In this work, we investigate how the entry of the driving service Uber influences the rate of alcohol related motor vehicle homicides. While significant debate has surrounded the entry of driving services like Uber and Lyft, limited rigorous empirical work has been devoted to uncovering the social benefits of such services (or the mechanism which drives these benefits). Using a difference in difference approach to exploit a natural experiment, the entry of Uber into markets in California between 2009 and 2013, findings suggest a significant drop in the rate of homicides during that time. Furthermore, results suggest that not all services offered by Uber have the same effect, insofar as the effect for the Uber Black car service is intermittent and manifests only in selective locations. These results underscore the coupling of increased availability with cost savings which are necessary to exploit the public welfare gains offered by the sharing economy. Practical and theoretical implications are discussed within.
From the introduction:
Preliminary analysis conducted by Uber and several industry analysts suggest that introduction of Uber and other ride sharing services has a negative influence on DUI arrests. However, these studies have been questioned on several grounds: including involvement of Uber in the data analysis, methodological rigor (i.e. single city estimations), and the presence of confounding factors such as changes in city’s population, bar scene, and tougher enforcement.
Moreover, a limited understanding of the mechanisms by which such services influence the rate of DUIs exists. On one hand, it is plausible that the decrease in DUI is simply the result of availability of vehicles for hire and that patrons are willing to pay a price premium for such services. Insofar as it is often difficult to hire a taxi, based on time, location, or even the race of the patron (Meeks 2010), it is plausible that the presence of the platform mitigates these market inefficiencies by soliciting the driver electronically, thereby significantly reducing search costs (Parker and Van Alstyne 2005) and creating excess utility for the consumer. On the other hand, it is equally plausible that the effect is a result of both availability and cost. Drawing from rational choice theory (Clarke and Cornish 1985, Cornish and Clarke 2014) it is conceivable that individuals who make the decision to drive under the influence do so based on the costs associated with conviction, the cost of searching for and hiring a taxi, and the probability of being stopped by the police and/or striking another driver. This broad question: what is the impact of Uber’s introduction on alcohol related motor vehicle homicides in the local area and by what mechanisms, forms the core of the research investigated in this paper.
Empirically, we exploit a natural experiment, the introduction of the ride sharing service Uber into cities in the State of California between 2009 and 2014, to investigate the effect. Leveraging this econometric setup offers us several advantages. First, to the extent that the entrance of Uber is staggered temporally and geographically, we execute a difference in difference estimation to establish the effect. Second, Uber offers multiple services in each of the treated areas with varying price points (note that these services also enter at varying times and orders). On one hand, UberBlack, a town car service, offers transportation with a significant markup over taxicabs (~20% – ~30% price premium). On the other, the UberX service is a personalized driving service which offers significant discounts over taxis (~20% – ~30% price reductions). To the degree that each of these services identifies a different mechanism being at play (availability v. availability and price point), we are able to cleanly identify the dominant mechanisms at play. We test these using hand collected data from the California Highway Patrol (CHP) safety and crash dataset and a custom webscraper which indicates when each service entered a geographic area in California.
Results indicate that while the entry of UberX strongly and negatively affects the number of motor vehicle homicides which occur in townships, limited evidence exists to support previous claims that this occurs with the Uber Black car service as well (indicating that prior claims about the efficacy of Uber may have been overstated (Badger 2014)). Further, results indicate that the time for such effects to manifest vary is significant (upwards of 9 – 15 months). These results are robust to a variety of estimations (e.g. OLS, Poisson, and Quasi-Maximum Likelihood count models) and operationalizations. Finally, findings suggest an absence of a heterogeneous pre-treatment homicide trend in treated locations, indicating that the primary assumptions of the difference in difference model are not violated (Angrist and Pischke 2008, Bertrand et al. 2002). Further, results suggest no effect of Uber when surge pricing is likely in effect, thereby underscoring the importance of cost considerations. Economically, results indicate that the entrance of Uber X results in a 3.6% – 5.6% decrease in the rate of motor vehicle homicides per quarter in the state of California. With more than 1000 deaths5 occurring in California due to alcohol related car crashes every year, this represents a substantial opportunity to improve public welfare and save lives.
Emphasis mine, as that’s the key point. The paper overall is fairly technical and written for an academic audience, but you get the idea. We’ve discussed this issue before, and now that there appears to be some solid evidence behind the idea that Uber (and presumably Lyft) can help reduce the vehicular homicide rate in a city where those services are legal, it’s a factor that needs to be taken into account when they are debated. Sure, the people who are now using Uber to get themselves home after a night on the town could have called a cab in the past, but they didn’t. Uber is the option they prefer, and it comes with a benefit. Of course, Uber also comes with its own problems that haven’t been fixed yet, too, so this isn’t a debate ender. It’s just another point to keep in mind. Link via Streetsblog.