Princeton U. Professor Alan Krueger Publishes Paper On Uber

Waiting taxis at the rank outside Princeton University. Local cab drivers are complaining about competition from Uber. (click to expand.)

Waiting taxis at the rank outside Princeton University. Local cab drivers are complaining about competition from Uber. (click to expand.)

Recently, local cab operators demanded that Princeton Council shut down Uber, a ridesourcing service that competes with traditional taxis. Now, Princeton University economics Professor Alan Krueger has co-authored a paper examining who is driving for Uber, and how much money they make. The study is based on a survey of 601 Uber drivers, and finds that they are somewhat younger, and more likely to be female or holding a college degree than drivers of traditional taxicabs. In fact, about half of Uber drivers hold a college degree or higher.

Uber drivers seem to be happy with their lot, expressing very positive responses when asked if partnering with Uber had improved their quality of life and sense of personal satisfaction. 78% of drivers surveyed said they were very or somewhat satisfied with their company, and a clear majority said that their impressions of the company had improved since they started working for them.

The study also draws on Uber’s own data, to show that New Jersey has become one of the company’s biggest markets. Over 8,000 drivers made four or more trips for Uber in the Garden State in November 2014, servicing areas including Princeton. Nationwide, the number of drivers who are partnering with Uber is growing exponentially, accounting for over 150,000 people by 2013 (and presumably growing even further in 2014).

Uber drivers can opt for ‘UberBlack’ service, which is more like a traditional limousine service and requires commercial licensing, or ‘UberX’ service, in which they drive their personal automobile. UberX is the service that is growing most quickly, in part because it offers lower prices to customers. UberX drivers must pass a background check, and are insured up to $1 million by the company.

62% of Uber drivers work as drivers part-time, often while doing another day job. According to the paper, Uber drivers earn different amounts depending on what market they are in, and how many hours per week they work, but their average salary is estimated at $19.19 per hour, compared to an average hourly rate of $12.90 for traditional, licensed cab and limousine drivers. (The minimum wage in New Jersey is $8.38 as of Jan 1, 2015). On the other hand, because Uber drivers tend to work fewer hours per week, they make less total money from driving. The paper suggests that many Uber drivers are working with the company to help make ends meet before they can get a full-time job.

Finally, Prof Krueger’s paper observes:

“Another aspect of Uber that can influence the pay of Uber’s driver-partners vis-à-vis taxi drivers is that customers rate their driver when they take a trip with Uber, and drivers’ ratings are made available to potential customers. This leads Uber’s driver-partners to develop reputations, and to have an incentive to perform well to develop and maintain a good reputation.”

The Uber rating system is something that is not always appreciated as a key element of the business model. Drivers are more likely to do a great job, because every ride is rated by the customer, and drivers with poor ratings will lose out. The authors suggest that this  may underpin the higher hourly wages that drivers with Uber can attain.

Have you ever rode with Uber, or driven for the company? Let us know your impressions in the comments section below.

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2 Responses to Princeton U. Professor Alan Krueger Publishes Paper On Uber

  1. Namaste says:

    Significant other caught a traditional cab from Nassau Inn last night to go to Littlebrook area. Driver had no idea where destination address was, ended up going wrong way, tried to blame wrong route on “traffic” (this on empty roads at ~9pm!). Cost a ridiculous amount of money for a short trip. Almost as bad an experience as when we booked a traditional cab for pickup, it failed to turn up at the appointed time, and when we called to find out why it was late, we were told the company has no record of the booking. New services like Lyft and Uber offer a far superior experience: not only cheaper but technologies to let you see where drivers are, help drivers navigate, let you leave immediate feedback about the experience… If traditional cabs don’t want customers using Uber and Lyft, they *have* to start offering a better level of service. Authorities should recognize that licensing is a mid-20th century solution to a problem that is far better addressed by today’s assessment and rating systems. If they worry about losing revenue from licensing, let them collect a per-trip fee from Uber and Lyft. Banning a superior service in favor of an anachronistic, unfit monopoly would be an insult to the town’s residents, and would in all likelihood be ineffective (remember Prohibition).

  2. Beefabulous says:

    Uber is the ultra solution to decrepit cabs and insolence of traditional cab/limo drivers

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