Saturday, March 3, 2018

Uber Disputes Findings Of MIT Driver Income Study

I haven't run the numbers completely but the first question is: Are we comparing gross pre-expense with after-expense earnings?*

And they don't say anything about lobbying for outlawing personal ownership of autonomous vehicles.

Oh wait, that's the subject of Monday's story, sorry.

Back to driver earnings. This was our post on Friday:
"Uber and Lyft drivers' median hourly wage is just $3.37, report finds".

Here is the 3-page MIT CEEPR Research Brief (the study itself is forthcoming):
The Economics of Ride - Hailing: Driver Revenue,  Expenses and Taxes

And although the study has not yet been published we do have a 38 page working paper dated February 1:
The Economics of Ride  Hailing: Driver Revenue,  Expenses and Taxes

The raw data is from's:
RSG 2017 Survey Results: Driver Earnings, Satisfaction and Demographics

For comparison, the results of the most recent survey were released a few days ago:
2018 Uber and Lyft Driver Survey Results – The Rideshare Guy has not commented on Uber's response, his most recent post is:
Studies are Increasingly Clear: Uber, Lyft Congest Cities

Here is the response from Uber, March 2:
An analysis of CEEPR’s Paper on “The Economics of Ride-Hailing”
By Jonathan Hall, Chief Economist

The on-demand workforce has grown considerably over the years. In the US alone, more than 750,000 people drive with Uber. And while on-demand work still accounts for a relatively small portion of the total US labor force, it has emerged as an important focus of academic research.
We have been fortunate to collaborate with many researchers interested in learning more about the on-demand workforce. We have done this because rigorous and credible research can help ground and advance important matters of public policy for the entire ecosystem.

This week, MIT’s Center for Energy and Environmental Policy Research (CEEPR) released a paper titled “The Economics of Ride-Hailing: Driver Revenue, Expenses and Taxes,” which differs markedly from previous academic studies on the topic of driver earnings.

For example, a study we conducted with Alan Krueger of Princeton found that drivers across 20 of Uber’s largest US markets earned an average of $19.04 per hour, in October 2015. A more recent study with Stanford professors estimated gross hourly earnings of $21.07¹ for all US drivers between January 2015 and March 2017.

Perhaps most surprisingly, the earnings figures suggested in the paper are less than half the hourly earnings numbers reported in the very survey the paper derives its data from. That survey, conducted by The Rideshare Guy in 2017, reports average hourly earnings of $15.68.

Why the major discrepancy? In our estimation, it comes down to a major error in the authors’ methodology.

Step 1: So, what’s the error?
The Rideshare Guy survey asks a number of questions about how much drivers earn and how many hours they work per week. The most important are questions 11, 14, and 15.

Q11: “How many hours per week do you work on average? Combine all of the on-demand services that you work for.”
Q14: “How much money do you make in the average month? Combine the income from all your on-demand activities.”
Q15: “How much of your total monthly income comes from driving?”

The problem in this case is inconsistent logic on the part of the paper’s authors. Consider this: for question 14, the authors assume respondents are reporting income from *all* sources, not just on-demand work. As a result of this assumption, the authors discount the earnings from Q14 by the answer to Q15, “How much of your total monthly income comes from driving?”

For example: if a driver answered $1,000 to $2,000 to Q14, the authors would interpret that as $1,420.63² according to their methodology. If the respondent then answered “Around half” to Q15, the authors conclude this driver made $710.32 driving — half what they actually earned from driving with ridesharing platforms.

However, and perhaps just as important, the authors also assume that drivers understood Q11 perfectly well and that the hours reported only applied to on-demand work. As a result, they divide an incorrectly low earnings number by the correct number of hours.
This inconsistency leads to flawed methodology that results in hourly earnings numbers that are far, far below what any previous study has found....MORE
Leaving aside that Uber's chief economist appears to be throwing the drivers under the bus UberPOOL, for reading comprehension, I think we'll just have to wait for MIT's response.
In the meantime we can probably agree that this claim was, at best, just nonsense:
Uber Says Its Drivers Are Making $75,000 - $90,000 A Year

HT that Uber was contesting the study's results: Reuters' "MIT study that found low pay for Uber drivers to be revisited"

*Both the Hall-Krueger and the Stanford profs reports were criticized for headlining the pre-expense number.