It’s almost impossible to catch a cab when it’s raining.
Economist Henry S. Faber examines this not-so-simple problem in a paper out this month.
First, Faber explains the standard economic view of why it might be harder to find a taxi. Credit to Twitter’s Ben Southwood for flagging up the research:
That it is difficult to find a taxi in the rain has been a standard complaint in Manhattan for as long as there have been taxis. If asked why this is the case, the answer from an economist 20 years ago would have been that rainy weather increases the demand for taxi rides and there is no or an insufficiently rapid supply response to meet this transitory demand.
But there’s another view, which suggests that rain doesn’t only drive up the demand for taxis, it also drives down the supply of drivers, making the problem worse from both angles.
Basically, the idea is that drivers are often “target earners”. They’re self-employed, and instead of working for a set number of hours per day, they work to a mental income target. Once they have got to the target, they clock off, and one fewer taxi is on the road.
So when it rains, and demand for taxis spikes, drivers are inundated with work. They reach their target income earlier and stop working. That was the finding of four economists in 1997, who became the founding fathers of the “what taxis do in the rain” school of microeconomics.
But according to Faber, that’s just not true.
In his studies, New York taxi drivers behave much more like an economist’s model would expect them to. Drivers want to work more when they are able to get increased wages, or more work, than when they can’t. They won’t just clock off when they have reached some arbitrary level, because there are still significant opportunities for them to earn. Faber says that’s true of anticipated increases in income (like holidays, or certain times of the day) as well as unanticipated ones (like the rain).
“The overall pattern is clear. Drivers tend to respond positively to both anticipated and unanticipated increases in earnings opportunities,” said Faber.
With these findings, he’s blown the foundations of our understanding of what taxi drivers do in the rain. So next time you can’t catch one, blame your fellow passengers, not the driver.
Business Insider Emails & Alerts
Site highlights each day to your inbox.