A busman's lottery


The Economist reports on an interesting innovation in Singapore. To encourage more people to take the bus to work, travellers will be entered into a lottery every time they get the bus – and three times for every off-peak journey they take. The idea is that people are risk-taking when the stakes are small:

Offer individuals 20p to leave the house an hour earlier, and most will say no. But a 1-in-50 chance of winning £10 may seem more enticing.

The risk-seeking effect is amplified in small networks: regularly hearing about other winners leads individuals to overestimate their own chances of success. This worked particularly well in Bangalore, where Infosys commuters shared a workplace, and scheme winners were advertised through the company. The scheme in Singapore would aim to create a social network among users to produce a similar effect.

The hope is that the project will eventually be self-funding.

So, could a Singapore-like system work in London? I’m sceptical about how effective Singapore’s plan will be for them, but on the margin it might make things a bit better. The problem is that city bus companies are bad at innovating at the margin – picking the low-hanging fruit first – and usually end up wasting money on white elephant projects, like the new bus designs churned out every couple of years with great Mayoral fanfare.

TfL’s bus service is OK, but it gets around half a billion pounds worth of subsidies every year. Congestion in the capital is also crippling for the service: though many people do get the bus during rush hour, it goes incredibly slowly. Compared to the even more heavily subsidized Tube network, it’s a pretty unappealing option if you’re in a rush to work.

So, what’s the solution? Honestly, I’m not sure. A sophisticated road pricing scheme coupled with privatized roads might be the best option but, in cities at least, it’s a political fantasy right now. I think the next best solution would be to privatize the bus system and open it up to new competition. It’s happened in Manchester, with quite good results, and could happen here as well. I don’t know how to make buses nicer, but there’s no greater discovery process than the free market. If a Singapore-like lottery scheme works, great. If it’s something we haven’t thought of, even better. The great upshot of a private municipal bus system is that there will be “neighbourhood benefits” for everyone who doesn’t use the bus – a better, more competitive bus network would take cars off the road and reduce congestion in the capital for everyone.