Surely the most important distinction is that normal price discrimination is usually based on trying to infer a customer’s willingness to pay (based on how wealthy they are, how much they want the product, etc). Versus fare evasion is also heavily based in how willing someone is to lie / cheat / otherwise break the rules. So, tolerating fare evasion is a form of “price discrimination” that’s dramatically corrosive to societal trust and other values, much moreso than any normal kind of price discrimination—effectively a disproportionate tax on honorable law-abiding people. See Kelsey piper’s article https://www.theargumentmag.com/p/the-honesty-tax
“Dramatically corrosive to societal trust” feels like a wild overstatement. Fair evasion is and has been a norm (at least in the US) for approximately as long as public transit has existed, and it doesn’t seem like it’s meaningfully accelerated (except in periods of lax enforcement, which my guess is would reach an equilibrium somewhere) or meaningfully (let alone dramatically!) damaged social trust.
I buy parts of Kelsey’s argument, but I think there’s a bait and switch (at least between her opening example and the fare evasion example) where we start out talking about how people who can’t afford food are incentivized to lie and then end up talking about how poor people shouldn’t be allowed to use public transit. I claim the maxim should be sensitive to the context and would like to entertain the notion that services with near-zero marginal cost should tolerate some non-zero amount of fare evasion.
Non-zero, of course, in the same sense that credit card companies tolerate a non-zero amount of fraudulent transactions as part of doing business. And I agree that the right amount of resources to spend on fare enforcement will be different for each transit system, depending on all kinds of particular circumstances. But I would guess that for most transit systems, “let’s help the poor by cutting back on fare evasion” would overall be a much worse use of marginal resources than “let’s help the poor by offering free or discounted fare cards or giving them fare credits”, or perhaps “let’s help everyone by slightly expanding service frequency / coverage”.
Eg, grocery stores tolerate some amount of “shrinkage” (people stealing the food) according to whatever maximizes profits. If grocery stores were run by the government and were willing to run at a loss in order to promote greater overall social welfare, I wouldn’t support a policy of “let’s just roll back our shrinkage enforcement and let people steal more food”. I would instead support giving poorer people something like expanded EBT food stamp credits. (And, per kelsey, signing up for such a program should be made simpler and more rational!)
Tolerating a high amount of fare evasion also means letting some very disorderly people into the system, which makes the experience worse for all the actual paying users of the system. So it is not always “near zero marginal cost” to let other people free-ride (even outside of busy, congested times).
For an example targeting rich people instead of the poor: I think we should lower income and corporate taxes (which discourage productive work) and replace the lost revenue with pigovian taxes (ie a carbon tax, sin taxes, etc) plus georgist land taxes. And, for the purposes of this conversation, say that I support lowering taxes overall, in a way that would disproportionately benefit rich people and corporations. But I am totally against severely rolling back IRS enforcement against tax cheats (as is currently happening), because this runs into all kinds of adverse selection problems where you’re now disproportionately rewarding (probably less economically productive) cheats, while punishing (probably more productive) honest people.
I didn’t mean to imply the full ‘optimal amount of fraud is non-zero’ frame. I do mean an amount above that, and typed ‘non-zero’ hastily.
I wouldn’t support a policy of “let’s just roll back our shrinkage enforcement and let people steal more food”. I would instead support giving poorer people something like expanded EBT food stamp credits.
I support what gets the people fed. Supporting an option that isn’t really on the table (because serious proposals for doing welfare well aren’t being actively debated and implemented) doesn’t do anyone any good. I am not talking about a perfect world; I am looking at the world we are in and locating a tiny intervention/frame shift that might marginally improve things.
No. If you replace “just” with “partially model-able as”, then yes.
Surely the most important distinction is that normal price discrimination is usually based on trying to infer a customer’s willingness to pay (based on how wealthy they are, how much they want the product, etc). Versus fare evasion is also heavily based in how willing someone is to lie / cheat / otherwise break the rules. So, tolerating fare evasion is a form of “price discrimination” that’s dramatically corrosive to societal trust and other values, much moreso than any normal kind of price discrimination—effectively a disproportionate tax on honorable law-abiding people. See Kelsey piper’s article https://www.theargumentmag.com/p/the-honesty-tax
“Dramatically corrosive to societal trust” feels like a wild overstatement. Fair evasion is and has been a norm (at least in the US) for approximately as long as public transit has existed, and it doesn’t seem like it’s meaningfully accelerated (except in periods of lax enforcement, which my guess is would reach an equilibrium somewhere) or meaningfully (let alone dramatically!) damaged social trust.
I buy parts of Kelsey’s argument, but I think there’s a bait and switch (at least between her opening example and the fare evasion example) where we start out talking about how people who can’t afford food are incentivized to lie and then end up talking about how poor people shouldn’t be allowed to use public transit. I claim the maxim should be sensitive to the context and would like to entertain the notion that services with near-zero marginal cost should tolerate some non-zero amount of fare evasion.
Non-zero, of course, in the same sense that credit card companies tolerate a non-zero amount of fraudulent transactions as part of doing business. And I agree that the right amount of resources to spend on fare enforcement will be different for each transit system, depending on all kinds of particular circumstances. But I would guess that for most transit systems, “let’s help the poor by cutting back on fare evasion” would overall be a much worse use of marginal resources than “let’s help the poor by offering free or discounted fare cards or giving them fare credits”, or perhaps “let’s help everyone by slightly expanding service frequency / coverage”.
Eg, grocery stores tolerate some amount of “shrinkage” (people stealing the food) according to whatever maximizes profits. If grocery stores were run by the government and were willing to run at a loss in order to promote greater overall social welfare, I wouldn’t support a policy of “let’s just roll back our shrinkage enforcement and let people steal more food”. I would instead support giving poorer people something like expanded EBT food stamp credits. (And, per kelsey, signing up for such a program should be made simpler and more rational!)
Tolerating a high amount of fare evasion also means letting some very disorderly people into the system, which makes the experience worse for all the actual paying users of the system. So it is not always “near zero marginal cost” to let other people free-ride (even outside of busy, congested times).
For an example targeting rich people instead of the poor: I think we should lower income and corporate taxes (which discourage productive work) and replace the lost revenue with pigovian taxes (ie a carbon tax, sin taxes, etc) plus georgist land taxes. And, for the purposes of this conversation, say that I support lowering taxes overall, in a way that would disproportionately benefit rich people and corporations. But I am totally against severely rolling back IRS enforcement against tax cheats (as is currently happening), because this runs into all kinds of adverse selection problems where you’re now disproportionately rewarding (probably less economically productive) cheats, while punishing (probably more productive) honest people.
I didn’t mean to imply the full ‘optimal amount of fraud is non-zero’ frame. I do mean an amount above that, and typed ‘non-zero’ hastily.
I support what gets the people fed. Supporting an option that isn’t really on the table (because serious proposals for doing welfare well aren’t being actively debated and implemented) doesn’t do anyone any good. I am not talking about a perfect world; I am looking at the world we are in and locating a tiny intervention/frame shift that might marginally improve things.