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How would you answer the following question? What quintile in the income distribution dedicates the largest share of its budget to spending on public transportation services?

Common sense would have you bet the lowest 20% of households. Why?

Because for poor households they would seem to be less likely to have cars, live in places where public transportation is more accessible (buses for example) and because it seems to be cheaper. Of course we’d be wrong with that guess. It turns out that the richest 20% of households spend the largest share of their budgets on public transport. Whereas households in the bottom quintile spend 0.7% of their annual income on public transport the wealthiest 20% of households spend 1.4% of their income on public transportation.

There is of course a literature on this. Kudos to readers who can come up with a reasonable hypothesis to explain this. It won’t surprise many of you upon reflecting on it.

6 Responses to “Fun Facts to Know and Tell: Public Transportation Regressivity”

  1. I am a fan of public transportation. I grew up in Cleveland and learned to cross town on my own with a transfer. The Rapid Transit trains were built and extended. (The old Shaker Rapid antedates even me, but was running then, of course.) Later, in high school, The Cleveland Terminal Tower was my image of the Taggart Terminal, concourse, tobacco shop, and all. And, yes, even when I work blue collar, I make more than minimum wage, and now I am on a technical project that brings several multiple of that. And one of the reasons that I chose Austin is because of the buses. The city has a 1% sales tax and charges a dollar a ride only to keep the bottom-most from living on the buses. But I do not see many of my computering colleagues on the bus, mostly a lot of working poor, the $10/hour and below and a lot of non-working poor as well.

    As for the wealthy taking the trains, well, when my brother was an executive he lived in Westchestr and took a train already loaded in Connecticut into The City. And, as the story goes, young Michael Milken took the train in from New Jersey because it gave him an hour a day to read books on the bond markets. (Riding the bus, I read two Jane Austen novels, two William Gibson novels, and now have Kuhn’s Scientific Revolutions.)

  2. Harry says:

    Wintercow cleverly left the definition of public transport unclear, but I think it would be everything except your car, your motor coach, your plane, and your yacht. The top twenty percent includes a lot of people who do not own yachts, but who do fly on their own dime for both business and pleasure. To get anywhere from anywhere, it takes at least $100 for each flight, maybe a bit less if you put everything under the seat in front of you (your carry-on luggage cannot have that big can of hair spray, etc.). I know the fares are cheaper out of Newark, but then you have to get to Newark. In any event, a family of four flying anywhere will spend eight times the one-way ticket plus all the fees and taxes that are added in for the TSA, etc. Let us assume that each trip costs $1200 for just airfare, and let’s assume that family making $80,000 a year takes two trips a year, or one trip for $2400. What I find surprising is that airlines can make any money.

    But check that. Over time, the airlines have lost money.
    So has passenger rail, including WAMATA, MARTA, SEPTA, BART, AMTRAK, and the CTA.

  3. Trapper_John says:

    My guess is that government subsidies of public transportation account for a lot of the spending. That, of course, comes from the people who pay most of the taxes, i.e., the top 20%.

  4. Alex Armlovich says:

    It’s a reflection of the high productivity of urban areas–cities make us rich! Public transit isn’t viable in lower-density lower-productivity areas. All our large cities have at least some public transit and our richest cities on the coasts have significant transit. The places that are good for public transit also happen to be the places that are good for rich people.

  5. Pierce Schultz says:

    Maybe the top quintile buys more expensive public transportation, ie. taxis, planes, etc. whereas the lower quintile uses less expensive public transit, ie. buses.

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