At $2.90, the NYC Subway is too cheap
Back in August, the MTA could no longer hold back the resistance to raise the price of the fare to $2.90. This resulted in a lot of grumpy people online who complained as they always do.
But as I heard their cries, I began to wonder. What if the subway is actually too cheap? What if $2.90 is simply too low, and the price of a fare should be much higher?
This certainly is a controversial idea, as nobody likes paying more for something. People would complain even louder, saying that the subway is far too important to make its price inaccessible. But that value is not being priced into a fare, and alternatives like Uber are far higher.
Some people ask why the MTA deserves this much money for a fare, as it lacks the reliability and frequency and cleanliness of systems like Tokyo and Paris. As such, I’ve done some research on various transit systems in order to steelman my controversial idea and I’ve identified many reasons why the subway fare is too cheap.
Urban Sprawl
The price of a subway ride was $0.05 in 1948. If we simply adjusted for inflation, that would be $0.64 for a ride today. But the subway of the 1940s is far different from the conditions and expectations today.
People often don’t realize just how huge American cities are, and how much they sprawl out across land that was once wild and forested. Paris is just about 40 square miles total. New York City sprawls out to over 300 square miles. When you include the greater metropolitan area, it ends up at nearly 4500 square miles.
Second to Seoul, the MTA has among the most miles of track of any of the surveyed transit systems. People may praise the Paris Metro, but BART has roughly as much track.
This results in US transit systems requiring a great deal of stations to cover large swaths of land. Boston’s MBTA has nearly as many as Berlin, also comparable in the number of lines and miles of track. Yet it has a fifth as many riders and is roughly a dollar cheaper per-ride.
If we were measuring the price of fare compared with the number of miles in the system, we can see that the MTA is actually very cheap ($0.004-per-mile). All American transit systems are relatively cheap on a per-mile basis compared to the tiny city systems of Europe.
In my survey, I put down the cost of a Seoul Metro ticket as $0.93. This is exceptionally cheap!
But we must acknowledge that the MTA is also very cheap by this metric. In fact, if fares were based on the average ($0.027-per-mile), the price of the subway would be $17.80.
The MTA has a lot of trains
Due to this sprawl, transit lines need to be spread out in all directions. The MTA actually has the most separate lines of any system I surveyed, going out to places like Far Rockaway (which is quite far away, hence the name). Munich has an impressive train frequency, but isn’t that helped by the fact they have fewer lines to manage than Denver’s RTD?
Taking into account the frequency of trains and the number of lines, we see that the MTA exceeds Tokyo in terms of trains being run every day. This calculation is an estimate by taking into account the frequency of trains at peak and non-peak times every day. Here it should be noted that the MTA is the only system in my survey that runs 24/7. Seoul’s subway shuts down four hours every night and even Tokyo’s subway stops running overnight.
When we look at the number of trains running per day based on the cost of your fare, we can see that the MTA is also one of the cheapest subway systems ($0.0006-per-trains-per-day). Here, low frequencies mean most US systems are above the average. The MTA is actually cheaper than Tokyo’s subway using this metric.
If we priced the MTA as the average across these systems ($0.0027-per-trains-per-day), the price of one fare would be $12.45.
We’re overspending on public transit subsidies
Our low-density cities and sprawl mean that there aren’t many people nearby to use them. Aside from the MTA, the other US transit systems barely appear on the graph. Yet the subway system has a lot more riders than Paris and Seoul just be the sheer size of the city and metropolitan area.
A system of this size costs a lot to run. Certainly there are a number of ways that the cost may be too high, but it is worth comparing looking at the operating budget for one of the oldest subway systems in the world.
Munich’s U-Bahn is owned by a larger conglomerate so I’m not definite on how much of their annual expenses are specifically allocated to the transit system compared to other areas.
Across all of these systems we can assume the allocations are generally for the same categories: payroll, overtime, healthcare, pension, materials, maintenance, etc. These figures are meant only to focus on regular expenses, not capital expenses.
We can see that the MTA is not the costliest. Actually, given the breadth of the system it seems quite efficient, though you could also argue that it is underfunded.
You may argue that we need to raise taxes higher for the MTA. You may argue that the current price of fare is too high.
Yet we can see that American transit systems are the most generous towards riders. When you look at what percent of operating expenses are not covered by the fare, we can see that Denver RTD, BART, and the MTA are among the highest. This graph above means that over 75% of the annual budget is not being funded by the riders directly but through taxes, tolls, and other schemes.
Dublin’s Luas system stands out here because it is run by a private company and has largely been profitable, funded entirely by fares. Notably, it also is the most expensive for riders per-train and per-mile.
If we wanted the MTA to be as profitable as Luas, it would charge between $27.42 and $50.38 per ride.
But we don’t want that. We don’t need that. The MTA is a public entity who is supposed to serve the public and not themselves. That’s noble, but the fact that users are paying so little may actually backfire.
Why is cheap public transit a problem?
In economics, the concept of “perceived value” reflects the individual’s belief on what a given item should cost. If it’s too low, it is perceived as low-quality. If it is high, it is seen as a luxury good. Pricing thus can serve as a signal for quality.
If $2.90 is seen as half the price of a coffee at Starbucks, it may be seen as a cheap commodity and not viewed as a fantastic way to get around a city. If it is seen as dirty and unsafe and otherwise low-quality, people may not ride it. It may be seen as charity for the poor rather than a valuable service. People may prefer Uber or taxis, which create air pollution and congestion.
Owning a car in the city is very expensive. Payments alone can cost over $1000 a month. When you factor in the cost of maintenance, fuel, insurance, and parking, it is absolutely a luxury good. Yet it’s a luxury good that most people participate, perhaps because of its price not despite it.
Why is this a problem? Consider how reliant the MTA is on local and state funding. Constituents need to go to appeal to lawmakers in Albany to ensure the subway is properly funded. Yet if many lawmakers don’t take public transit, and many of their supporters don’t, why would they care?
They largely don’t care. Last year they spent an emergency $600 million on transportation: this money went towards a gas tax holiday rather than a capital expansion of the subway or reduced fare cards or improving peak headways or even bus lanes.
The MTA being so reliant on apathetic lawmakers in another city does not garner much confidence it’ll ever not be underfunded. It took a lot of petitioning for the state to cough up a paltry $300 million and even more of that funding came from an increase in business taxes. The MTA needs big businesses in the city to survive rather than relying on the people who use it everyday.
Why is public transit an opportunity?
We need to elevate public transit as not just a public good, but a public great (pun intended).
When you take the subway, you don’t take a car. That reduces noise pollution. It reduces air pollution, helping people today and reducing carbon emissions for the future. It cuts down on congestion, allowing people who need to drive a smoother commute. Cutting down on driving can save lives.
Public transit is good for equity. People who can’t afford thousands a month can benefit a lot from high-quality public transit, allowing them to get wherever they need efficiently.
Perhaps we should follow the footsteps of highly-praised systems. We could privatize the MTA. Perhaps a private company could make the subway as beloved as Dublin’s Luas or Tokyo’s Metro. Though I don’t imagine that’s going to fix the structural problems.
Expanding transit is just too expensive. The Second Avenue Subway is costing $2.5 billion per mile, the most expensive costs in the world by an order of magnitude. Spain, Germany, France, and others can build a lot cheaper. There are many reasons for these excessive costs, and solving this problem is imperative if we want to expand public transit. Making our dollars go further is vital.
Efficiency is important when you have hundreds of miles of track. People deserve reliability and consistency, and every extra mile adds much more risk.
Yet it does feel unfair to have to pay for hundreds of miles when you don’t usually go that far. My daily commute is just four miles. I don’t see a reason to pay a lot just so that tracks in Flushing can be modernized. People are bristling at paying $0.15 more, so an extra $10 would be politically impossible.
Not every subway system has a flat fare. In fact most break up travel into separate zones. The cost of a trip depends on how many zones you travel.
Here’s a quick mock-up of what I mean. Please note that this is fairly arbitrary and there are a million different ways to do this better (which is probably why it’s never been done).
In this payments system you tap your card when entering and tap again when exiting. If you enter and leave within the same zone, we may charge a small amount like $1.45. If you travel one zone, the price may go up to $2.90. Traveling two zones may be $4.35. Traveling three zones would be $5.80. Traveling four would be $7.25. And if you were to go from the Bronx all the way to Far Rockaway it would cost $8.70.
You may consider this to be an unfair system, penalizing poorer Bronx residents who may want to go to JFK with higher fares. It would also benefit poorer Bronx residents who don’t want to go to JFK but instead travel short distances within the Bronx. Overall it would be a fairer system which better charges people based on the amount they travel.
This proposal also doesn’t touch upon the PATH train to New Jersey and the AirTrain to JFK. Integrating those into the broader system through zones or OMNY would benefit riders as well.
Combating Urban Sprawl
American city sprawl is a big problem as we look forward to tackling climate change. Our inability to build transit efficiently is going to present a great deal of friction in getting people out of their cars. Ultimately that should be seen as a primary goal of climate activism.
Subways may not work in all circumstances. It can be great in dense urban cores, but expanding the 7 train from Flushing to Douglaston at the edge of Queens would be five miles and likely $13bn at our outrageous per-mile rate. Douglaston is one of the least dense neighborhoods in all of New York City (and yet is still one of the densest relative to the country).
Our surface road and highway infrastructure may mean improving our bus system would be a lot cheaper. Adding dedicated bus lanes should be a priority for the city and yet attempts to add bus lanes are opposed by city officials. Automated systems can help enforcement on existing bus lanes and speed up transit. This has direct improvements in the quality of life for riders and reliability can boost public confidence in public transit.
When you look at the NYC subway, it’s one of the largest and oldest in the world. It’s a great example of sprawl and how intermittent, intergenerational planning can lead to bad decisions over time. The MTA managed to starve off financial insolvency this year, and that’s good. Yet they haven’t really addressed the structural issues of financing.
New Yorkers need to take pride in our subway system. It has lots of lines, lots of track, runs all night, and it’s a fantastic value. Its low cost may mean we don’t appreciate it. Hiding its operating costs with ample amounts of taxes and tolls may mask some of its structural problems. Congestion pricing is coming to New York City and it absolutely will make things better for residents below 60th Street.
How much better will it make the MTA? Their final recommendations have yet to be shared and approved. We’ll have to wait and see how much extra this adds to the MTA’s capital budget. From that point, it will be up to those in charge to spend the money wisely.
They need to prove to everyone, but mainly drivers, why public transit can save money and reduce air pollution without creating the perception that it’s unreliable and grifting. If they cannot do that, people will never stop driving. And that would defeat the point.
