My local mall does not provide short-term bicycle rentals. It also does not sell roast-lamb-and-mint flavour potato chips, or jeans in a size 32 inch waist/36 inch leg.
I would like to be able to purchase all three of these goods and services. For the last two items on the list, the intuition of the average person is the same as the intuition of the average professional economist: quit whining and deal with it. Most Canadian firms do not produce obscure potato chips flavours or clothes in unusual sizes because consumers aren’t willing to pay enough for those items to cover the firms’ costs. The benefits consumers enjoy from these goods and services are less than the costs of providing them, so it’s not efficient to provide the good or service.
Yet when it comes to short-term bicycle rentals, people often reach a
completely different conclusion: government should intervene to create a bike sharing program. All the world class cities have them: Washington, London, Paris, Beijing, New York, and Toronto.
Although each bicycle sharing program is unique, almost all receive public subsidies. Some cities provide in-kind support. Paris’s scheme, for example, is implemented and operated “free of charge to the city”, in exchange for granting an advertising company “rights to 1,600 advertising hoardings
around Paris”. The company also receives “space to allocate the cycle
stations” at no cost. Other cities provide loan guarantees, as Toronto did for its partner’s $4.8 million capital investment. In yet other cities, such as London, the bicycle share program is publicly owned. The city has ultimate responsibility for absorbing losses, although the program is privately sponsored and operated.
To justify such large public costs, one needs to point to some kind of public benefit, some positive externality created by bicycle sharing programs. To figure out what these were, I took a look at some feasibility studies for bicycle share programs, such as London’s, New York’s, and New Orleans’s. The benefits of bike sharing identified across the studies are
- Improved health through increased physical activity
- Reduced pollution
- Reduced congestion on roads and public transport
- Shorter and more reliable journey times
- Tourism and a strong business climate
These first two arguments for bike shares are easily dispensed with. While increased physical activity is a laudable goal, a study of London’s bicycle share scheme found that the typical user is a professional male between 25 and 44 – probably not the demographic one would want to target in a physical-fitness promotion scheme. Although London’s bike share scheme has been expanded into lower income neighbourhoods, those bikes – in contrast to the ones in more affluent central areas – are little used.
What about pollution? Bicycle sharing programs are a decidedly inferior solution to this problem. A much better option is to put a price on emissions through gasoline taxes and/or congestion charges. This allows each person to choose the way of reducing their carbon footprint – forgoing a trans-Atlantic flight, carpooling, moving closer to work – that works best for them.
The third and fourth arguments – shorter journey times and reduced congestion – are worth taking more seriously. What’s the evidence?
A review of bike share programs (gated here) published earlier this year found that they typically do not take many cars off the road: “mode substitution from cars to bike share is low.” People who use bike share are people who would otherwise be walking or using public transit.
Yet switching people from public transit to bike sharing may be a worthwhile. As the New York feasibility study put it:
“Bike-share programs, which typically can be introduced in a matter of months, can be especially valuable as New York faces increasing subway congestion and no clear, quick answers for relief…”
As an argument for bike share, this has some merit, but how generally applicable is it? That is, how many cities are there where (a) a bike share program would make a noticeable difference to public transport ridership and (b) it is cheaper to build a bike share program than to expand the public transport network? I’ve looked, but I haven’t found a study that compares the costs and benefits of bike share with alternative strategies.
Even when increased cycling has the potential to relieve pressure on the public transport system, I would be interested in knowing how bike sharing compares to alternative methods of encouraging cycling, such as subsidizing private cycle rental operations, providing cycling lessons for people who do not know how to ride bicycles, subsidizing bicycles for low income children and families, subsidizing electric bicycles, improving cycling lanes, or creating safe and secure cycle parking facilities.
What about the final argument for bike sharing programs, that they promote tourism and a strong business climate? Based on my own experience, I’m skeptical. Even though I’m an enthusiastic and confident cyclist, in recent trips to London and Toronto, I’ve not bothered to use those cities’ bike shares. It’s just too hard to navigate around an unfamiliar city on a bicycle, to say nothing of the challenges of locating docking stations. The pricing structure of bike share programs tends to make them unattractive for tourists who want to spend a day or two exploring a city by bicycle. Another issue for tourists is the lack of locks on many bike share bikes.
At one level, I can really see the appeal of bike share programs. But as an economist, my instinct is to say “if you want to subsidize something, just write a cheque.”
Worthwhile Canadian Initiative 
It’s apparently successful in China, although that may be due to the relatively recent tradition of nearly universal bicycle usage.
In the West, signalling that the municipal government is now invested in actually preventing bikes from being casually stolen is important, I suppose.
I’m a subscriber to the Montreal bike-sharing system and have used the systems in London and Toronto as well so I wanted to mention a couple things you missed.
– You don’t have to worry about your bicycle getting stolen
– Bikes are often the fastest way to get places. Anywhere <30 minutes is a faster bike than transit in my experience. Very often faster than driving if there is traffic
– Sometimes I want to go somewhere, but not leave a bike there. I know people who have their own bikes, but use the public bike in this situation
– Phones are generally solving the problem of navigation. I recently biked through central London (which I am totally unfamiliar with) just using google maps for directions and an app to locate the stations.
– I know many tourists who have used them and would again – so at least some tourists are finding them useful
Its anecdotal, but people really love the Bicycles and are finding a lot of use for them. Even if they aren’t profitable, I think the positive impact is very noticeable. They are new and kinks are still being worked out, the longer they are there the more people will learn how to use the system and I think the benefits will become more clear.
I’ve used the bike share in Paris as a tourist, but it wasn’t easy. Even though I had chip-and-pin, the system wouldn’t accept my CC so I ended up using the access code of a friend (who is a Paris resident.)
“The pricing structure of bike share programs tends to make them unattractive for tourists who want to spend a day or two exploring a city by bicycle. Another issue for tourists is the lack of locks on many bike share bikes.”
If you really wanted to cycle continuously all day, then the pricing structure in Paris would be a problem. But then the lack of a lock would be irrelevant. On the other hand, if you use the bikes as intended – to cycle short journeys from one station to another – it costs nothing (first half hour free.) And again, no lock, no problem.
I am generally sympathetic to your view here; how can this sort of meddling be efficient? On the other hand, Paris is a different city with the bike share, one that is friendlier to tourists even if they never touch a bike. The big thing is that there is just way more bicycle traffic, most of which is not bike share. But it wasn’t there before the bike share went in. So maybe this is one of those things that works in practice but not in theory.
Bram: “You don’t have to worry about your bicycle getting stolen”
Instead, the bike share program has to worry about the bicycles getting stolen. The cost of theft is shifted rom the bicycle user to those who pay for the bike share program, including non-users. Sure, that’s a gain for the bicycle user, but it’s a loss for the non-users. I’m not convinced.
“Bikes are often the fastest way to get places.”
That’s my point 4 above. I should have spent more time demolishing it. Getting some place more quickly is a purely personal benefit. Why should anyone else subsidize my need to for speed?
“Phones are generally solving the problem of navigation”
Phones help, but not everyone has a smart phone. Then there are the safety issues associated with looking at phone (or, ideally, stopping to look at a phone) while cycling.
“I know many tourists who have used them and would again” – I’ve used the Montreal ones, and am thinking about using them again on my trip to the city this weekend.
Overall the mania for bike share reminds me of nothing so much as the Simpson’s monorail song.
Phil: “Paris is a different city with the bike share”
But is this causal, or part of the overall “bike are cooler than cars” vibe? It’s also hard to explain these things. London is much friendlier than it used to be, too – on a recent visit people just randomly came up and offered to help me – but I blame it on it being a much more international city than it once was, and losing its traditional culture.
It seems to me that most of your arguments would also apply to other forms of public transit, in particular buses. Am I missing something? And if not, would you argue against public bus services?
Frances,
Bixi system bikes (e.g. Montreal, Toronto, New York, London, Ottawa) don’t get stolen. You put in your credit card to take the bike, and you’ll pay for it if you don’t bring it back. Coin deposit type systems like Copenhagen fail pretty badly though, for that reason.
Where there is critical mass the system is extremely useful. There’s an app on my phone that tells me how many spots/bikes are at each station so I never have trouble finding or parking a bike where I’m going. If it’s raining when I’m going to work I walk or take a cab, and I can still bike home. Any trip less than 20-30 mins I bike and don’t worry about where I might have to lock it. Yesterday I rode 2X2k in a hurry in the middle of the day to pick up a passport. If I’d had to lug my bike in and out of my office, I would have taken a cab instead. I’d agree that the system hasn’t really replaced driving for me (I never drove to work), but it has replaced an awful lot of cab rides.
One more important point. Many people don’t have room for a bike at home, or would have to lug it in and out of inconvenient locations, up and down flights of stairs and through door ways. For a large proportion of urban dwellers, bike ownership is simply impossible or too inconvenient. Those are the real beneficiaries of the public system.
K – I don’t have first hand experience, but here’s the first scenario that comes to my mind. I take a Bixi bike, but on the way to my destination I stop at a shop to pick up a few things. I come out of the shop and the bike has gone. Does this never happen? If not why not?
Could a more clear benefit be seen if bike share programs were included in an overall public transit strategy? If monthly pass holders were given access to the bikes as a part of their pass (more feasible in Ottawa now with presto cards) the congestion/reliability factors could provide a more clear benefit. This largely comes down to location – if bikes were positioned in locations that are not within a reasonable walking distance of the o-train, transit way and other high volume transit corridors they could work in the transit strategy I would imagine. This would require sufficient space to store bikes at the end point, but since there is a logical flow from location X to a nearby transit corridor I imagine through a bit of trial and error sufficient storage could be put in place. Some of the locations I’m suggesting covering are also likely inefficient to serve by bus, and the inclusion of bikes could help justify a reduction in bus service because the 5 minute bus ride could now be made by a 10-15 minute bike ride.
In Ottawa, I find location is the biggest problem. I live in the market and there are tonnes of bike shares around me – but there are few that have storage at an end point I want to go. I’ve always been under the impression that they are positioned primarily for tourists. I think if that mindset was changed and they were positioned for local transit users, within this public transit strategy, a more clear economic benefit could be realized.
K: “For a large proportion of urban dwellers, bike ownership is simply impossible or too inconvenient.”
In the outer city, people face a problem: they’d like to take public transit, but they live too far away from the public transit station to make public transit attractive for their entire journey. Public transit systems have worked out the solution to this problem. It’s not car sharing. It’s park and ride.
In the inner city, there’s not a bicycle provision problem. Most bike share users can easily afford the cost of a bicycle. The issue is a bicycle parking provision problem. Why are we providing bikes when what people really need is parking?
B.t.w. Havana is a fascinating place to visit from this perspective – when I was there a few years ago, people would pay for safe, secure, locked bicycle parking facilities, but street parking for cars was free of charge – one of the lasting accomplishments of the glorious socialist revolution.
Two points on Frances’ objections:
“What about pollution? Bicycle sharing programs are a decidedly inferior solution to this problem. A much better option is to put a price on emissions through gasoline taxes and/or congestion charges. This allows each person to choose the way of reducing their carbon footprint – forgoing a trans-Atlantic flight, carpooling, moving closer to work – that works best for them.”
I totally agree. Good luck getting there. I am resigned to a bunch of second/third best solutions to this problem. Also, you swing from pollution to carbon quickly. In urban areas, it is also local emissions, including diesel exhaust from buses, and exhaust from taxis that are also important.
On tourists, as a regular cyclist and Bixi user in Toronto, I notice a lot of tourists using Bixi bikes, but not in all locations. For instance, go to the Toronto Island ferry docks in the summer, and observe the number of Bixi users. There are lots. They are all obviously tourists. As well, the lakeshore trail from the east end to the west end is teeming with Bixi bikes in the summer. Both locations don’t have Bixi stations, so they aren’t point-to-point trips. I think these observations trump the armchair thinking that tourists don’t use Bixi bikes.
Ok – third point. For the 25-44 year old Professional men who use the bike share bikes, they may not take private cars as an alternative, but take taxis instead. Going to a meeting a few blocks away? Too far to walk? Too close to have brought your own car? Ride a bike-share bike! This eliminates a taxi trip. This actually describes a good portion of my Bixi use (and I fit the cited demographic too!).
I also like the comparison to other transit. Why subsidize buses and not bikes? While I agree that cheques might work better, they are not politically feasible. Again, second best solutions can dominate because of political feasibility.
whitfit: “I notice a lot of tourists using Bixi bikes, but not in all locations. For instance, go to the Toronto Island ferry docks in the summer, and observe the number of Bixi users. There are lots.”
This is true in Ottawa, too, and I’ve got to say, it leaves me scratching my head. A typical tourist is often much better off renting from a private rental company. Private rental companies provide locks, helmets, and bikes built for speed. With a Bixi bike, a tourist who wants to say, cycle through the Gatineau Park and pick up some chai brownies at the bakery in Old Chelsea, or cycle up to the Experimental Farm and go for a walk through the flower garden there, is out of luck, because it’s not possible to lock the books safely or securely. (I experienced exactly this problem cycling to the Lachine Rapids in Montreal). Plus the pricing for Bixi bikes is just not that attractive for a full day rental. My parents are visiting in a couple of weeks, and I’ll be renting bikes for them from a private company, because Bixi bikes are just so inconvenient.
Plus I just fail to see the evidence that there is any significant market failure in the rental-bicycles-for-tourists market. To the extent that subsidized Bixi bikes are taking business away from other businesses, this is a bad thing, not a good thing.
whitfit “For the 25-44 year old Professional men who use the bike share bikes, they may not take private cars as an alternative, but take taxis instead. Going to a meeting a few blocks away? Too far to walk? Too close to have brought your own car? Ride a bike-share bike! This eliminates a taxi trip. This actually describes a good portion of my Bixi use (and I fit the cited demographic too!).”
I can think of many many wonderful ways to spend public money. Saving people like you and me the hassle and cost of taxis seems like a pretty low priority. Again, we end up using public funds to put private companies (taxis) out of business.
The issue is not whether or not bike sharing is a good idea. I think it’s a great idea. I just don’t see the rationale for providing it with large public subsidies (and if you don’t think the subsidies are large, try negotiating with the City of Toronto for the rights to take over a large chunk of city sidewalk in a prime downtown location!)
I guess since the bike share user demographic coincides almost exactly and precisely with the WCI readership demographic, I should have anticipated a fair bit of blow back on this one.
Frances,
Apart from taking up space in somebody’s apartment, an unused bike is idle capital. In the long run, perhaps, the rate of bike replacement is mostly governed by the rate of bike usage (wear and tear), but you need a much larger stock of bicycles if everyone needs to own their own bike which also means way more parking. Car sharing systems are also a good idea in the city, for exactly the same reason.
I’m going second (third? fourth?) the request for answer to the question about why we subsidize buses and trains, and also roads. Are you proposing that there are no externalities from transportation infrastructure?
K –
Two responses: that bike share uses fewer resources in the form of parking etc than bike ownership doesn’t mean that it should be subsidized by government. Memory sticks, ipods, hard drives etc store music using way fewer resources than vinyl LPs. That makes it cheaper to use electronic memory than vinyl, and so that’s why most people store most of their music electronically. Competitive markets loathe using resources unnecessarily.
Identify the market failure that is preventing competitive markets from providing bike sharing, and then we can have a serious conversation about it.
What about the argument that if we’re subsidizing roads and public transit, we should subsidize bikes too. It’s a “theory of second best” type argument, and has some merit.
But subsidies should be directed where the bang for the buck is greatest. Whenever possible, we subsidize the desired outcome, and let people achieve that outcome in whatever way works best for them.
In the post I say this: “As an argument for bike share, this [reducing congestion on public transit] has some merit, but how generally applicable is it? That is, how many cities are there where (a) a bike share program would make a noticeable difference to public transport ridership and (b) it is cheaper to build a bike share program than to expand the public transport network?” I also talk about alternative ways of subsidizing cycling.
In a city like Ottawa, where all buses lead to the downtown core (pretty much), the downtown core is walkable, and bike parking is not impossible to come by, the infrastructure benefits of bike share are pretty minimal. I would be willing to bet that the major effect of the program is to cut into the profits of the private bicycle rental companies.
I’d love it if someone could make the case that bike share is more cost effective than other ways of reducing congestion or pollution. But take a look at the feasibility studies. Search for some kind of analysis. There’s really not much out there.
As for Paris – cyclists take the bikes down hill. Then people have to load the bikes onto trucks, take them up to the top of the hill, and refill all the depots at the top of the hill. Seriously.
Frances: “Identify the market failure that is preventing competitive markets from providing bike sharing.”
What I know about bike share programs is – well basically that they involve bikes and sharing. But onward!
My guess is parking/bike stands. The city can build bike stands where it wants to, because sidewalks and streets are city property. A private provide would have to get access to spots to put stands throughout the city for a service to be useful. There may be a bit of natural monopoly to that problem if you are not to have incompatible bike-sharing services with inadequate stands.
Tom – that downtown parking spaces are expensive is not a market failure, it’s a market in action!
The natural monopoly – or more precisely, the network externality -is the only good market failure I could come up with. That’s how I would build an economic case for public bike share programs. But that’ll have to wait for another post.
A paper arguing that Bixi has increased cycling rates in Montreal: http://www.ijbnpa.org/content/10/1/66
Padriac – thank you so much for that link. Two numbers leap out at me from that paper:
“The estimated modal shift associated with the implementation of the PBSP from motor vehicle use to walking, cycling, and public transportation was 6483 and 8023 trips in 2009 and 2010. This change represents 0.34% and 0.43% of all motor vehicle trips in Montreal.”
“For example, Montreal’s BIXI (BIcycle-taXI) program, North America’s largest in 2012, makes available 5050 bicycles at 405 docking stations”
In other words, even if we make the huge assumption that the shift in transport mode was due to the bike sharing program the number of trips shifted was just over one trip per BIXI bike.
Given that the program costs hundreds of dollars per bike, that seems about as devastating an indictment of the BIXI bike program as you can get.
Frances,
“that bike share uses fewer resources in the form of parking etc than bike ownership doesn’t mean that it should be subsidized by government.”
I wasn’t claiming that (at least not there). I was responding to this claim of yours:
“Why are we providing bikes when what people really need is parking?” followed by a discussion of Havana bike sheds.
What you seemed to be missing is that bike sharing is a big part of solving the bike parking problem (car sharing also). I don’t want a special parking spot for my bike. I just want to use the same bike as everyone else, thereby keeping bikes in use as much of time as possible.
“I would be willing to bet that the major effect of the program is to cut into the profits of the private bicycle rental companies.”
Maybe in Ottawa. It sounds like a fairly marginal, insignificant system. In the down town core of Montreal, close to 40% of bikes are Bixis. This has nothing to do with tourists or other casual bike renters. These are commuters who aren’t taking bus/metro/taxi.
“I’d love it if someone could make the case that bike share is more cost effective than other ways of reducing congestion or pollution. But take a look at the feasibility studies. Search for some kind of analysis. There’s really not much out there.”
It has enormously increased bike traffic in my city. If there is a lack of studies to indicate that bikes are better than buses on the balance then I don’t see how that supports a claim in favour of bus subsidies. A priory I should get at least the same subsidy as a bus commuter. I produce no CO2 and do essentially no damage to roads. Start taxing other commuters in a serious way for road maintenance, noise pollution, property tax value of road area, congestion, carbon tail risk, and noxious emissions and we’ll see if we can compete on a level playing field.
If bus fare went up by a factor of three, I’d bet a lot more people would get off their asses and onto a bike. Except they wouldn’t have anywhere to park them safely, so they’d start a bike share.
“Identify the market failure that is preventing competitive markets from providing bike sharing”
Like other public transit, it probably involves very high marginal returns to scale. Other than that, just the huge subsidy for all the bogus transportation methods. You want to argue in favour of ending all the subsidies, I’m all for it. That way walkers/runners can get treated fairly too. But don’t go after the sanest method of public transport based on “argument by non-existing studies.”
K “In the down town core of Montreal, close to 40% of bikes are Bixis” “It has enormously increased bike traffic in my city”
Where are these numbers coming from? A lot of Canadian cities now have open data initiatives and bicycle counters. These make it possible to track the level of bicycle traffic over time. I’d love to see some evidence showing that Bixi bikes are causing a big increase in bike use.
“Like other public transit, it probably involves very high marginal returns to scale.”
What this means is that taking people from subways and buses, where the marginal cost of an extra user is very low, and putting them onto a new type of system that has to be build entirely from scratch, is going to be a very expensive proposition. It might make sense in situations like the one New York claims to be in, with a subway system that’s operating way beyond capacity and is expensive to expand, but how many other cities fit that description?
And I go back to the points I made at the beginning and end of this post. If something is not being supplied in a competitive market, most likely it’s because there isn’t sufficient demand to make it profitable. If the good or service merits some kind of a subsidy, why provide the goods publicly, or in public/private partnerships, instead of writing a cheque, e.g. providing tax credits or grants to bike subsidy operators?
A little bird told me I should weigh on this. A few things come to mind:
1) Overall, the evidence for or against bicycle share programs is very limited with only a small number of studies and very, very few studies that are methodologically rigorous. So it’s hard to make strong claims for or against certain effects (physical activity, pollution, etc). If you take a detailed look at the review study mentioned in the original post most of the evidence comes from users surveys or other non peer reviewed sources.
2) That said there is some evidence that at least the bike share in Montreal does increase physical activity (http://ajph.aphapublications.org.cyber.usask.ca/doi/abs/10.2105/AJPH.2012.300917). A big challenge from the research side is understanding what parts of the effects (whatever they may or may not be) are specific to the context of the city and what parts of the effects are generalizable across cities. I’d say there are no studies at all that can answer that question in a rigorous way.
3) Assuming 1 and 2 it’s tough to say one way or another whether the programs are economically sound without resorting to anecdote and many assumptions that are more or less plausible.
4) Related to the point about the BIXI modal shift study mentioned above. I would argue that cost per bike is not a good unit for the critiquing the results. Cost per trip would be a much better measure. Not sure if anyone can find those data anywhere.
5) The bottom line is all transportation systems are subsidized by public money. Transport Canada estimates that in 2009–10, all levels of government spent $28.9 billion on roads and collected $12.1 billion in fuel taxes and $4.4 billion in other transport user fees, indicating that road user fees cover about 64% of costs (http://www.tc.gc.ca/eng/policy/report-aca-anre2010-index-2700.htm).
People just aren’t willing to pay the full costs for any form of transportation but they do want the benefits, so the public pays. The thing is that we have been paying for roads for so long that we kinda forget about it. If I want to prioritize my public spending, I’m happy to spend 10 Million less on roads (a small fraction of the 11 Billion we pay in total on roads) and put that into a Bike Share.
Frances,
It’s my own rough estimate. I just biked home. On a 1k section of bike path I counted 18 bixis out of 50 bikes. I’ve estimated similar numbers before, but there are possible biases which I’ll discuss later.
Daniel – always great to have contributions from people who are seriously knowledgeable about a subject!
That link takes me to a gated U Sask site, do you have more info on it?
Yes, I agree that trips/costs would be better than trips/bikes. However since costs are a function of the number of bikes, one can do a back of the envelope guesstimate of one from the other.
“The bottom line is all transportation systems are subsidized by public money.”
So it’s important to have an informed discussion about the best way of spending that money. Like a lot of people here, I’d much rather have my tax dollars going to support cycling infrastructure than rural roads – coincidentally, I personally benefit much more from cycling infrastructure than rural roads.
I’m not seeing even any kind of attempt to have that kind of discussion. I’m hearing lots of claims of things like health benefits, tourism, strong economic climate, etc, that are basically pretty much handwaving. Like take this from the NY feasibility study:
“In addition,for some households,
the introduction of a bike-share program may help them avoid or postpone the purchase of a car,
as trips to transit or other short trips could then be made by public bicycle”
The word “may” here translates as “I think this might be possible but I have absolutely zero evidence as to whether or not it’s likely to happen.”
As the bike share users who’ve comment here have pointed out, and the studies have shown, bikeshares don’t replace cars, they replace taxis, walking, public transit, etc. Trips that can be made by car from home can more easily be made using your own bicycle from home.
Seems to me that the first order problem is urban planning and development. In most cities many people, especially young families, live in the exurban asteroid belts because that is where they can afford the kind of house they want. My guess (and it’s just a guess) is that the people who do the most driving are people living in the outer reaches with young(ish) families. So if your goal is to get people to switch from cars to bikes, you probably want to start by understanding where they are going and why, and then thinking about how the built environment can make bikes (or walking) practical.
For example, here (http://goo.gl/maps/5JeX7) is a link to a map of the busiest rec centre in Edmonton. It’s packed from 5am ’till closing. They have a huge parking issue on the weekends. It’s smack in the middle of suburbs so full of kids that the schools (all new) are bursting. Have a look at the street view and “drive around” to get a feel for the area. With the exception of the subdivision directly across the street, can anyone imagine taking two kids under 7 or 8 years old to the swimming pool on bikes on these roads? It’d be completely irresponsible. Never mind bikes, imagine walking it. In February. There are no street trees, no shelter from the wind. Most of the time the sidewalks are impassable because they’ve not been cleared or have drifted over with snow. You’re completely exposed to the traffic. The boulevards have speed limits of 70 in many places so your nervous system is under constant assault from the traffic. Even from the nearby bus terminus it’s got to be nearly 1/2 km walk to get in the door. Not so bad on a sunny summer day, but in Edmonton sunny summer days are not the norm. Bikes could be free and they’d still be useless, unless the urban design is radically changed.
We don’t have a bike vs. car vs. whatever problem. We have an urban design problem.
Rant aside, Frances makes good points, IMO.
Subsidizing bikes in this way strike me as being completely out of touch with the reality most people live. Especially in less dense Western cities. Individuals cope with the world as they find it. And most of find that we can’t afford to live in posh central neighbourhoods where it is practical to use a bike or walk for much of the year. So you’ll excuse me if I’m not too enthusiastic about subsidising the people with $1M dollar homes and his and her M5’s parked in the driveway (’cause their off riding their subsidized bike).
Anyway, as Frances says “show me the market failure!”.
Patrick, your position has been consistent throughout. But while I found myself completely opposed to it when I was arguing that bikes were cooler than cars, I now find myself in complete agreement with you.
But unlike you I wasn’t at all gracious.
Frances: “I’m not seeing even any kind of attempt to have that kind of discussion [about optimal use of money]. I’m hearing lots of claims of things like health benefits, tourism, strong economic climate, etc, that are basically pretty much handwaving.”
Amen. We can say all kinds of wonderful things about subsidized bike sharing, as we could about publicly subsidized organic food, ballet tickets, or psychotherapy for cats. I’m sure someone somewhere can attest a benefit. I personally attest that people with high incomes are happier when they receive government daycare subsidies. But is there no opportunity cost? Are professional men 25-44 in Bixiless cities staggering around groaning under the weight of their bellies, all for lack of cheaper bikes? If you tried to put that past a public health funding program you’d be sent packing.
Daniel: I checked out your website. I’m currently at the CAHSPR conference in Vancouver, and perhaps you are too. You’ve obviously done serious work on this so I’ll drop my sarcastic tone. My question for you is: what is the best argument and evidence for promoting subsidized bikes as a public health priority? Does it have an edge over nutrition for poor children or post-natal follow-up visits?
“We can say all kinds of wonderful things about subsidized bike sharing, as we could about publicly subsidized organic food, ballet tickets, or psychotherapy for cats.” … “roast-lamb-and-mint flavour potato chips, or jeans in a size 32 inch waist/36 inch leg”
But as an economist…
It’s hard to know where to begin to unpack this load of snobbery posing as “science.” I suspect the place (or time) to start would be the 18th century and the etiquette of patronage and learned mendicancy. “I beg to remain, my Lord, your most humble and obedient servant, etc., etc., etc.” Mr. John Locke started out from the premise that the earth and its fruits were given by God to mankind to enjoy in common. The problem for Locke was how an individual could appropriate to him or herself a portion of that common gift.
Fast forward 325 years and self-styled economists have long abandoned the premise (God/gifts) but cling stubbornly to an arguably anachronistic interpretation of Locke’s tentative conclusions regarding private property. It is one thing to speak imaginatively about an “invisible hand” but quite another to invest in the metaphor shorn of its subject, which at one time could be named as “God” or if that sounds too religious, “providence.”
My point, which may seem obscure to those who revile non-confirming views, is that “sharing” and “gift” precede “buying and selling” and “commodity” both anthropologically and logically. No one comes to market without having endured years, if not decades, of the familial gift. Send a newborn infant out to earn its keep and it will perish — to state the obvious. But “as an economist” there is apparently no path from the logically and anthropologically prior to the ideal of truck and barter.
And where does the sarcastic tone come in to all this? I suspect that generations of grovelling to patrons has educed in economists a self-validating mannerism of pseudo-aristocratic disdain for those who they perceive as their inferiors — that is to say non-patrons. “As a general rule,” Dean Baker quipped a few weeks ago, “economists are not very good at economics.” What they are good at is grovelling to the financial nobility and snarling at the great unwashed.
Sandwichman: I’m not an economist, though I do agree that subsidizing already-cheap equipment is a lot like psychotherapy for cats. I’m also a fan of Dean Baker, who does much more than issue snarky quips. He wrote a great book called “The End of Loser Liberalism”, although most of the people who should read it never will. Pick it up. Spoiler: unfortunately he doesn’t address the Bilderberg/Trilateral/Rosicrucian conspiracy that, clearly, is the historical key to understanding who economists are.
Patrick: your comments about less dense cities and urban planning, I agree with. As Russ Roberts once said in a podcast, the problem isn’t that we don’t subsidize public transport enough, it’s that excessively subsidize private transport.
There are many ways to increase bike usage. Cities could allow private rental companies to use space at transit hubs as I saw in Potsdam, Germany. Or cities could create public spaces where there are bike stands, tools to borrow and people to teach you how to fix your bike. This is already happening at many universities. Also when I used a bike share program in Cologne the bike was horribly uncomfortable. Now what is good about a sore bum?
Shangwen wrote: “Spoiler: unfortunately he doesn’t address the Bilderberg/Trilateral/Rosicrucian conspiracy that, clearly, is the historical key…”
A fine example of the mannerism of attributing irrelevant nonsense views to opponents to insinuate that their actual opinions are not worthy of reasoned consideration and response! This is exactly what I was trying to highlight — the pathological reliance of “economists” on condescension at precisely the point where their arguments evaporate.
If one bothers to go back to Alfred Marshall’s discussion of external economies, Pigou’s discussion of uncompensated services and uncharged disservices, J. M. Clark’s and K. W. Kapp’s discussions of social cost and cost shifting, one will see that the issues of “subsidy” and “market failure” are not so straight forward as Frances appears to be implying. There is no background datum of a competitive free market in which allocation is rationally determined by price against which to foreground the alleged subsidies. Or let me refer to a 19th century precursor of the entire market failure question, Henry Sidgwick:
Unfortunately, it appears that the “politics of the eighteenth century” rather than the legacy of Sidgwick, Marshall, Pigou and Clark has prevailed in what presumes to call itself orthodox economic science.
Sandwichman: “is that “sharing” and “gift” precede “buying and selling” and “commodity” both anthropologically and logically”
I agree with you. Sharing arrangements tend to evolve spontaneously as soon as people form communities. Right now I belong to two active but completely unofficial “car share” programs – one with a neighbour and one with a friend. There’s also the bike share/camping gear share/canoe share/snowblower share etc.
My sense is that bike share programs will work best if they build upon these already existing sharing arrangements, from private bike rental operations to informal sharing among friends and neighbours. That’s the complete opposite of what we’re doing right now with these large scale, technologically-driven bike shares.
Sandwichman – (if I’m following you) it seems to me that Frances is, in fact, defending the car bound great unwashed who are unlikely to find much utility in having their money taken from them and given to e.g. economics profs living in posh neighbourhoods who want to satisfy their eco-vanity by going to the local organic coffee shop on their bike-share to put their apple products on prominent display.
Patrick, No, you’re not following me. The expression, “the great unwashed” can refer to any designated out-group. The car-bound may be the unwashed from the perspective of latte-sipping bicyclists but from the perspective of the “as an economist…” the alleged unwashed are those who don’t genuflect to the notion — in reality, as well as in the abstract, unreal model — that market-prices allocate scarce resources optimally.
Frances, I suppose you would also eagerly make the same argument for military procurement, monetary policy, corporation law, intellectual property and K to 12 education? Spontaneous, voluntary sharing arrangements are already at a tremendous state-imposed disadvantage from the get-go.
I’m not arguing that all subsidized bike sharing initiatives or any particular program is “Pareto efficient” or even well conceived in some broader sense. What I’m saying is that if you are going to compare subsidies for bike sharing with something else, you should be comparing it with something that actually exists, not with some imaginary free-market price system that optimally allocates scarce resources. There is no such animal and never has been.
The reason that such an “economy” could not possibly exist is that the production of goods for the market depends intrinsically on the active participation of human subjects who come into the world without the immediate capability of subsisting by participating in market exchange. Thomas Hodgskin figured that out 186 years ago, John Maurice Clark reiterated it some 90 years ago. The market economy depends crucially upon — and often is parasitic upon — the non-market economy of reproduction. It is a fallacy for economists to assume that what is outside the market is external to the economy. That might make their models more tractable but it also makes them utterly meaningless. Furthermore, if they were to be consistent in making such an assumption, they would also have to exclude from consideration an extremely large portion of the so-called market economy, namely that portion where allocation is not optimally determined by the price mechanism in competitive markets (see above reference to military procurement, etc.).
Patrick, love that comment.
Frances says: “bikeshares don’t replace cars, they replace taxis”. There seems to be a non-sequitur here.
I live and work in downtown Toronto. I have a posh, way above average price house close to downtown (it actually is an old, uninsulated, poorly renovated skinny little house), no car, and use bike share. I pay a lot of property tax due to the high value of my house, there is free street parking on my street (again, I have no car), and there are huge swaths of road near my house, and along the way to work, dedicated to cars.
I understand that the bike share solution that is being implemented is not really an economically ideal solution, but there don’t seem to be a lot of other informal solutions that have sprung up, and good luck using a “write a cheque” system to subsidize private bike share schemes or even bicycle use here. On the other hand, the huge resources that go towards sustaining the car infrastructure, including the massive amounts of free parking and free use of road in the downtown area, and even moreso outside of the downtown core, the regulatory scheme for taxis that is a massive public subsidy to the owners of taxis in Toronto (and taxis are cars too) are much more significant and economically wasteful. Now, I suppose it doesn’t make sense to add an economically inefficient program on to an already massively inefficient transit/road system, but given the relative costs and benefits to the urban environment, it seems to me to make a lot more sense to subsidise a bike share program than to continue to subsidise cars.
Patrick says (sanctimoniously): “it seems to me that Frances is, in fact, defending the car bound great unwashed who are unlikely to find much utility in having their money taken from them and given to e.g. economics profs living in posh neighbourhoods who want to satisfy their eco-vanity by going to the local organic coffee shop on their bike-share to put their apple products on prominent display.”
But, by the same token, why should the prof living in a posh neighbourhood be subsidizing car users, with municipal roads/parking being largely subsidized by property taxes (that are incidentally much higher in the posh neighbourhoods)? I bet the cross subsidy to cars is a larger by a huge margin.
And, characterization of what the prof is doing with his time, including whether she is going to an organic coffee shop and using an apple product seems to be a non-relevant point, and just character assassination.
Why is the basis of this argument bikes versus cars? If it’s about pollution, take the subsidy to bike shares and give to workers or employers who support working from home. Surely commuting is a worse gas burner than grocery runs or casual driving. But if it’s about privileging bikes as a symbol of enlightenment or urban sophistication, then we can lump it in with all-day kindergarten and geothermal heating as a misallocation of scarce funds.
People are talking in the absence of a true picture of scale. The amount of driving is enormous. There is no bike share program that can make a dent in that. If you want to reduce driving, there are far better ways. If people drive less because of, say, a carbon tax, why do we care what alternatives they choose, whether it’s biking, staying home, or walking?
Patrick – “economics profs living in posh neighbourhoods who want to satisfy their eco-vanity by going to the local organic coffee shop on their bike-share to put their apple products on prominent display.”
Econ profs aren’t actually like that. Lawyers or sociology profs perhaps.
Plus it’s impractical to take the bike-share to the local organic coffee shop because typically there won’t be anywhere to park the bike-share bike.
Sandwichman – well, when it comes to military spending, I’ve ranted about that a few times before, i.e. the problems with the whole national defence is a public good argument. As to education – I think one can make a case that the existing public system built upon pre-existing infrastructure i.e. schools run by churches and charities, as well as private schools.
whitfit – see Rachel Goddyn’s comment above about the kind of alternative models that would be worth looking at, e.g. providing space for private bicycle rental companies in subway stations (the Potsdam model).
On property taxes – I hear you. The incentives this creates for urban sprawl and unsustainable living are definitely worth a blog post.
I’m a long-time reader of this blog, but my economics chops are weak. Nevertheless, as a 25-44 year old male, living and working downtown (Ottawa), bike-commuter, and an occasional Bixi user, I’ve been inspired by the discussion to contribute.
It was noted above that most bike-share trips are substitutes for trips by transit, taxi or foot, and may therefore relieve (some) pressure on transit systems. But, at least in Canada, bike-share programs do not operate all year. And even during the portion of the year that the programs are operating, the substitution between bike-share and transit trips is likely somewhat dependent on weather. Surely there’s data on this point, but most cabbies I’ve spoken with report that cold/rain/extreme heat = good business, as people who would otherwise walk or wait at a bus stop flag a cab instead. Similarly, while there’s many “hard core” cyclists and pedestrian commuters out there, most of us put away our bikes when November rolls around or when the day’s weather looks uninviting. I imagine this applies, at least in part, to those who commute or run their daily errands on foot.
But transit systems have high fixed costs, and must be designed around peak usage. Transit providers can’t run fewer trains and buses when the sun is shining, and don’t lay drivers off in the summer months. Barriers to entry and exit are lighter for cab drivers, and working hours more variable, but I think this argument is somewhat true for them as well. If you find the same number of buses driving and taxis idling on a sunny summer day as a cold winter day, do bike-share programs really result in meaningfully less pollution/fewer carbon emissions, or lower transit system costs?
whitfit – I wasn’t entirely serious, but it IS the visceral reaction of many people, who like myself, are proud members of the great unwashed, stuck out in ‘burbs we’d rather not live in but due to a variety of constraints are forced to cope with. We deal with the world as we find it.
And surely you realize that even non-drivers benefit enormously from roads. Bike share? Not so much. No doubt car owners and drivers should pay more than they do, but that’s a different question.
Ok – one more comment, addressing market failures and public bike share programs.
There are big network effects to having a uniform, broadly distributed, high tech (meaning credit card/key fob, 24 hour access) bike share system. Being able to ride from point a to point b, c, d, x, or y and make one way trips makes a big difference. This can’t be accomplished with private operators at a transit station, which may require limited point to point, or round trip use of the bicycle. Also, small scale bike share systems are hard in a big city, where keeping track of the bicycles, theft, and trust issues can’t be easily and efficiently resolved by a large number of small systems. In Toronto, the old yellow bike system was a failure. Now, just because the system is better when it is broad and uniform doesn’t mean that the public sector needs to/should provide it, but it seems that it is difficult to create such a network is difficult with private sector entities.
Shangwen says: “Why is the basis of this argument bikes versus cars? If it’s about pollution, take the subsidy to bike shares and give to workers or employers who support working from home…” and
“People are talking in the absence of a true picture of scale. The amount of driving is enormous. There is no bike share program that can make a dent in that. If you want to reduce driving, there are far better ways.”
I totally agree – but you also miss the scale of the cost of bike share programs. It is also hardly a dent in the capital cost and budget for transportation of a municipality like Toronto. It is a tiny cost, so saying it has a tiny effect is not necessarily fatal to it.
and “If people drive less because of, say, a carbon tax, why do we care what alternatives they choose, whether it’s biking, staying home, or walking?” I totally agree. That is the end goal where the angels start singing. Just ask Stephane Dion. I would also add a congestion charge – electric cars use a lot of real estate too.
whitfit – all that is meaningless in a world where people shop for a family of four once a week at the big box store and commute 15 or 20 minutes on highways to get to work. Seriously, think about how and where most people really live. The problem is not too few bikes, it’s how we inhabit the landscape.
Steve – thanks for that comment – absolutely spot on!
A few points (from a Montreal point of view):
1) The “great unwashed” vs “latte-drinkers”. Most areas serviced by Bixi have a high density of tenants and relatively few homeowners. I would guess that it is not a subsidy paid to the rich. Most likely, Bixi users have lower incomes than other Montrealers (this is, of course, speculative).
2) If everything goes well, Bixi should not incure future losses. By and large, I think municipal policymakers understand Bixi does not generate huge externalities when added to existing roads and public transit infrastructures.
3) However, it makes life a lot more enjoyable in Montreal from spring to autumn (both for Bixi users and public transit users; and maybe even for drivers). The city saw an opportunity to kickstart a project. It is common that governments need to subsidize the creation of completely new networks, because private firms perceive the risk as unmanageable. Given the scale of the city’s budget, spending a few millions in the first years of a project that could serve tens of thousands of residents does make sense.
4) Bixi is very useful when the subway system breaks down, which happens on a relatively common basis. It adds robustness to the transit network.
5) If, after ten or so years, the bike-sharing projects become profitable, we might see private firms start projects in other cities. In that scenario, the initial public subsidies might be considered as the proof of concept that the private sector needed to start investing in bike-sharing.
I’m repeating, but if I may: Bixi and Hubway, the two bike shares I’m familiar with, are both very visible and dramatic additions to the streetscape, both are extremely convenient for the individual user (I thought they were really, really cool), and both are very cheap compared to what we spend on cars. Because it is way, way too early to get a read on what benefits these programs will have over the longer term, I think it is well worth the relatively small extra cost. I understand your concerns, but I think it’s worth trying these things out for a decade or two before we assess.It makes me happy every time I ride my bike past Hubway stations, even though I rarely use them, since I ride my own bike everywhere.
EC: “and both are very cheap compared to what we spend on cars”
Let me tell you about my bike share program. Nick Rowe rescues old abandoned bikes and repairs them. Then he lends them out to friends and family.
It’s very cheap compared to Bixi bikes.
The point is it’s not enough to look at a program and say it has benefits. The point is how do the costs and benefits compare to the alternatives and ***what are the reasons for thinking that markets won’t solve this problem on their own****.
There may well be some cities and some circumstances where bike share is viable and cost effective. But I think the jury is still out on this one.
I grew-up in and went to University in Montreal. I agree that it’s a good candidate for bike share. At least in the summer. Though I kinda wonder what kind of regular cyclist wouldn’t have their own, but whatever. If it’s a good idea, let an enterprising entrepreneur do the project. Why is a public subsidy required? Where is the market failure?
On the other hand in Edmonton, where I currently live, bike share is a lousy idea. And that’s probably why the private sector hasn’t stepped-in. Unless and until we solve our massive sprawl problems, bikes and walking as alternatives to cars will remain a pipe dream. And we have a HUGE problem with urban design that starts with individual buildings, never mind whole neigbourhoods. Just look at the design of the new Royal Alberta Museum. Nice, eh? In summer. Now imagine all those blanks walls, and open spaces with no trees and no shelter during a prairie winter. If we can’t even get one building so that it’s fully functional in our climate, how are we ever going to get whole neighbourhoods to be walkable and bikeable all year round?
I despair.
Patrick: a hidden benefit of Bixi is that they’re immediately reusable. They don’t stand all day outside your office. Cars take three spaces : one at home, one at work and one at the mall. Using our own bike to commute repeat the mistake.
I wish I could use my bike to go back home now. But it’s still in storage on my balcony. Outside, with the wind from the sea and the wind-chill from the ride, it would be below freezing…
And in summer ( julyat noon) I am on holiday.