are serverly underpaid. So, exactly what we have learned here, other then different assumptions yield different results?
  - Eridrus 9y ago
    We learn that the outcome we care about is highly sensitive to the initial assumptions and we should get data on those assumptions.
  - 1337biz 9y ago
    We learn that there are no absolutes when using quantitative methods to measure human actions.
  - twic 9y ago
    Nothing. But learning that different assumptions yield different results is useful in its own right. It tells you that this study is not capable of answering the question it set out to answer, and you will need to do a better study. Perhaps you have come across interval arithmetic: https://en.wikipedia.org/wiki/Interval_arithmetic https://en.wikipedia.org/wiki/Interval_arithmetic
    - deleted 9y ago
      [deleted]
  - dekhn 9y ago
    not much, which is a big part of the problem.
amelius 9y ago
I find that statement a bit disturbing too, but do we need "science" to determine people's average pay now?
- stochastic_monk 9y ago
  I agree that it’s an awkward label, but “good research practices” felt worse. It was median, not average, as well, which makes sense as potentially being lower than an average wage.
  - walshemj 9y ago
    The median is better for things like pay as it removes the extreme outliers - I doubt you'd like it if your negotiation for a pay increase was denied because your lavishly remunerated c level execs skewed the average.
    - stochastic_monk 9y ago
      Exactly. Which is why the responses which focus on how the "average" pay is higher than the "median" pay the report mentioned is misleading at best.
r3bl 9y ago
> Re-running analysis with more optimistic assumptions is not how science works. String theory is nothing more than an assumption.
- stochastic_monk 9y ago
  And is untestable.
- richardknop 9y ago
  String theory is still just a speculation by some theoretical physicists, albeit some of them high profile. It's not part of a model accepted my mainstream physics so bad comparison.
ballenf 9y ago
The assumption is with regard to how respondents interpreted a vaguely worded question. Not an assumption of what 2+2 equals. This study has a huge human component since no single party has all the data needed to calculate the answer. Uber has a lot of data, but even they don't know total hours spent before or after shifts in prep for work nor expenses with regard to vehicle maintenance.
- mseebach 9y ago
  > Uber has a lot of data, but even they don't know total hours spent before or after shifts in prep for work nor expenses with regard to vehicle maintenance. I would think Uber has exactly the data they would need to calculate this meaningfully, or at least the points you list aren't the decisive shortcomings. Most jobs require that you get yourself to work and prepared (to some degree, at least, but one that seems to apply fine to Uber drivers) on your own time. Also, in the blog post they state that they agree with the methodology around calculating cost of vehicle use, which regardless is not an area of great contention. There are stable and largely uncontroversial numbers published by tax authorities, and there are rental agencies that provide vehicles at fixed rates.
walshemj 9y ago
Its economics its not called the dismal science for nothing

jimrandomh 9y ago

Does anyone have a link to the actual study? The closest I can find is a "research brief" PDF that looks like a university press release; I'm not sure it's even been published at all? And why does Reuters think it's acceptable to not include any links in this sort of reporting?

JorgeGT 9y ago
The actual study link is http://ceepr.mit.edu/publications/working-papers/681 http://ceepr.mit.edu/publications/working-papers/681 but the full text is "for sponsors only": > As a benefit to our Associates, the latest Working Papers are embargoed for a period of up to six months before becoming accessible to the public. The list of associates can be found here: http://ceepr.mit.edu/support/associates http://ceepr.mit.edu/support/associates
- OxO4 9y ago
  If you google for the paper, then a direct link to the full paper comes up, which works for me: http://ceepr.mit.edu/files/papers/2018-005.pdf http://ceepr.mit.edu/files/papers/2018-005.pdf

chx 9y ago

Much less scientific but interesting nonetheless: Mr Money Moustache ran some numbers on driving Uber and they are Not Pretty either. It's not even hard to find the relevant data on amortization and such: relevant government agencies will tell you what they think is reasonable. In Canada, that'll be this page. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/automobile/automobile-motor-vehicle-allowances/automobile-allowance-rates.html https://www.canada.ca/en/revenue-agency/services/tax/busines... > The automobile allowance rates for 2018 are: > 55¢ per kilometre for the first 5,000 kilometres driven > 49¢ per kilometre driven after that The logic goes -- you can be pretty sure to spend at least this much on your car, the taxman won't allow you to deduct more... So using these numbers, you can check the average Uber trip distance length, the time it takes you to drive it and the number of trips a month to figure out how much you are making. UberX in Toronto pays you 81 cents per km and 18 cents a minute. The Toronto minimal wage is currently 14 CAD an hour. If you do quite well and spend 30 minutes driving at a 30km/h average speed then you made 4.8 dollars on the per km part (.81-.49) x 30/2 and 5.4 dollars on the time part .18 x 30. The minimum fare won't save you because they don't deduct the 49¢ per kilometre car cost obviously. Note https://www.mrmoneymustache.com/2017/11/22/mr-money-mustache-uber-driver/ https://www.mrmoneymustache.com/2017/11/22/mr-money-mustache... used the rough equivalent of 40 canadian cents/km for the same cost above we used 49c for -- it's not too outlandish, everything in the US vehicle wise is cheaper and there's some guessing involved anyways.

scythe 9y ago
Mr. Money Moustache's cost estimates are wildly unrealistic. I ran a TCO on my own vehicle and it came out to about 35-40 cents per mile, much less kilometer. The MIT study uses 30 cents per mile, and this sounds right if you are being frugal and driving carefully, but apparently even this is being revisited. The idea that the government would not let you over-deduct is, in my opinion, a big mistake -- lawmakers know that people who work out of their cars are generally low-paid and therefore do not contribute much to the tax base in the first place, so it is a higher priority to avoid screwing over the poor than to nickel-and-dime them. Furthermore tax laws in America are influenced by some pro-car, anti-tax elements, who will of course act to make taxes lower for drivers.

mhb 9y ago

An Analysis of CEEPR’s Paper on “The Economics of Ride-Hailing” https://news.ycombinator.com/item?id=16513089 https://news.ycombinator.com/item?id=16513089

Symmetry 9y ago

Here's a pretty good explanation of exactly how the study calculated the number it did, it's pretty embarassing: https://medium.com/uber-under-the-hood/an-analysis-of-ceeprs-paper-on-the-economics-of-ride-hailing-1c8bfbf1081d https://medium.com/uber-under-the-hood/an-analysis-of-ceeprs... I'd previously read a paper by an economist using Uber pay data to analyze gender wage gaps. The numbers they had for both men and women were way higher than this study and it's usually best to trust administrative data over self reports. https://web.stanford.edu/~diamondr/UberPayGap.pdf https://web.stanford.edu/~diamondr/UberPayGap.pdf

jakobegger 9y ago
Thanks for the link. Those questions are worded in a pretty ambiguous way, making this survey pretty much useless. Who knows how the respondents really interpreted those questions?
CydeWeys 9y ago
That is flat-out embarrassing to report an hourly pre-tax income of $3.37, which implies accuracy down to the cent, when the actual reporting methodology is bucketing within ranges of powers of two. And then on top of that to completely screw up the accounting methodology anyway. Much more accurate would be to actually get real data from drivers, by giving them instructions to extract desired monthly data from the app itself showing income and hours online (I presume the driver-side apps include this data?).
hinkley 9y ago
This has some interesting numbers in it, but I live in a high rent part of the country and these statistics that throw around national averages leave me cold. In similar conversations you can encounter rhetoric about how we should tax people worth a million dollars. This logic doesn’t consider that a $million for a 40 year old dentist in rural Ohio is very different than for someone who just retired in New York. That’s all they have for the rest of their life. Financial policy decions need to consider money in terms of cost of living and also age of the people. Especially in a world where pensions are barely a thing now. Going after numbers without context ends up attacking the middle class. So for instance the $20 an hour would make more sense to Reason if it were restated as a multiple of minimum wage or the poverty line. Because if Ubuntu is concentrated in metropolitan areas that could mean most of their drivers are near the poverty line. Not as incendiary as $3.50/hr but still quite damning.

Gys 9y ago

A truly fair study would also research the real income of 'normal' taxi drivers in the same places. Because normal taxis are generally also part of some kind of organization that takes a cut from their earnings. From the drivers point of view there might less difference then implied.

joncrane 9y ago

It's easy to complain about the paper, but credit where credit is due: Stephen Zoepf listened to the criticism, considered it, and will be re-running some numbers. All within a few days of the paper being publicized. That's more than you can say for A LOT of analyses that are published. This is exactly how public discourse should work, so good job to everybody (so far).

hackerman12345 9y ago
The damage is already done though. Lawmakers and laymen will bring up this $3/h number constantly while making decisions that hurt Uber.
- crankylinuxuser 9y ago
  Uber's already a scam to begin with. It's not a bad thing to force them to compensate properly within the law. 1. It is employment, not a contract. They punish you if you don't do X hours a week. 2. They don't pay minimum wage, or other employment things like workers comp, unemployment tax, or others. 3. They actively seek to undermine all laws that protect the taxis and the citizens who ride. 4. They actively encourage lack of awareness with regarding commercial driving and the law. If one does not have commercial insurance, you are driving uninsured. If in a traffic incident, your license will be suspended. It's just another company trying to socialize the risk and privatize the profit. And they're socializing the risk on the poor and needy by giving them hope and screwing them in ways they don't understand.
  - John_KZ 9y ago
    Exactly. At best, a company like Uber could provide a logistics service to taxi drivers and transport companies. Ride-sharing, optimized route planning, easy dispatching etc are all nice features and make the service cheaper by reducing overhead costs. However this is not what made Uber such a success. It was the unreasonably low prices it offered. How did it manage to do so? By externalizing a number of costs onto workers and society. And by the way, the article has a very deceptive title. Just because the author agreed to re-run the numbers with Ubers "hopeful" and "optimistic" assumtions doesn't mean the initial numbers where wrong or that the new numbers will be substantially better. They're still employing people for less than minimum wage.

rdlecler1 9y ago

Here’s the thing. (1) Uber is not a full time job for a lot of people. They have a couple of hours here or there that fits within their existing schedule. I don’t doubt that it’s helped put food on the table for a lot of families. Unfortunately In a few years driverless cars will take this opportunity away (2) Uber drovers are rational market participants. If they were really averaging less than $4/hour then this wouldn’t be attractive to driver given our current low unemployment rate.

nicholas73 9y ago
I talked to one guy who drives for Uber just for his hour long commute. If he was going to drive anyway, why not have someone else pay for it?
- strangegecko 9y ago
  How does this work? He can't choose the passenger's destination.
  - eropple 9y ago
    I believe you can, twice a day.
  - nicholas73 9y ago
    You can tell Uber where you want to end up, and they will route you customers going that location. Also, I'm astounded at least two people bothered to downvote my factual reporting.
poulsbohemian 9y ago
>"Uber is not a full time job for a lot of people" I don't know this to be true without seeing a citation. In Seattle and Maui (two places I've used a car service recently), it has seemed to me at least the Lyft drivers I've encountered were all full-time drivers.
- 9y ago

dpweb 9y ago

Uber has the data. They know all the trip prices, models of cars (costs can be calculated), and time that drivers are online. This could be figured out, but would you trust what they said?

dmoy 9y ago
There's also no upside for Uber to release the numbers if they're not really that high - it'd be discouraging to their future contractor pool.
- ghaff 9y ago
  Costs are going to be a bit squishy but you're right that Uber has a pretty good handle on mileage, time, money paid out, etc. One suspects that if the average driver is making $25+/hr. after reasonable expense assumptions, we'd have heard about it loud and long. My suspicion with some back of the envelope calculations is that it probably ends up somewhere in the minimum wage range most of the time. Especially at the higher end of that range, it sort of makes sense. Assuming at least a reasonable percentage of drivers have some rational handle on what they make and their real costs, that's about where you'd logically expect pay to need to end up. To be clear, I'm sure some drivers don't really understand their costs or know that they're effectively borrowing from their future self who will have to pay maintenance bills--and feel they don't have an option. But it's a bit hard believing it's near universal behavior.
  - dpweb 9y ago
    Seems like the preventative maintenance person would be rewarded. I would also think the car mechanic since they can obtain a car at a lower price. For budgeting, I’ve tried to just arrive at a cost per month of ownership for a car with expected depreciation (not cost to purchase), ins., gas, and expected maintenance.
  - user5994461 9y ago
    >>> My suspicion with some back of the envelope calculations is that it probably ends up somewhere in the minimum wage range most of the time. Especially at the higher end of that range, it sort of makes sense. Assuming at least a reasonable percentage of drivers have some rational handle on what they make and their real costs, that's about where you'd logically expect pay to need to end up. Your assumptions are incorrect. The world is filled with people who can't estimate costs, it's actually pretty difficult. I've worked in online gambling before. I think it has a lot of similarities with Uber. It's entirely possible to have the vast majority of your customers lose money.

grantlmiller 9y ago

The problem is that the initial, flawed findings fit the biased narrative that the many in the media (both traditional and social) prefer to perpetuate. As a result, the surveys and stories that support their biases get top billing as headlines for days or weeks. People are often so eager to hear claims that support their beliefs that they don't investigate the credibility of the claims. When the truth comes out, the same media outlets will likely do nothing and at most will publish a small redaction (same goes for individuals who spread this on social media). I have no expectation that the true nature of this study will be widely reported or nearly as promoted as the initial false results. The world needs more rational skeptics. We have to hold each other accountable by ask probing questions about the nature of "facts" that are presented us. Seek truth.

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tyingq 9y ago
How far off will the refined results be though? The sensational number was half of minimum wage. Is 7/8ths that much different of an issue?
- OiNG 9y ago
  the medium article claims pay was computed as follows: dollars_earned_driving * percentage_of_total_wage_from_driving assuming this is correct, the less drivers rely on driving as a primary source of income, the more incorrect the $3.37 figure would be. curious to see the updated results.
johnhenry 9y ago
Someone made a public claim using public data and methodologies. Someone else refuted it. That original someone is going to check again and get back to us. I agree that the world needs rational skeptics -- and yes, perhaps more -- but looks like the peer review process is working properly here. Don't see a need to blame media bias?
- 9y ago

njarboe 9y ago

One might consider that the average drivers wage is highly depressed by a large number of people who are inexperienced or not very serious or not very smart at making money driving. I have a cousin who drives as his primary employment. If you have been driving for awhile, have an aptitude of understanding how to maximize your benefit in complex systems, and have a flexibility on when you work, one can do quite well. Knowing when and where surge is likely to happen. Knowing how to up your odds of getting a nice long trip on a freeway at your max Lux level when the traffic is clear. Having the skills and interest in buying used cars so you can get a good deal on the cheapest car that passes for UberXL or UberSelect. When and where to set your two daily destination options. Keeping up with all the bonus plans and other rules of all the ride sharing platforms in your area. Chatting up other skilled drivers to try to learn more tricks on upping your income. It does not seem like such a bad idea for society to have some entrepreneurial like jobs that are easy to get but don't pay very well until one becomes good at it.

FLUX-YOU 9y ago
>It does not seem like such a bad idea for society to have some entrepreneurial like jobs that are easy to get but don't pay very well until one becomes good at it. Until it gets abused by employers as a cheap source of labor and then sold to the public as "adding jobs". Those entrepreneurial jobs exist already as door to door salesmen and MLM people. If you can be this smart about Uber driving, you can be this smart about getting a decent salary job, so this doesn't make sense rationally because Uber ultimately has a low earnings ceiling for drivers.
- njarboe 9y ago
  People being able to get transportation at times, places, or prices that were not available before seems like a positive endeavor. People bugging you at your door selling you things that you never would want and MLMs, not so much.
hinkley 9y ago
You seem to be equating gaming the system with making the system fair to the driver. The problem is that now not only is Uber taking advantage of your coworkers, but you’re indirectly taking advantage of them as well. Because you’re now exploiting the same thing Uber is. This doesn’t fix the system. In fact it probably makes it worse. Take your advice to the end: nodody should drive unless there’s a surplus of fares. That would cause much of the day to qualify as surge. The premium Uber pays for surge would drop substantially in order to protect their margins. Which means your earning potential would decrease. Now the first quartile of employees are barely making more than the third quartile. That sucks for everybody.

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gearhart 9y ago

Does anybody else find the Tweet response from Dara Khosrowshahi deeply childish? The in-depth response from Jonathan Hall is, whether you consider it to be biased or not, a well-researched, calm and explained piece of peer-review, but the CEO's tweet is pathetic and kitsch: "MIT = Mathematically Incompetent Theories (at least as it pertains to ride-sharing)"? Is that the level of communication that we expect from our leaders now? I've always held an image of the character that CEOs of large corporations strive towards as reasoned, rational and "stately", at least in their public role. This sounds like the outburst of a petulant adolescent, and is disturbingly reminiscent of a certain presidential figure. Is this a consequence of some societal shift towards communicating at the lowest possible denominator, or do I just have an overly conservative view of what is expected from people in those positions?

crankylinuxuser 9y ago
Well, it does go along with the recent decorum change with respect to "bigger buttons" and the like. Stately speaking has hit a new low. It's no surprise that CEOs and politicians alike are picking up on what I call Idiocracy-speech. There was a video a few years ago published on youtube by CCP Grey called "This video will make you angry". It explains how angry memes spread faster, and are more durable than other types. I'd surmise that this is true.
m52go 9y ago
You didn't cite the whole tweet. The real tweet is a bit longer, cites analysis written by Uber, and in context, does not come across as childish: MIT = Mathematically Incompetent Theories (at least as it pertains to ride-sharing). @techreview report differs markedly from other academic studies and @TheRideshareGuy recent survey. Our analysis: [https://t.co/S2aAqCuDR0 https://t.co/S2aAqCuDR0] https://twitter.com/dkhos/status/969805860594581509 https://twitter.com/dkhos/status/969805860594581509
- gearhart 9y ago
  I apologise, that's totally true. I did cite only the bit that jumped out at me, and my implication that it was the whole tweet does make it seem worse than it was, but I would disagree that the context redeems the statement.

fenleyman 9y ago

I have a question on this study. The news rightfully claim it‘s an MIT study, because the respective institute is at MIT. However, when considering the authors of the paper, it looks like everyone currently has institutional affiliation with Stanford. Am I wrong?

wcr3 9y ago

"The Rideshare Guy." Oy.

AKifer 9y ago

Hopefully these firms haven't yet their shares listed on stock exchanges, otherwise all the ignorant sheeps would have all shorted, only to see their money gone into expert investors pocket a few days later.

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davecraige 9y ago

Paper updated: Looks like Uber pays 41%-54% of their drivers less than min wage https://twitter.com/yfreemark/status/970761011895652355 https://twitter.com/yfreemark/status/970761011895652355