Second Ave. Sagas

Musings on the economics of unused MetroCard fares

Written by

Benjamin Kabak

in

When the MTA raised fares earlier this year and continued the 15 percent pay-per-ride bonuses, the agency inadvertently created a crisis of mathematics among New York City’s straphangers. With a base fare of $2.25 and a volume discount, a rider has to buy 20 rides for $45 to earn a bonus of $6.75 that results in 23 rides for the price of the original 20. Yikes.

For the less mathematically inclined among us, this discount and the new fare brings the discounted pay-per-ride cost to $1.96. That’s an ugly uneven number, and apparently, many New Yorkers cannot be bothered to do this math. As the Daily News reported earlier this week, many subways are frustrated by the uneven amouns left on their MetroCards.

In a sense, the real problem is ignorance. Riders simply do not know that token booth clerks will combine leftover amounts on old cards. “I have a whole pile of them sitting in a jewelry box on top of my dresser,” Megan Hunt, 36, of Chelsea, said to the News. “There are at least 40 cards and some only have a nickel. I don’t know what to do with them, but I can’t throw them out.”

Although I’m usually critical of anecdotal news coverage, this frustration is part of a larger trend. As the News reported earlier this week, the MTA will recover $53.3 million in what they term fare media liability this year. That figure shatters last year’s record take of $40 million in unused fares.

As spokespeople at the MTA have told me, that figure counts only unused pay-per-ride money, and it is a significant figure at a time when the MTA is struggling for dollars. As straphangers toss out cards with small change, the nickels and dimes start to add up.

But on the other side of the equation are the unlimited ride cards. Recent numbers show that these cards are more than fully utilized by consumers. According to numbers supplied to me by Transit, the average number of swipes per MetroCard for the third quarter of 2009 is as follows:

[TABLE=4]

As we see, unlimited riders clearly get the most of their subway cards. The average user reduces the fare to nearly a dollar below the $2.25 mark and well clear of the $1.96 pay-per-ride discount. Because a large percent of straphangers are using some unlimited ride card, the average subway fare (for September) was $1.48 per ride. That’s downright cheap.

So why then is there such a discrepancy between the Unlimited Ride usage figures and the pay-per-ride leftover that has led to a $53 million recovery on behalf of the MTA? The MTA speculated that the fare media liability total was a result of the higher fares rather than the math involved in MetroCard transactions. More people are spending more money and are discarding a higher volume of cards.

But even with a base fare increase of 12.5 percent, the fare media liability is up over 30 percent over last year’s total. It’s my belief that New Yorkers in a hurry simply do not want to face the math involved in MetroCard calculations and do not know about the opportunity to have token booth clerks combine used cards. In the end, the MTA recovers some of the money they lose to the unlimited ride cards, and those people who don’t want to make the effort to solve a simple problem lose out. It is economic efficiency at its finest.

Comments

30 responses to “Musings on the economics of unused MetroCard fares”

  1. Scott E

    The simplest solution, of course, would be to program the Metrocard machines to tell you how much you need to add to achieve a round number of fares. But that would “cost” them $53.3 million, plus the cost of the actual reprogramming.

    For now, I have to remember what the balance is on my Metrocard, then go to the MetroCard calculator website when I get home or to the office. Then I write the oddball amount I need to add on the glossy, smudge-prone card, and hopefully add the right amount next time I use the subway.

    Reply
  2. Marsha

    It’s good to know about the combination of cards. I did that once and it was very convenient. And now I only put $45 on my MetroCard. I used to do $20 at a time but it was too hard to figure out when I got the extra rides.

    Reply
    1. Andrew

      No need to go that high. $15.65 will give you 8 rides with nothing left over.

      Reply
  3. Eric R.

    Maybe I’m not getting something here, but why do people not just add money to their existing MetroCard? When their card seem to be near the end of it’s usable life, use it until you’re below $2.25 then top it off to $2.25 (a little less math)? Is it laziness? People only get $20 from the ATM?

    Reply
    1. Benjamin Kabak

      I think it’s laziness, pure and simple. Or people just keep on buying new cards for no good reason. $53.3 million worth of laziness is a lot of laziness though.

      Reply
    2. John

      I don’t get this either. Even if you don’t know the exact amount to add to get to a multiple of $2.25, why not just throw $20 more on the card and leave it at $21.53 or something? I wonder how many are out-of-towners who maybe don’t ever come back to top off their card, or when they finally do they forget the card, etc.

      Reply
  4. Alon Levy

    Ben, where do your numbers about the average number of swipes come from? A few years ago the NY Times published an article claiming much lower numbers, averaging 55 swipes per unlimited monthly.

    Reply
    1. Benjamin Kabak

      The numbers came to me from Paul Fleuranges at New York City Transit. They are the number of unlinked trips — that is, swipes — per unlimited ride card in the third quarter of 2009.

      I guess people are getting smarter about their MetroCard use than they were a few years ago when Neuman wrote about the practice then? I know, Alon, that you’re referencing this article with the following:

      Mr. Hirsch said recent figures showed that people who use the 30-day pass take an average of about 70 rides a month on subways and buses. But many of those rides occur during what transit officials refer to as linked trips, such as when a subway rider transfers to a bus to complete a journey.

      A truer picture, Mr. Hirsch said, is given by a further analysis that shows that, on average, holders of the 30-day pass make 56 linked trips a month. With the cost of a 30-day pass at $81, that results in an average fare of $1.45.

      I’ll circle back with Transit to confirm the numbers. That’s a 25 percent increase in unlinked swipes. I think there may be some bus-subway transfers included in those 70 swipes in my post.

      Reply
      1. Andrew

        You’re switching from linked trips to unlinked trips mid-analysis.

        (If I transfer from subway to bus, that’s one linked trip but two unlinked trips.)

        Mr. Hirsch is saying that 30-day pass users take an average of 70 unlinked trips per month (pretty close to your 71.51), but only 56 linked trips per month, due to free transfers.

        So the average cost per unlinked trip is $1.23 (ignoring reduced fare MetroCards) – but some of those riders, without unlimited cards, are paying only 98 cents per swipe ($1.96 to board the first vehicle and $0.00 to transfer free to the second vehicle).

        Reply
  5. Kevin P.

    “In a sense, the real problem is ignorance. Riders simply do not know that token booth clerks will combine leftover amounts on old cards.”

    The real problem is that MTA NYCT allocates this task to “token booth clerks” (a position that doesn’t even exist anymore) after having made station agents less and less relevant by phasing out this kind of manual labor. Years ago you could combine card amounts at MetroCard vending machines (I think it was labeled “Trade In”). I recall a thread on this subject about 10 years ago over at either nyc.transit or SubTalk. Apparently MTA NYCT removed this feature from the MVMs because it was vulnerable to some kind of hack.

    Reply
    1. Andrew

      NYCT allocates this task to Station Agents, and there is still at least one Station Agent at each station. I don’t think “token booth clerk” has every been an NYCT title – before they were called Station Agents, they were Railroad Clerks.

      (But I agree that the machines should allow card balance combinations.)

      Reply
  6. Jonathan D.

    I’d love to go into this in more detail, but suffice to say, the major problem with all this is that these unclaimed amounts are a seriously regressive tax. On average, the people using pay-per-ride metrocards are significantly poorer than those using unlimited cards. That means that we’re taking additional money from the neediest in the city and handing it over outright to the richest people.

    It’s also important to note that your discounts do not account for things like the huge increase in tax-free ridership. All of my unlimited ride cards are bought pre-tax, so they are, in fact, significantly cheaper than $89. Assuming a blended tax rate of 30% (picking the marginal rate would be inaccurate), I am paying a real $89 for my card while those who do not have transit benefits through work are paying $115.70 for the same card.

    Reply
    1. AK

      Here here Jonathan. Excellent points. We’ll see if the MTA’s offer of an automatically funded MetroCard will help this issue. Of course, automatic funding requires a credit card, which the poorest of the poor (including many immigrants who lack bank accounts) don’t have access to.

      Reply
      1. Benjamin Kabak

        They already offer an automatically funded card: the EasyPayXPress card. I think more people should use it.

        Jonathan: If you’d be open to writing a more substantial guest post about the taxation issues, contact me. You seem to know more about it than I do, and I’d love to feature a piece on it.

        Reply
        1. AK

          Right Ben, though it seems like they’ve pumped up the ads for it a bit more– that’s what I was referring to…though that feeling is merely based on anecdotal evidence.

          Reply
    2. Andrew

      Perhaps it’s regressive, but how is it a tax? Nobody is required to leave balances behind on discarded cards.

      Reply
  7. crescent

    So sad people cannot do basic math. If I have $1 left on a card and want to make the balance even with a $2.25 base fare (given the $8 minimium purchase), the math is ($2.25*5-1) / 1.15 = $8.91. Go to the machine and manually tell it to put in $8.95 (nearest 5c) and the balance is then $11.29 = 5 rides.

    Reply
    1. Benjamin Kabak

      With four cents left over.

      Reply
      1. JP

        Keep adding money to it, eventually it will balance out. Since we get a % bonus to dollar amounts, losing four cents of free money doesn’t seem to be a big deal to me. Am I missing something?

        Reply
  8. JAR

    Let us know when you confirm those numbers. The number of “swipes” and associated costs don’t compare to the true costs of using the card. If “linked trip” is the right term, so be it.
    How many “linked trips” are there, on average, for 30, 14, and 7 day cards? That’s the number that tells the value of the unlimited card because that’s what we can compare to the pay-per-ride.
    $2.46, $2.64, and $2.68 for two swipes to take a subway then transfer to a bus would be downright expensive compared to pay-per-ride!

    P.S. How much does “SWIPE AGAIN AT THIS TURNSTILE” count 😉

    Reply
    1. Benjamin Kabak

      Well, we know that the average subway fare is under $1.50, and we know that pay-per-ride users, with the discount, are paying $1.96 per ride. Therefore, linked or unlinked, the Unlimited Ride MetroCards are still offering a better per-ride deal than the pay-per-ride cards. The magnitude of that deal is still up in the air.

      Reply
      1. Alon Levy

        Ben, the average subway fare is under $1.50 only when you count transfers twice, apparently. If you count them once, as pay-per-rides do, then the average is closer to $1.59 = $89/56.

        Reply
        1. Benjamin Kabak

          I don’t doubt you, but do you have a source for that or can you show me the math at least? I can’t get more info from Transit until folks are back at work on Monday.

          Reply
          1. Alon Levy

            The article I linked from 2003 says the average number of linked trips per unlimited monthly is 56. $89 per month divided by 56 trips per month is $1.59 per trip.

            Reply
  9. Mike Nitabach

    It is SHOCKING that the MTA hasn’t put up posters in the subways publicizing the fact that you can combine card values at the ticket booth! SHOCKING I TELL YOU!

    Reply
  10. Mike Nitabach

    I’d love to go into this in more detail, but suffice to say, the major problem with all this is that these unclaimed amounts are a seriously regressive tax.

    Charging fares for mass transit at all is a regressive tax.

    Reply
  11. alphachapmtl

    Why not a permanent card refillable at will, as they have in Washington DC ? It is so simple and practical.

    Reply
  12. Fare media liability expected to stay at $52 million :: Second Ave. Sagas

    […] a $5 profit from my card. Last year, when the MTA announced $53 million in fare media liability, I explored the whys of it. That budget item had jumped by 12.5 percent, and I speculated that New Yorkers simply don’t […]

    Reply
  13. Matthias

    Very interesting, thanks! I always use spare change to bring my leftover balance up to $2.25 to finish off a card. But having a station agent combine all of my old cards is even easier. I had no idea I could do that. It’s so easy to gather up a mess of abandoned cards with a few nickels left on them that I could almost ride for free…

    Reply
  14. With surcharge looming, fare media liability could decline :: Second Ave. Sagas

    […] Over the past few years, as the MTA’s fiscal outlook has remained bleak, news coverage has often focused on its fare media liability. Each year, the MTA recoups around $50-$60 million in unused fares when riders purchase pay-per-ride cards but fail to zero them out. As the discount math gets tougher, the amount recovered increases. […]

    Reply

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