Why Uber Is an Economist’s Dream


Why Uber Is an Economist’s Dream

Uber created a massive open market, it is directed by its strengths from supply and demand. Uber not only broke up the way taxi syndicate runs but also brought people to accept “surge” pricing. “Uber is, in many ways, the embodiment of what the economists would like the economy to look like,” (Freakonomics Podcast, Stephen Levitt, 2016). Uber is well known for its use of technology to match drivers with riders (buyers and sellers) This is where their use of surge pricing comes in. They have used this method to balance supply and demand. When they are low in supply (not many drivers available/ large need for drivers) prices begin to rise. When they are high in supply and little demand (many drivers available/ little to no need for rides), prices dramatically decrease. They continue to make the ride-hailing market an economist’s dream.

Something I found very interesting about Uber as a whole is the fact that they lack equal pay between men and women. However, it is not their fault. Because of the way their information is stored in their database, there is literally no way they could determine the gender of their driver, but somehow women still continue to make about 7% less than the average male driver. Researchers and economists have found that the speed in which they drive and time it takes for them to reach a destination accounts for close to half of their pay. Because of this, it's more profitable for drivers to make more trips rather than longer ones. So drivers have an impulse to quickly drop off one client and pick up another. It is also a statistical fact that men drive faster, meaning they can make more trips, and in the end make more money per hour. According to an article in the LA Times, Men drive faster; men gain more experience driving, and men drive in more lucrative, and sometimes less safe locations.


Work Cited:

“Study of Uber Drivers Finds Men Earn More than Women - for Three Key Reasons.” Los Angeles Times, Los Angeles Times, 9 July 2018, www.latimes.com/business/la-fi-uber-gender-pay-20180709-story.html.

“The Social Costs of Ride-Hailing May Be Larger than Previously Thought.” The Economist, The Economist Newspaper, 3 Nov. 2018, www.economist.com/finance-and-economics/2018/11/03/the-social-costs-of-ride-hailing-may-be-larger-than-previously-thought.

Griswold, Alison, and Alison Griswold. “Uber's Secret Weapon Is Its Team of Economists.” Quartz, Quartz, 24 Oct. 2018, qz.com/1367800/ubernomics-is-ubers-semi-secret-internal-economics-department/.





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