Taxis and unintended consequences

In keeping with the DC theme, I wanted to comment briefly on the taxi fare system in Washington. The first time you ever take a DC cab, it’s a bit of a disconcerting experience, because there’s no meter running. Instead, fares are calculated based on a system of zones, with a flat rate based on how many zones you cross along your journey.

So far as I can recall, Washington is the only city I’ve ever spent any time in which employs this particular methodology for calculating taxi fares. From which data you can probably guess how much sense it makes.

For example, it seems pretty silly that two trips from point A to point B would cost the same even if one were undertaken on, say, an early Sunday morning and the other took place in the depths of a weekday rush-hour (and the rush-hour traffic can be horrendous in Washington). After all, the rush-hour trip might take 4 times as long and occurs during a time in which demand for taxis is probably much higher. Similarly, it seems vaguely inappropriate that two trips of equal time and distance would cost a different amount, merely because one happens to be entirely contained within a single zone whereas the other crosses two or three zones.

As such, it should come as no surprise that this fare system arises from regulation rather than from market forces (admittedly, most cities set regulations regarding taxi fares, though, as I said, Washington is the only place I’ve seen where fares aren’t metered). Now, given all the disadvantages of the zone system mentioned above, along with many others that are easy to come up with, why would even politicians be silly enough to require this particular system? Because, of course, there are some advantages to be gained, and the zones in Washington favor those most likely to be influential in the regulatory process.

If you zoom in a bit on the above-linked fare calculator and know much about Washington’s geography, you’ll notice immediately that the zones are drawn on the map in such a way as to be distinctly advantageous to someone traveling from, say, DuPont Circle to the Capitol. Even though the trip is more than 3 miles right through the heart of downtown Washington, the entire trip will cost you the minimum possible taxi fare (currently $5.00, I think), since both locations lie in the same fare zone. Now, if you’re not very familiar with DC geography (like me), you’re probably wondering what the significance of this is. It’s quite simple: most of the major embassies as well as many of the best restaurants and membership clubs are in the DuPont Circle area, so politicians, bureaucrats and diplomats are constantly making the trip between DuPont and the Capitol and its surroundings. Which means that those politicians, bureaucrats and diplomats are making out like bandits from the zone fare scheme. Needless to say, I somehow doubt that this is a coincidence.

I’m sure someone with more knowledge of the DC area could point out several other ways in which the fare zones are constructed to the benefit of those with political clout, but, fortunately, I haven’t spent much time in Washington.

The next natural question, of course, is the following: what are some of the unintended consequences of this situation? I mean, it seems clear that the politically powerful are benefitting at the expense of taxi drivers, but most of us are neither politicians nor taxi drivers, so should we really care? Well, if you’re trying to get from somewhere in Northwest down to the area of the Capitol (including, for example, the residential area just east of the Capitol), especially late at night, you probably should. I’ve never had occasion to try it myself, but I’m told that getting a taxi-driver to agree to pick you up for such a trip is virtually impossible. Also, if you’re trying to take a taxi from somewhere in the city to, say, northern Virginia, you should probably care. Since DC taxis don’t have meters, the driver has to estimate what expense a meter would have added to the trip once you leave the city and, needless to say, those estimates probably tend towards the high end of plausibility.

Given these various distortions on the taxi market, it shouldn’t come as much of a surprise that the taxi black market is apparently thriving. I’m always disposed to look favorably on the entrepreneurial spirit, so I was happy to take one such informal taxi from the bus station to the restaurant where I was meeting up with friends on this latest trip. It wasn’t much of an issue for me on that particular occasion, but the black market driver’s main attraction seems to be that he will take you places other taxis won’t, at least based on my conversation with the driver I wound up with. It might cost you a little more than the legal rate, but the unofficial taxis will take you to the places it’s simply not profitable for the legally licensed variety to bother with. Since they’re not officially licensed, black market taxis don’t follow the official rates, so you’ll have to negotiate your own price up front, but if you’re traveling from DuPont Circle to the Mall (or, for that matter, from the bus station to Pennsylvania Ave. when most taxis loitering around the station are hoping for long trips to the suburbs), it might be well worth it, even if only for the educational value as a lesson in the unintended consequences of regulation.