Tuesday, April 17, 2007

Irrational Taxi Drivers?

There is high demand for taxi cabs in NYC when it is raining, of obvious reasons. However, taxi drivers tend to work fewer hours on rainy days.

The first perspective on this phenomenon is that the taxi drivers are behaving irratioanlly. According to a paper by behavioral economists:
They speculated that cab drivers have a particular income level they target each day. When they hit that target, the cabbies go off duty. The increased cab demand in bad weather increases the number of fares per hour, so cab drivers reach their target sooner, and go off duty. Economists consider such a strategy irrational. After all, if each hour of work is more lucrative, shouldn't cabbies work more hours?
However, on the Free Exchange blog, the author proposes another idea that brings the taxi drivers behavior back into the realm of the rational:
They claimed the reason they stop work early on rainy days is the dangers associated with driving in such conditions. Rain makes the roads slick and encourages irrational behaviour from pedestrians. As one cab driver put it, “The people become crazy; they walk right in front of oncoming traffic to get out of the rain.” Assuming high costs associated with getting into an accident or hitting a pedestrian, it may be very rational to work fewer hours at the higher wage. When you subtract the cost of getting into extra accidents, the wage may not be as high as it seems.
Any thoughts on which side is more likely?

(Source: Free Exchange)

10 comments:

Anonymous said...

So... taxi drivers work each day to get an expected income. If they still work to get that income on rainy days, but go off work early, there isn't anything that they are losing except an additional amount of money they could make. The extra money would be like their opportunity cost. The other aspect is on rainy days. The chance of being in an accident increases. Don't you think that hitting someone, getting in an accident, or hurting yourself would be worse than not making a few extra bucks? I think so. I think that not making "extra" money would be better than getting into an accident or hitting someone. I also think that an accident could hurt money income in the long run. Overall, it is safer for a tazi driver to only work on rainy days until the expected income is reached. It just seems safer this way.
-Morgan Hale

Anonymous said...

I think the first reason is more likely and that the taxi cab drivers probably hate their job and just work as few hours as possible to pay for wahtever they need that day or month. They would not stop, because of risks i rainy weather because the extra money would heavily outweigh the risk of injury or getting in a wreck. I think that another possiblilty is that more driver's would want to drive on the rainy days so it would be ewsier for a driver to find someone to take his place and the hours could be divided into smaller segments so that more workers could get in on the good money.
\- chris g

Anonymous said...

Taxi drivers aren't being irrational when they stop driving early on rainy days. Considering everyone is rationally self interested, it means that in order to make sure they keep their jobs, and can continue to earn an income, drivers will try not to take too many risks. If getting in an accident because of the rain causes a cab driver to hurt a pedestrian, or hit another car, they are putting themselves in danger. It is up to the driver whether they are willing to take the risk of getting in an accident and in return gain more money. If the cost of getting in an accident is greater than injuring a person (which in my opinion its not) then they should drive more hours on rainy days.
-Hope Johnson

Truth Masemola said...

I think becoming a taxi driver is actually no ones dream, so ending up as a taxi driver you are actually just there to get an income not because you actually want to be there. During rainy days it's sometimes dangerous to drive and so I understand their reasons to knock off early, even though people depending on taxis would be stranded that's why they would think taxi drivers have a specific income they have to earn everyday and when they reach the amount they stop, which is actually not true. I believe as a taxi driver you strive to get as much as you can get in a day because taxi drivers are also in business and business is not always in good days everyday, some periods it's profit and some periods it's a loss, just like it will be a loss when the taxi has to go to repairs.

Choshane Magdeline said...

I definitely think that taxi drivers are being irrational for knocking off early on rainy days.People need transports more when it is raining than any other day hence they should be there for their people.Its a job of a taxi driver to commit themselves to their clients because they are running a service.In South Africa,its a job if one is earning income so they should not be weary just because they are taxi drivers and being one was not their dream job.
I understand the risk that they are trying to run away from to save their people from danger but what about all those other cars that are functioning on rainy days also? Is it not risky for them too? The roads are only risky if the driver is speeding up the vehicle especially on the rainy days.
The drivers should learn to follow the road signs and not speed up their vehicles, that is the only way it shall prevent risks from occurring.

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Jake Cross said...

The problem with that argument is that even if it doesn't rain taxi drivers work fewer hours on busy days.

Jake Cross said...

The problem with that argument is that even if it doesn't rain taxi drivers work fewer hours on busy days.