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If you live in a big city, you probably aren’t within walking distance of your job or school, so you commute using another mode of transportation. In most North American cities (New York being the major exception), the private car remains the conveyance of choice, with public transport accounting for fewer than 20% of trips made.

In contrast, public transportation accounts for more than 50% of transport demand in European and Asian mega-cities such as London, Berlin, Paris, Madrid, Tokyo, Seoul, Delhi and Hong Kong. So what explains the difference? Based on an international comparison of prices of public and private transportation, I conclude that public transport in North America is simply too expensive vis-à-vis its direct competitor, the private car. Here’s why.

An Instructive Example: Paris vs. Chicago
A few months ago, UBS (a Swiss Bank) published a survey comparing prices and earnings in 73 cities around the world, including the price of a liter (a bit more than a quarter gallon) of gasoline and the price of a “standardized” public transport ticket—a ticket for the public transport network for a one-way trip of approximately 10 kilometers (6.21 miles). In Paris and Chicago, to take two of the 73 cities, the price of a standardized ticket is about the same at $2.05. However, in Paris public transport is of major importance, accounting for 67% of total trips. In Chicago, it’s not (only 25% of total trips).

Let’s now take a closer look at the price of gasoline, which fuels the main competitor of any public transport system: the private car. In Paris, a liter of gasoline costs $ 1.57, almost three times as much as in Chicago ($ 0.55). This means that, for the price of one liter of gasoline, you can travel much farther on the public transportation network in Paris than in Chicago. How much farther?

Remember that a standardized public transport ticket entitles you to travel a distance of about 10 kilometers. In Paris, a liter of gasoline costs a bit less than such a ticket, so that you can also travel a bit less than 10 kilometers, to be precise: (10 x 1.57/2.05 =)  7.7 kilometers. In Chicago, a liter of gasoline costs only a quarter of a standardized ticket, which means that you can travel just over a quarter of the 10 kilometers that one ticket buys (2.7 kilometers, actually).

Gasoline vs. Public Transportation Costs
I call the number of kilometers that you can ride on public transportion for the price of one liter of gasoline the “Public Distance for Private Fuel Index” (PDPFI). The higher the value of the index, the less expensive the public transport when compared to the private car. For 71 of the 73 cities in the UBS survey, I have calculated the index (I’ll tell you in a minute why I excluded two cities). The top 10 (see chart below) mainly consisted of cities in developing countries, where gasoline prices are generally high and public transport tickets inexpensive.

Surprisingly, all six North American cities surveyed by UBS were in the bottom 10 of the PDPFI list (see chart below), even New York.

This means that the private car is cheaper in North America—relative to public transportation—than almost anywhere else in the world. No wonder it’s not popular in the US and Canada.

But Wait—Driving a Car Costs More Than Just Gasoline!
I have used only the price of gasoline to estimate the cost of private transport. You may argue that I should have included other costs, such as depreciation and insurance. It’s true that these costs influence behavior, but only in the long run. If you already have a car—and most people in the 71 cities do—the cost of making a trip with your private car consists only of fuel costs (in economist’s jargon, this is the marginal cost of the trip).

Unlike gasoline consumption, depreciation or insurance costs will not be any higher or lower when you make a trip. There is one exception, however. Two of the 73 cities in the UBS survey (London and Singapore) impose a congestion charge when you enter the city, and this charge will increase the cost of a trip (i.e., it’s part of the marginal cost). To put all cities on equal footing, I excluded them from the analysis.

How to Increase Public Transport Demand in Laggard Cities
Obviously, the more people we can get to use public transportation, the better for the planet—less fuel burned, less CO₂ and other pollutants spewed into the atmosphere, less global warming. Many governments, including those in North America, claim they are willing to encourage the use of public transportation to help reduce greenhouse gasses and air pollution(among other policy objectives). As we’ve seen, the use of public transport is highest in cities where public transport prices are lowest relative (and I emphasize the word “relative”) to the price of gasoline—or stated differently, where the Public Distance to Private Fuel Index is highest.

To improve the index, governments have two basic means at their disposal: lower the price of public transport or increase the price of gasoline. But as we know, increasing gasoline prices in North America remains politically radioactive. So that leaves only one option for encouraging the use of public transportation systems in the long term—making them less expensive.

Additional resources:
UBS: Prices and Earnings, A Comparison of Purchasing Power Around the Globe
EMTA Barometer of Public Transport in European Metropolitan Areas (pdf)
Chicago Suburban Rail Summary (pdf)
CNN: New Yorkers Are Top Transit Users

Updated 9/29/10; originally posted 12/5/09.

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