When a Nudge Becomes a Shove: Uber’s Guilt is All Of Ours

Uber recently made headlines with this feature by the New York Times, on how it uses behavioural insights to get drivers to work longer hours, and go to areas where there is high passenger demand. As Uber drivers are not employees, Uber has very little formal influence over their behavior – they can’t mandate how much drivers drive, or what area they cover. Behavioural nudges are a relatively costless way of getting drivers to do what Uber wants, instead of using monetary incentives. But is Uber particularly guilty?

nudge2

A Brief Overview of Behavioural Nudges

The use of behavioural nudges to shape customer, constituent and employee behavior is certainly not unique. Examples abound, including:

  • Businesses and customers. Positive reinforcement is the bedrock of modern advertising. Jeff Bezos from Amazon famously said “through our Selling Coach program, we generate a steady stream of automated machine-learned ‘nudges’ (more than 70 million in a typical week).” Games like candy crush turn us into addicts by providing mini rewards in our brains, releasing the neurochemical dopamine and tapping into the same neuro-circuitry involved in addiction.
  • Governments and constituents. The UK Government has its own Behavioral Insights team, which has helped sign up an extra 100,000 organ donors a year and doubled the number of army applicants by simply changing default options and how emails were written.
  • Employers and employees. One of the reason Google will fix your car, take care of your health and food needs all in one place is because they know it will get you to stay longer and work harder.

Now that you’ve seen some examples, what exactly are “behavioral nudges”? Definitions vary, but I’ll boil it down to two things:

  • Applying an insight about a person’s decision-making calculus (that the person might not even know about himself!) to get him to make the decision you want.
  • The person is likely unaware that this tool is being used (unlike a law or a policy, which he actively shapes his behavior to comply with).

For example, the principle of “loss aversion” suggests that humans are more likely to respond to a potential loss, than a potential gain. When you want drivers to drive for two more hours, tell them they’d lose out on $200 if they didn’t. Don’t tell them they’ll gain $200. We are also a lot more vulnerable to peer pressure than we think. The UK Government managed to nudge forward the payment of £30m a year in income tax by introducing new reminder letters that informed recipients that most of their neighbours had already paid. Never underestimate the power of inertia – which is why companies adopt “opt-out” rather than “opt-in” clauses.

An in-depth article on leading thinkers in the field of behavioural science (Kahneman, Tversky, Thaler, Lewis), can be found here.

The use of behavioural nudges is not new, but data has made it an increasingly powerful tool.

The potential for behavioural nudges is increasing with the proliferation of data about individuals. The more you understand how people make decisions – to work longer hours, to buy your product, to pay their taxes, to brush their teeth, to play a game, the more effectively you can nudge them towards your desired behaviour. Facebook knows more about me than I do. Uber knows more about their drivers than drivers themselves.

As a result, these companies can push buttons I didn’t even know existed. They have the potential to hack my operating system and change my behaviour.

Hence the ethical question of when a “nudge” becomes outright manipulation is more pertinent than ever.

Here are several ways to think about whether a “nudge” is being used ethically. <By the way, some people argue that it’s never OK to curb someone’s “moral freedom” through nudges, but I find that too idealistic – nudges have been used for time immemorial. It has to be a matter of degree.>

First, what is the inherent goodness of the outcome for the target population?

On the positive extreme, behaviours such as showing up at a doctors’ appointment, attending school or paying bills on time can be seen as actions that are positive for the individual. On the negative extreme, you could have outcomes such as an alcoholic purchasing more alcohol, or a suicidal person being nudged off the ledge.

There is huge scope for debate in between the extremes. Uber could argue that getting drivers to work longer hours during peak period is good for their earnings. Facebook would argue that repeatedly pushing advertisements that users are more likely to click helps them find what they need and like faster.

But here are two sub-questions to consider, in Uber’s case:

  • What is the distribution of benefits accruing to Uber vs the driver if the driver changes his behaviour? In this case, there seems to be a direct trade-off between Uber and drivers’ interests. As more drivers come onto the platform as a result of the nudges, drivers don’t benefit from surge pricing. On the other hand, Uber gets the benefit of more rides and hence more earnings.
  • Is there an intention to deceive? The author suggests that some of Uber’s methods nudged drivers towards geographical areas on the pretext of a surge, but when drivers got there, they found there was none. Even if this was not the intention, the asymmetry of information is unfair to drivers. More transparency is needed, perhaps by providing drivers a live feed of surge rates in various areas, including when surge is dropping.

Second, how easy is it to “opt-out”?

The ‘opt-out’ technique is one of the most commonly used “nudges”: always set your preferred option as the default, and count on human inertia (or ignorance) to keep people there. If you are a Netflix user, you’ve experienced this: once your episode ends, the next one comes on automatically in ten seconds. It is a nudge to keep you watching, but you can turn off this feature permanently. Google and Facebook will send you personalized ads, but you can opt-out and get those replaced by randomised advertisements instead.

If you are an Uber driver, you can also temporarily turn off the forward-dispatch feature, which dispatches a new ride to you before the current one ends (keeping you constantly driving, just as Netflix keeps you constantly watching). However, there is no permanent way to turn it off. It will keep popping back on when you take a new ride: you have to be constantly proactive about stopping it if you don’t want to overwork. Does the lack of a permanent opt-out feature make Uber more guilty? Perhaps. But I would like to find out more about the design considerations of both Uber and Lyft before giving a definitive view (hit me up if you have further insight!).

Generally, how proactively institutions educate their users/employees about the opt-out function matters, as does how easy it is to opt-out.

A More Important Question

So is Uber particularly guilty? On the surface it seems to. But want to hear my real answer? I have no idea, simply because much of the nudging that institutions do today is invisible, making it impossible to compare. We – as users, employees, constituents – do not even know that it is happening, and there is no legal obligation to tell us.

Hence, rather than ask whether Uber is guiltier than other institutions which deploy “nudges”, I believe the more important question should be: is self-regulation by these institutions sufficient? If not, does anyone have the moral high-ground to arbitrate? Should there be a system where institutions report their use of “nudges” and hold each other accountable? Would love to hear your thoughts.

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Source: New York Times
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Featuring Xinwei Ngiam: Government Policymaker turned Start-up Business Strategist

I’m really excited to share this interview with Xinwei, Director of Strategy at Grab (formerly GrabTaxi), a ridesharing platform in Southeast Asia. She is also Regional Head of Grab’s social ridesharing service, GrabHitch, which beta-launched in Singapore in late 2015 and has since expanded to Kuala Lumpur, Jakarta and Bangkok. Prior to joining Grab, XW worked at the Boston Consulting Group and the Singapore Ministry of Finance.

In this wide-ranging interview, she shares her biggest lessons in her journey from policy-maker to consultant to start-up director, where she wants to see technology applied more aggressively, advice for companies looking to expand into Southeast Asia, and insights for both policy-makers and technologists from both sides of the fence. Besides being a good friend, Xinwei is someone I admire deeply for her work ethic, depth of thought and calm under pressure. Definitely someone to watch 🙂

xwngiam

1. How did you make the transition from Government to Tech? What’s it like working in a start up vs in a more traditional industry?


After I left Government, I joined consulting for about 2.5 years, and 
thereafter joined Grab, where I’ve been working now for almost 2 years.

I would recommend consulting for any generalist who is looking to learn at hyper-speed about the business world and about the region we live in. While at BCG, I spent at least half of my time in Indonesia (if not more), and it’s benefited me greatly now that I work in and manage teams in our Jakarta office.

Joining Grab opened my eyes to start-up life and culture. I’ve loved this way of working from the beginning – the juxtaposition between the casual team culture but incredibly intense pace of work; the tension between wanting to reach for the stars but having to ruthlessly prioritize based on your current resources and capabilities; the ever-present low-level existential crisis of not quite knowing whether you’re flying or falling. It’s a thrilling place to work, but with that thrill also comes stress and increasingly blurred lines between work and life (my husband will not hesitate to confirm this last point).

For those who are seeking to move from more traditional industries to start-ups, you have to be prepared to let go of some of what you know; but also have confidence that you’re bringing an expertise and knowledge base about how companies work that is very valuable to
start-ups. Some tips:

 

(a) Learn to embrace uncertainty.

Uncertainty will exist in all aspects of start-up life. The type that seems to affect people most is professional uncertainty. In a startup, it’s not uncommon to experience frequent reorganizations, to see the team you joined dismantled, or to undergo several title or portfolio changes in a few months. Then there’s business uncertainty – how do you know whether to invest in a new vertical/market/business or not? When choosing between two ideas that could 10X the business (or send it into a downward spiral) how do you choose? There is no playbook for what startups typically do, and that can cause a lot of anxiety.

There is no perfect remedy for this, but it helps to take a philosophical view that no matter what happens you’ll live to die another day. Channel all your nervous energy into obsessing about your business and outserving your customers, put aside your personal anxieties and just enjoy the ride.

 

(b) Execution is what makes good ideas great

There are two common pitfalls (that I have personally experienced many times now). The first is to overestimate your ability to execute, which results in jam-packed workplans where items are checked off the list, but not done in a truly excellent way. The second is to underestimate the need for excellent execution; this usually comes hot on the heels of a great idea where one is seduced into thinking that the awesomeness of the idea will carry the day.

The truth is that good ideas are everywhere, especially in fast-growing startups where everyone is obsessing over big questions such as how to win market share, how to serve customers better, or how to leapfrog the competition. What makes an idea truly great is elegant, flawless execution that delivers outsized results.

I don’t have any big secrets to share on how to execute well – I’m still very much a student in this journey – but I think a big part of it is about disavowing silver bullets and instead being very deliberate about tracking and measuring any intervention you make in your market. You want to get to a point where you know how best to deploy every dollar based on what channels you have at your disposal and what your objectives are. The tradeoff of course is that learning takes time (not to mention failure), and in a startup, time is often the one thing we don’t have. But our job is to walk that tightrope.

2. What is one problem in society today that you think we can solve more aggressively using technology?

I would really like to see how we can use technology to facilitate elderly lifestyles and caregiving. I think the amount of thinking and consumer research done in the field is simply not commensurate to the tremendous need and opportunity. In fact, elderly care has many similar themes with infant care (ranging from personal hygiene products to food to mobility solutions), but the two sectors are worlds apart in terms of customer-centricity, product variety and innovation. One reason is that elderly people aren’t as tech savvy as younger cohorts, nor are they constantly connected to the internet via smartphones – but that is changing very quickly.  I think there is another deeper reason, which is that elderly care fundamentally faces a brand image problem – we associate it with the end-of-life, the loss of dignity, and diminished versions of ourselves, rather than simply a challenging stage in life where we have different needs and require more support and help than we used to.

I would love to see innovations in areas that facilitate independent living (mobility solutions, health monitoring and remote caregiving of some sort, seamless chronic care), reduce the burden on caregivers, and that use the internet to create active communities or learning opportunities for the elderly.

3. What’s one thing you wish your friends in Government knew about the tech sector, and one thing you wish your friends in the tech sector knew about Government?

That no one is really in this only for the money. There’s a common misconception that everyone in the private sector (and especially in tech companies) is out to make a quick buck. Of course, there are always going to be companies that fit that stereotype. But in my experience, the most impressive and successful entrepreneurs never quite set out to make big bucks. Rather they became obsessed with some crazy idea that they thought could deliver huge impact, executed on it and managed to bring the world along with them.Making money is a necessity for businesses (at least once the growth capital runs out) and so it’s unrealistic to expect companies to behave like charities. But just like the humans who found and build them, companies have their own personalities, culture and DNA. Of course, there’s a limit to how nuanced our regulations and economic policies can be, but if governments see that many businesses come from the same starting point of wanting to make a positive impact on society, then it paves the way for more open and productive engagement.

Another misconception – which, like the first, isn’t restricted to people in Government – is that what makes a tech company great is solely dependent on how good their tech is, and nothing else. The companies that we consider great “tech companies” – Apple, Amazon, Netflix, Facebook, Google – certainly had and continue to build superior technology; but what sets them apart is clarity of focus, a winning business model, and the willingness to fail and pivot.


I recall a conversation with a friend who was trying to understand how Didi beat Uber in China, and a sticking point was whether Didi had any original tech or whether they simply copied ideas; or whether Didi had superior tech which allowed them to win. There are many versions of this story, but what’s fairly clear to me is that technology was merely table-stakes in the Didi-Uber fight; these were two giants at the top of their game and a more finely-tuned surge algorithm was not going to be decisive. What Didi had was incredibly efficient and locally rooted ground operations (back to execution and the ability to deploy every dollar more efficiently than the competition), excellent and often viral marketing, and deep integration with China’s all-pervasive mobile payments network.

In terms of what I wish the private sector understands about Government – I think it’s that the current system of rules and regulations was constructed for a reason and changing it does require time and deep consideration. There’s a general impatience among the private sector with governments, and especially so in the tech sector given that so much of what we do challenges status quo norms and systems. But just as we wish governments understood that we are just trying to serve our customers the best we can, they too need to do the required diligence to make sure that this is the right thing for society as a whole. So the approach shouldn’t be to try and disassociate ourselves from government or brazenly disregard regulations, but to build bridges and try to align our interests. If you’re in it for the long haul, then engagement and trust is the only sustainable way forward.

4.     You work extensively in Indonesia and Kuala Lumpur. What are they key differences in how you operate in these contexts? What advice to you have for companies looking to move into these regions?


One gradually exploding myth about Southeast Asia is that it is a coherent region; in fact, Southeast Asia is extremely fragmented with clusters of countries sharing some common cultural history while others are relatively unrelated. I’ve found that Singapore and KL feel 
culturally very similar, for obvious reasons. Indonesia, on the other hand, feels quite different, more so the further you travel from Jakarta. As my CEO likes to say, Indonesia is a continent, not a country. The energy and vibe is quite different from what you’ll feel in Singapore or KL. The war for talent is far more intense there. We’ve seen some really impressive tech companies come out of Indonesia in the past few years.

If you’re looking to expand to or start something in Indonesia (or really anywhere outside home ground), I think the most important thing to do is to spend time on the ground and learn the language. There’s only so much management you can do from afar, and most of these markets are intensely competitive. There is no substitute for being on the ground and experiencing your product and services in the local context. You’ll learn things that no management report could adequately describe.

 

5. Some of our readers are interested in entering the field of tech. What is your advice for them?


First, if you are currently in a non-technical role but would like to become a technical Product Manager, a software engineer or data scientist, then some formal training is required and there are tons of great options out there to acquire those skills. That aside, I believe that in every company will be a tech company in the future, in some shape or form. It will become increasingly meaningless to think about entering the “tech industry” because every company will have to adopt relevant technology to stay ahead, including how to use the internet to distribute services, understand their customers and facilitate payments and other transactions.

So I would encourage anyone keen on “tech” to first ask themselves what real-world problem they are trying to solve, or what business vertical they feel best fits their interest. Once you’ve figured that out, then go in search of a company that you think is harnessing tech in the right way to solve that problem. Otherwise you put yourself at risk of becoming an unknowing participant in “innovation theatre” in a company that’s just using tech as a marketing tool.

ngiam and tay
XW and I at CES2017, speaking about the potential and challenges of the sharing economy in transport

Better Consumer Access AND System-level Sustainability: Can Cities Have Both?

 

This week I read three parallel articles: one on healthcare, two on transport, all with the same theme: how the introduction of disruptive technology in traditional ‘public services’ led to a flood of new demand, calling sustainability into question.

I’ve thus far painted a positive picture of how new technologies can democratize access to services: Riding in the comfort of a private vehicle is no longer restricted to those who have money to own a car. Tele-health, where patients can consult their doctors online rather than face-to-face, is cheaper and more accessible than a traditional doctor’s visit, cutting down unnecessary waiting and travelling time (issues that disproportionately affect the poor and elderly!).

But improving access often leads to a surge in demand, creating new problems for society. These articles point towards an important trade-off between consumer access and system-level health that I haven’t quite addressed. [Spoiler alert: we should care about both because they are ultimately about the consumer!]

Transport

“The Downside of Ride-Hailing: New York City Gridlock” empirically shows how ride sharing has worsened congestion in NYC because many have replaced their subway rides with an Uber or Lyft. “Average travel speeds in the heart of Manhattan dropped to about 8.1 miles per hour last year, down about 12 percent from 2010”. New Yorkers have famously pushed back against their Mayor’s attempts to restrict the number of Uber cars.

“Autonomous Vehicles: Hype and Potential” shows how autonomous vehicles can also exacerbate traffic congestion, slowing down the movement of people and goods around the city.

  • One of the promises of autonomy is that the car can be re-imagined. IDEO imagined how cars might become work-spaces in the picture below. Once the car becomes a comfortable place to work or relax, many of us might not mind spending more time on the roads. I might opt for an Uberpool even if takes twice the time of a train journey because it’s such a comfortable, productive ride.
  • If these autonomous vehicles are privately owned, people might send their cars on trips they would normally take. For example, sending their car to the McDonald’s drive-through, or far out of the city center to find cheap parking.
  • We will also take some time to get to roads where vehicles are 100% autonomous. In the interim, human drivers are likely to “bully” autonomous vehicles because they know that these autonomous vehicles are programmed to be risk-averse (an autonomous vehicle killing a person is perceived as a greater travesty than a distracted driver killing a person). In such a scenario, we will see autonomous vehicles driving at slower-than optimal speeds, creating more congestion.

Source: IDEO

Autonomous work spaces

Healthcare

The parallel in the healthcare system is a study by RAND Corporation, showing how only 12% of tele-health visits have replaced visits to the doctor, while 88% represented new use of medical services. Unsurprisingly, this finding suggests that doctors’ visits are highly price-elastic – by halving the cost, we see a surge in new demand. Net annual spending on healthcare among patients with respiratory illnesses increased by US$45 per tele-health user.

This is a bigger problem if the new users actually didn’t need to see a doctor and a smaller one if they would have deteriorated if not for the medical treatment. The answer is likely somewhere in between – I believe closer to the former – 88% is huge (But a more in-depth study correlating the new use of medical services with health outcomes is needed). There is potential for tremendous waste in our already-stretched healthcare systems if we massively lower the cost of healthcare services without creating disincentives for unnecessary usage.

How can we get the best of both worlds: access and sustainability?

Technologies have amazing potential to help us use scarce resources like doctors’ time and road space more efficiently, creating greater supply. By lowering cost, they also ensure that this greater supply is spread out more evenly across the population, regardless of income.

However, doctors’ time and road space are ultimately still scarce resources that need to be rationed somehow. Capitalist countries are happy to ration these services by income. Countries on the socialist end of the spectrum (think the UK National Health System) tend to ration by waiting time. Neither fully takes into account the most important consideration: need and urgency.

How can we incentivize people to only use these new, accessible services only when they really need it? Here are some ideas.

In transportation

In transportation, cities need to make mass people-mover systems (trains, buses) the core service used by most commuters: ride-sharing must complement, not replace trains and buses. The bulk of commuters should spend most of their journey in trains and buses where the road space per commuter is significantly lower. Ride-sharing can be a first-mile and last-mile solution (e.g. home to train station), but certainly not the default for the whole journey.

To achieve this, cities need to up their game in public transportation. It has to at least be reliable and predictable (which many, many aren’t). Examples of how Singapore has done this here and here. Taking a step further, payments and arrival/departure times should be integrated with ride-sharing platforms so that people can minimize waiting and inconvenience when transiting between ride-sharing and public transportation. Work-friendly design in public transportation (think flip-out work tables in public buses) will also help make these options less unattractive compared to IDEO’s self-driving pods.

When it comes to autonomy, cities also need to think about moving to 100% autonomous vehicles as quickly as possible, since the dynamics between human drivers and autonomous cars will likely increase congestion. A 100% autonomous vehicle scenario also creates the most gains in efficiency and safety – vehicles can travel bumper to bumper (more efficient use of roads) and provide information to each other about road and traffic conditions (safety and efficiency are both enhanced). I cover some strategies in this article though this is a topic worth exploring in greater depth.

Finally, slightly more “interventionist” policies may be needed, such as limiting private-use autonomous vehicles and rationing the total number of cars dedicated to ride sharing so that people are prodded towards mass people-mover systems like trains and buses.

Tech companies sometimes paint these suggestions as the Government acting against the consumer interest. I disagree: it is in the commuter and patients’ interest if we can manage the demands on our roads and doctors such that those who need it most can get the services in an affordable and timely manner.

In healthcare

In healthcare, raising co-payments is a commonly-used tool which helps people think twice before using a service. “Triaging” patients is another way – for example, having them first speak to a nurse practitioner and only passing them to the doctors if it is needed.

But let’s take the patient’s perspective for a minute. What’s motivating them to use a service they may not need? Anxiety that their condition may be more serious than they think, and lack of a place to clarify (short of calling up a doctor). Any new parent empathizes with this. I probably went to the doctor every week in the first month of my daughter’s birth for no good reason at all.

We need solutions that assuage a patients’ anxiety. I believe equipping home caregivers is going to be a big part of this. Home caregiving is currently an informal sector with minimal training, which is an incredible waste. Imagine if home caregivers could be the first line of defence – giving the patient assurance when they do not need a doctor, and quickly helping them access a doctors’ time when it is urgent.

If healthcare systems and healthcare insurance providers want to use tele-health to optimise their use of resources, the technology has to be complemented by human-centred solutions that assuage patients’ anxiety. If not, the technology won’t save them any money at all!

Conclusion

I hope that with the addition of this article, I’ve now painted a fuller picture of the impact of disruptive technologies on public services like transportation and healthcare. Indeed, they will make resources more abundant and accessible to people with lower-incomes. However, complementary policies and services are absolutely necessary to ensure that the system is not over-used – ultimately, so that those who really need the services can get it in both a timely and affordable manner.

 

Two (Game-Changing) Ways Cities can use Technology to Fight Inequality

The story of income inequality is not new – as lower and middle-class incomes stagnate while the highest income brackets race ahead, the wealthy have access to goods and services that are increasingly out of the average person’s reach.

But we now see its detrimental effects more clearly than ever. I live in the Silicon Valley, and when news of Donald Trump’s election broke, the overwhelming feeling was disbelief. It was unimaginable. Tears of anguish were shed, yet a large part of the country celebrated. To me, that moment captured the deeper impact of inequality – fragmentation of society. Our politics become polarized, we are unable to find middle ground in our interests, and we increasingly feel like a nation of enemies, not countrymen.

While the problem gets more serious, our typical approaches to tackling inequality are reaching their limits. Redistribution is a political hot potato that pits the interests of the “haves” and “have-nots” against each other. Investing heavily in educational opportunities has diminishing marginal returns on social mobility both in the absolute sense (because the future of jobs is increasingly uncertain) and in the relative sense (because wealthier parents give their children more and more advantages).

We are in desperate need of new paradigms to fight inequality in cities. Here are two ways I believe technology can be a powerful, game-changing force – if deployed thoughtfully by cities.

Inequality

Source: charterforcompassion.org http://bit.ly/1y8DPw1

First, cities should use technology to make life experiences in the city more and more independent of incomes.

 It would be impossible to close the income gap completely, short of communism. A society where incomes are totally equal is also undesirable, as it erodes the motivation to work.

However, I believe that technology can make life in the city increasingly independent of income, which can go a long way towards mitigating the daily experience of inequality.

Let me start with explaining the notion of an aspirational good – things that people wish they had money to buy. In transport, most people aspire towards owning a car. In housing, it is a condominium or a private home (American friends: as opposed to a publicly-built Housing Development Board apartment, which 80% of Singaporeans live in). In healthcare, it is a private doctor or hospital bed – at your choice and convenience. In education, it is getting into top schools and universities.

There is an unsustainable dynamic behind aspirational goods. Because these goods are limited in supply, the more people can afford it, the more expensive they get, and the further out of reach of the average citizen. Aspirational goods are the sources of a huge amount of angst in the middle class.

Technology has the potential to overturn the entire notion of an aspirational good. By creating new forms of value, it can make the alternatives so attractive that even those who have money choose not to buy the aspirational good. 

Take transportation for example. Owning a car is so attractive today because public transportation is an inferior option on many counts – the low cost cannot make up for its lack of time efficiency (it takes about twice the amount of time as a car ride), comfort (especially in humid weather), and customization (as a car owner, I know I can get a ride whenever I want).

What if public transport can be faster, more comfortable, more customized and cheaper than owning a car? With technology, this need not be a pipe dream. Imagine a day when you can wake up in the morning and your phone already knows where you need to be. It recommends the top three ways to get there. You select one, and within a minute, your ride shows up at your door – perhaps a shared car, or an electric bike if it’s sunny. It gets you to the train station just as your train pulls in. When you get out of the train, your minibus has just arrived to take you to the office. After work, you can summon a sleek designer vehicle for your dinner date. On the weekend, an autonomous jeep shows up at your door-step to take your family around for a day of fun.

You don’t need to buy multiple tickets – everything is paid through your phone. Or, you can even pay for transport just like a Netflix or Amazon Prime Subscription: a flat fee for unlimited rides. You never need to worry about parking again. With alternatives like this, how many people would still want to own a personal car? Even the wealthy may reconsider, especially if we simultaneously put in policies to make driving more inconvenient, such as no-drive zones in the city.

Just as technology brings about new forms of value (e.g. customization, flexibility) for those who don’t own a car, how can it do the same for other sectors?

  • How can technology help to transform Singapore’s public housing estates such that they offer new forms of value which private estates cannot provide? For example, how can we help HDB dwellers feel like the entire estate – with all its facilities and open spaces – is their home, one much bigger and diverse than any private estate? Digital communities and intra-town transportation may be aspects of this.
  • How can technology make a face-to-face doctors’ appointment something that people no longer seek as the “premium option”, for example, by making tele-health so attractive and pervasive?

I believe if domain experts and technologists put their minds to this, they will be able to come up with much better ideas than these! In short, technology can help catapult currently “inferior” options to equal status as “aspirational” options by creating new forms of value.

2. Second, cities should use technology to distribute scarce land and human resources more equitably.

In most countries, there is a healthy debate on how progressive and equitable the tax and redistribution regime is. However, not as much attention is paid to how other scarce city resources – land and manpower – are used. These too, must be used equitably, and technology can help cities achieve this.

Land

Reducing the land used on roads is a great example of how we can use land more equitably. Roads and parking lots tend to be utilized disproportionately by those who own cars, who – in Singapore – tend to be wealthier. Can we cut down on roads and parking, and reallocate this land to purposes such as community facilities and public housing, which benefit a wider proportion of the population?

Yes, and technology is critical to this. How much land we need for roads and parking is determined by the concept of “peak demand” – the maximum number of vehicles on the road, ever. We can cut down peak demand by encouraging people to use shared mobility options rather than drive a private car (I write about how tech enables this here), and by investing in autonomous freight and utility so that these activities can be done at night, when roads are far emptier.

Public Sector Manpower

Similarly, we can use public sector manpower more equitably by investing in technology. Technology can significantly reduce the manpower we commit to customer services. For example, Govtech rolled out MyInfo, which enables citizens to automatically fill in their administrative information for Government schemes with the click of a button. Chatbots on Government websites will increasingly be able to answer public queries; phone lines will no longer be needed. Public sector manpower can now be dedicated to functions which are in great need of resources. One such area is social work and education. Families in the bottom rung of society often face a cocktail of challenges – divorce, low-income, lack of stable employment, cycles of incarceration and so on. Giving them (or their children) a real chance of breaking out involves an extremely high level of hand-holding and investment by social workers and schools. Resources are sorely needed here.

Access to top quality healthcare

Let’s take another scarce resource – top surgeons. People who can pay for their services access better quality care, and stand a higher chance at recovery. Technology can change this dynamic. Companies like Verb Surgical are using machine learning to propagate top surgeons’ expertise more widely. This is how it works: every time the best surgeons perform a procedure, every single action is recorded in a common machine “brain”. The “brain” is trained to associate each action with the probability of a successful surgery. As the “brain” records more and more surgeries, it gets smarter and smarter. Now, the “brain” is made accessible to ALL surgeons. At each step of their surgery, they are told what successful surgeons did. Now, the best surgical expertise is within the reach of the average citizen.

Technology that enables our scarce resources (e.g. land, public sector manpower and top surgeons) to benefit the broad population and serve those in acute need are the types of technologies that cities should invest in, and quickly enable through regulations.

Conclusion

If you google the “Smart City” movement, you’ll find many broad and loose definitions. Generally, it refers to how cities deploy technology to improve city life and allocate resources more efficiently, whether it is helping transport systems run more efficiently, making interactions with various Government services easier, or to adding fun to the city experience.

Unfortunately, such broad and loose definitions give cities little guidance to on what to focus on in prioritising investments and regulatory reform, which is an incredibly important conversation given the limited resources at most cities’ disposal. It also does not paint a compelling vision for why being a Smart City matters, which disengages most of the population. Personally, before I worked in tech, I felt absolutely no connection to the idea of a ‘Smart City’. Tech was cool, but I never thought it was crucial.

I believe that using technology to tackle inequality and its effects should be a Smart City’s ambitious goal and guiding force, providing focus and rallying support from its constituents. This article spelled out two ways to do so.

The Dark Side of the Sharing Economy in Transport (and Three Solutions)

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photosource: cnbc

The shared economy is a net positive for society…

In my previous posts, I’ve talked about how the shared economy – expedited by technology – can have tremendous benefits for society. For example, it can mitigate the feeling the inequality by closing gaps in the transportation experience. The benefits are even greater when private companies work with Governments to reach the elderly, poor and underserved.

I’m pretty sure that the shared economy in transport has a net positive effect on the economy too, though evidence is nascent. Last March, Lawrence Katz and Alan Krueger conducted the RAND-Princeton Contingent Worker Survey, which showed a substantial rise in the incidence of alternative work arrangements[1] for workers in the US, from 10.1% in 2005 to 15.8% in late 2015. Strikingly, this implies that all of the net employment growth in the US from 2005–15 appears to have occurred in alternative work arrangements.

One reason is that the shared economy provides part-time or intermittent work for people who otherwise cannot find a suitable job. All these Uber drivers I’ve met before – the young man who lost his job and needs time to search for new employment. The father fighting a costly custody battle, who needs a flexible job so he can show up in court. The lower-income mother who needs to supplement her day job to pay for her mortgage. Uber driving is a particularly attractive part-time job – typical part-timers get paid disproportionately less than full-timers. In contrast, Alan Krueger and Jonathan Hall found that no matter how many (or few) hours Uber drivers work, their hourly earnings were the same.

…BUT the distribution of benefits matters, and here’s how cities should think about it

Even though the shared economy creates tremendous new value, the distribution of value favours some groups over others. The tensions that arise can undermine companies operating in the shared economy, as we’ve seen in several cities worldwide. Cities need to consider how they may ensure a fair distribution of the shared economy’s benefits along three dimensions:

  • Workers vs companies
  • Incumbents vs new entrants
  • Now vs 10 years’ time, especially with the advent of autonomous vehicles

Companies would be wise to work collaboratively with cities to resolve these issues early on, rather than lock horns in costly legislative battles, or get blocked from new markets.

  1. Fair Distribution of Benefits Between Drivers and Companies

The shared economy benefits both ride-sharing companies and their drivers, but arguably companies benefit a lot more. The business model of ride-sharing companies like Uber, Lyft and Grab is to provide a technology platform which enables matching of riders to drivers. These drivers are essentially self-employed contractors who log on to the platform whenever they wish. Many are able to find work and supplement their income through this platform.

However, these drivers are not employed by ride-sharing companies and hence do not receive certain benefits. In Singapore, employers are required to contribute up to 17% of their employee’s salary to a savings account for housing, retirement and healthcare. In the U.S., many receive healthcare insurance through their employers, who are often able to get better rates than individuals. In the UK, employees are protected by the minimum wage legislation. Drivers for Uber and Grab do not receive such benefits because they are not considered employees.

As companies rely more on these self-employed workers to fuel their business, risks are passed from companies to workers. As Singapore’s Deputy Prime Minister Tharman Shanmugaratnam has said “….it serves the interests of the company because they’re really pushing risk to the contract worker…who actually can’t take much risk – the risk of instability in wages and the risk of not being prepared for retirement because of a lack of social security contributions.”

Cities need to start shifting their social policies to accommodate the rising proportion of self-employed workers. At the same time, companies need to discuss reasonable ways to spread benefits and share risks with workers who are self-employed. It need not be all or nothing. There has been talk about creating a “third classification” of workers who have some benefits of employees, while retaining the independence of a contractor. This gives both the business and worker flexibility while providing some social protection.

Working with cities on some “in-between” solutions will help business avoid lengthy legal battles down the road. For example, Uber is appealing a ruling by London’s employment tribunal recently that it should treat its drivers like employees, including paying the national minimum wage. I would go so far as to say that it is the responsibility of ride-sharing companies to start engaging in these discussions, because many of their workers face an uncertain future when autonomy arrives (third point).

  1. Fair Distribution of Benefits Between Incumbents vs New Entrants

The arrival of ride-sharing companies like Uber very rapidly redistributed benefits in the transportation system, creating new winners (e.g. consumers, new drivers) and losers (e.g. taxi drivers). Yes, there were probably more winners than losers, but the losers suffered a huge impact on their livelihoods. For exampe, many taxi drivers in the U.S. invested large sums in their license – in Chicago, the median cost of a taxi medalllion in late 2013 was USD$357,000. Having the value of your medallion plummet is like losing your home!

Cities dealing with disruptive innovation need to quickly level the playing field between incumbents and new entrants, to ensure that the distribution of benefits is not overly skewed in the direction of new entrants. 

In the case of ride-sharing, issues like driver training requirements take the forefront. For example, Singapore placed 10 hours of training requirements on Uber/Grab drivers, while significantly cutting down the training hours required for taxi drivers (now, they only need to spend 16 hours on in-class training, compared to about 60 hours previously). We also cut down course fees for taxi drivers, and scrapped the daily minimum mileage – a move which helps taxi drivers minimise empty cruising just to meet their quota.

It is in the interest of disruptors to avoid a total regulatory lockdown by avoiding a zero sum mentality in these negotiations.

  1. Fair Distribution of Benefits Between Present and Future

Finally, while we reap many benefits now, there are two important long-term considerations for cities working with ride-sharing companies.

First, many ride-sharing companies are at the stage where they are flush with investment, and can afford keep their ride prices artificially low. What happens if cities “outsource” their transportation to ride- companies, which eventually raise the prices beyond what regular citizens can afford? How can cities set up their transport systems such that competition can easily arise – keeping prices in check – or that public options can bounce back quickly? A city needs to ensure that even as people reap the benefits of the shared economy today, these benefits can be sustained over time.

Second, the big elephant in the room is autonomy. Full autonomy = no more need for drivers.

Autonomy will further redistribute the benefits away from drivers towards companies, and for all we say about new jobs being created, I’m pretty sure many of these drivers won’t be the ones to do it.

Because many drivers are self-employed workers not covered by social protections, they will be in particularly difficult situations.

It will be some time before full autonomy at scale is realised, so it is not too late to start conversations on how to ensure that drivers don’t get the short end of the stick when their jobs are replaced. One immediate action companies need to take is to give drivers information. Drivers, while not employees, are stakeholders in the company’s business and should be informed about the timeframes and implications of autonomy as the field evolves. In addition, much more can be done to help them with skills and future employment, a topic I will cover soon.

Conclusion

Over a series of posts, I’ve argued that the shared economy is a net positive for society and economy. This post, I posit that we need to work together to ensure that these benefits are distributed fairly between drivers and companies, incumbents and new entrants, present and future.

This is not the ambit of cities or Governments alone; companies seeking a sustainable business model in essential public services like transportation would be wise to work closely with cities rather than to be caught in costly legislative battles, be locked out of markets, or worse still – to be exploitative in their practices.

[1] “temporary help agency workers, on-call workers, contract company workers, independent contractors or freelances)

 

An Autonomous Vehicle Strategy for Smart Cities

I live in the Valley now, and it’s impossible to go a day without someone mentioning Autonomous Vehicles. It is an incredibly rich discussion space. Some of the topics of debate include:

  • When will it be technically possible for cars to be fully autonomous, not requiring a human driver to fulfill safety-critical functions? (This is typically referred to as “Level 4” or “Level 5” autonomy).[1] Most auto-OEMs are aiming for 2020-2022, Tesla’s most recent assessment seems to be 2018.
  • What is the best business model to introduce autonomous vehicles? We have Tesla, which sells autonomous cars to individuals. We have the OEMs and tech companies (Uber, Ford, GM-Lyft partnership), which plan to, or have already, introduced autonomous vehicles as fleets for ride-sharing. I recently spoke to Rahul Sonnad from Tesloop, whose autonomous vehicles will only provide long-haul car journeys that compete with short-haul flights (think the LA to Las Vegas journey).[2]
  • When the market settles, will we see vehicles owned and operated by a few large coalitions of companies (each having the holy trinity of fleet management – manufacturing – design and software), or will it continue to be as diverse as it is today? I have met autonomous vehicle start-ups that plan to manufacture their own autonomous vehicles and disrupt major OEMs. On the other hand, even the richest companies (like Waymo, previous under GoogleX) have announced that they won’t get into the business of manufacturing cars. It’s just too costly to set it all up, and is best left in the hands of the OEMs.

 

Comparatively, I don’t hear as much debate about how cities should think about their autonomous vehicle strategy. I think this is incredibly important. Cities need to plan ahead to make the technology work for their people, instead of reacting to technology and business models as they arise.

I discussed this topic at the Worlds Fair Nano with my good friend Elliot Katz (who is the co-chair of DLA Piper’s Connected and Self Driving Car Practice). 

worldsfair

Summarizing four points here

1. Introducing autonomous vehicles shouldn’t be an end in itself. Smart Cities should aim for shared mobility and deploy autonomous vehicles towards this goal.

Shared mobility is essential for cities that struggle with land constraints and intensifying populations. To solve the problem of congested roads and unhappy commuters, we need less vehicles on the road. This requires a strong push towards shared mobility (and away from vehicle ownership). I write more about it here.

Fully autonomous vehicles will contribute significantly to the objective of shared mobility especially if they are deployed in fleets (think Uber, but with autonomous vehicles instead of drivers). When autonomous vehicles are deployed in fleets, operators can dynamically size the fleet – injecting new cars when demand surges, and deploying them to less-crowded outskirts when demand falls. Theoretically, you would get rides faster and more reliability, while cutting down on “surge pricing”. These cars will be constantly on the move, never taking up precious real estate by parking for lunch or waiting at the curbside for a next job. This will free up land for other purposes, especially in the crowded downtown areas.

Cities should carefully consider the allocation of private versus shared autonomous vehicles. If the objective is shared mobility, the optimal scenario is for all autonomous vehicles to be shared: either deployed in fleets, or for privately-owned vehicles to be shared among a smaller group of family members and friends. While this does not necessitate excluding private autonomous vehicles, how cities allocate road-space to private vs shared vehicles will determine the extent to which they will achieve shared mobility.

There are many policy levers to consider: from quotas for privately-owned vehicles (which Singapore employs), to incentives for private car owners to share their vehicles in limited capacities. When cars are connected, it is easy to design these incentives based on real-time information. For example, a car owner can receive an offer to avoid a road toll if they pick-up someone else along the route.

 

2. Introduce autonomous vehicles in a way that builds broad-based public acceptance – don’t just appeal to the 20% of early adopters.

Many have pointed out that one of the biggest challenges to autonomous vehicle deployment is broad-based societal acceptance. There will be maximum efficiency and safety gains when autonomous vehicles are deployed at scale, and this can only be achieved if a large majority of city dwellers is comfortable riding autonomous vehicles.

Cities need to introduce autonomous vehicles in a way that builds broad societal acceptance.

  • Unlike the US, where autonomous vehicles are tested on public roads, Singapore has introduced them in designated trial areas. For example, autonomous taxis by Nutonomy ply 12km of public road space in the One-North neighbourhood in Singapore. Autonomous electric buses ply public roads in the Jurong district. Soon, on-demand autonomous shuttles provide rides on Sentosa, an island dedicated to tourism and recreation.
  • The Government works closely with AV companies to ensure that the testing routes provide sufficient challenge, but are not too far out of the vehicles capabilities such that it creates dangerous scenarios. We also work closely on the requirements for autonomous vehicle testing, and on after-action reviews when accidents occur.

While this seems like an arduous process for both company and Government, it is a long-term investment towards shared mobility.

  • It is better for accidents to happen within limited contexts. In this early stage of testing, accidents provide valuable lessons that will lead to improvements in the technology. In late 2016, Nutonomy had its first accident with a lorry in the One-North trial area. Fortunately – and to some extent by design – the impact was limited and no one was injured. It is incredibly important to public perception that these accidents happen in a limited context with no fatalities, unlike what happened with Tesla earlier last year.
  • The Government’s commitment to working with AV companies gives assurance that there is an added layer of accountability for the safety of these vehicles.
  • These trials have arguably piqued Singaporeans’ interest in riding autonomous vehicles. While Nutonomy limits the pool of people who can bid on their autonomous taxi service, it is still more accessible than having to purchase a private autonomous car to experience riding in one.

 

3. Work with AV companies on your regulatory approach to autonomous vehicles

One additional benefit of a city working closely with AV companies on autonomous vehicle trials is that it creates a space for a meeting of minds. Unlike many US states, Singapore has not yet introduced regulations towards autonomous vehicles. Instead, we work with companies on trials that shape our thinking on the appropriate regulatory approach. At the same time, companies have given feedback that it is useful to understand the Government’s concerns so that they can address these concerns at the design stage.

4. Finally, invest in autonomous vehicles other than cars!

While autonomous cars receive the most attention, other forms of autonomous vehicles hold incredible promise for the objective of shared mobility. For example, if a city has autonomous freight and autonomous utility vehicles, these activities can be done in the dead of the night, when commuters aren’t trying to move around. This frees up road space in the day, and makes for a better commuting experience for everyone.

Singapore is investing in both autonomous freight and autonomous utility concepts.

In conclusion, Smart Cities should never deploy technology for its own sake. They should define their objectives and target their time, money and policy interventions in a way that achieves these objectives. Transport is just one area – this applies to healthcare, education, housing, and any issue that a Smart City deals with!

[1] http://www.techrepublic.com/article/autonomous-driving-levels-0-to-5-understanding-the-differences/

[2] He believes that the market for short-haul car journeys within cities will be commoditized – people won’t care what type of autonomous vehicle they get as long as it’s cheap and fast. It will be difficult for smaller companies to compete. On the other hand, there will be room for significant differentiation in services for long-haul car journeys.

Three ways to build a transportation system that serves the most vulnerable

So far, I’ve talked about how a seamless and enjoyable commute, sans car ownership, can go a long way towards mitigating the experience of inequality in a city.

But transportation systems, even the very best, will never serve everyone equally. Where the transportation system is not inclusive, the cost is borne by some of the most vulnerable in society.

stock-disabled-01

  • People who do not just need first and last mile transport – they need first and last meter transport. This includes the growing number of elderly (>65 years old), whose population will triple by 2030 in Singapore. It also includes those who have physical disabilities through accidents, illness or congenital conditions. Where the transportation system fails to provide first and last meter support, their caregivers bear the cost. When someone, (especially in a low-income household) leaves the workforce to be a full-time caregiver, there is a huge impact on the financial wellbeing of the family. In a survey by AgingCare.com 62% of caregivers said the cost of caring for a parent had impacted their ability to plan for their own financial future.
  • People who cannot afford rides. In my college years, I volunteered with Homefront, an organization that serves the homeless in New Jersey. I vividly remember talking to a mother whose children only ever ate canned food and hot dogs because they stayed in a Motel on Route 1, and it was too expensive to get to soup kitchens for a proper meal. A once-a-week supermarket trip was all they could afford. In this case, the cost is borne by the children, in the form of health and wellness.
  • People who live or work in inaccessible areas, where it does not make economic sense to deploy a public bus or even a ride-sharing car because there is so little demand. Where the transportation system does not provide, the cost is borne by the individuals or companies who have to cater private transport.

 

None of these groups are mutually exclusive. In fact, I hazard a guess that the number of families who fulfill at least two of these three conditions is not small, and will grow with the forces of aging and inequality.

For cities to provide a truly inclusive transportation experience, we need to explore three ideas:

  1. Closing the first-and-last meter transport gap through community participation

Currently, caregivers are responsible for the first-and-last meter transport gap. If 85-year old Jim needs to go to the clinic, his caregiver helps him onto the wheelchair at home, takes the elevator to the ground floor, and helps him board either the bus or the taxi. When he arrives at the clinic, his caregiver helps him out of the bus, and into the clinic for registration.

Can volunteers fill the first-and-last meter transport gap instead? For example, when Jim orders his ride to the clinic, can a request be blasted to volunteers who are in the 200-yard radius of his home or destination? It can be a simple five to ten minute volunteering stint – helping Jim out of his home and onto the bus, or out of the bus and into the clinic for registration.

With one click of a button, Jim should be able to pick and pay for his transport menu to the clinic, and get first-and-last meter support from the community. Volunteers who choose to be in the network can do good in bite-sized chunks. They don’t need to go out of their way – they receive alerts as they go about their daily lives. Perhaps we can lighten the load of caregivers.

This idea has taken off with apps like GoodGym, where runners can sign up to visit an elderly person or help with one-off tasks while on their running route. It would be important to integrate these efforts with our transportation networks so that people like Jim can enjoy seamless transportation experiences and live independently in the community, as many elderly desire.

 

  1. Closing the affordability and accessibility gap through public-private partnerships

Take Zara, the mother of four living in a Motel on Route 1 in New Jersey. Stranded because there are no public transportation options along Route 1, while ride sharing and taxis are too expensive.

It may not make sense for the Government to provide a public bus that passes by her Motel, simply because there is too little demand. I’ve personally experienced this. I used to live in a relatively inaccessible area in Singapore. Our municipality constantly lobbied the Government to provide a new bus line to serve us. We finally got it after 2 years, but every time I boarded that bus I counted no more than 5 people on it. Great for me, but it just wasn’t a great use of public funds to deploy a $100,000 bus way below capacity. Not to mention the additional congestion we created.

Here’s one idea for Governments: instead of buying a new bus to provide a bus line in inaccessible areas, use the money to subsidize rides by private providers such that it matches the cost of public transport. Furthermore, if a family like Zara’s is eligible for subsidies on public transportation, these should be applicable when they take rides by private providers.

This will require close collaboration between the Government and private providers (yes, operational issues will not be easy!), but is the most cost-effective way of closing the accessibility and affordability gap.

Some cities in the U.S. are working on this concept. For example, The Southeastern Philadelphia Transportation Authority (SEPTA) had insufficient parking lots at their train stations to accommodate commuters who drove to the station and dropped off their cars for the day. It did not make sense to make a huge investment in building new parking lots. Last year, they partnered with uber to provide a 40% discount on Uber rides to and from rail stations, encouraging people to share rides instead of drive.

  1. Deploying autonomous vehicles

Autonomous vehicles hold tremendous promise for our objectives of inclusive transport because they will likely reduce the cost of rides. First, a bulk of a ride’s cost today is the salary of the driver. Second, companies are moving towards deploying autonomous vehicles in fleets. When vehicles are constantly utilized, companies can afford to charge less per ride. Finally, with technological advances, we can expect the hardware of autonomous vehicles, such as Lidars, to decrease in cost.

When this occurs, it will make more economic sense for companies to deploy vehicles to inaccessible areas, even if there is no promise of a return trip. Reduced prices also means that transport will be more affordable to families like Zara.

A city that plans ahead will ensure that autonomous vehicles are deployed in a way that benefits the broader population. For example, road space should not be dominated by privately-owned autonomous vehicles; Autonomous vehicle fleets should be embraced. Helping city-dwellers accept autonomous vehicles as part of their daily transportation experience is also an important part of the equation.

 

Conclusion

In my first post, I talked about how a seamless and enjoyable commute, sans car ownership, can go a long way towards mitigating the experience of inequality in a city. In my second post, I explored the ways Governments must work with private transport providers to ensure a truly seamless commute in the sharing economy – one that mimics the comfort of car ownership.

This third post covered three ways to ensure that our transportation system caters to some of the most vulnerable members of our society: community participation, public-private partnerships, and embracing autonomous vehicles. Inclusivity is an objective that is particularly close to my heart.

My final post in this series will be about the darker side of the shared economy, and how cities and business must work together to manage disruptions to our transportation system, including the rise of ride-sharing technology companies, as well as the advent of autonomy.

The sharing economy tackles one of the biggest issues every modern city faces – inequality.

Last week I spoke on a CES panel “Powering the Shared Economy to Improve the Lives of City Dwellers”. My co-panellists were Zipcar, Lyft and Grab, so our discussion naturally focused on the sharing economy in transport. Our full session was recorded here.

As the only Government representative on the panel, the inevitable question to me was – how does the sharing economy impact a city? How does it fit into our plans? How does it change the way we operate? I’ll touch on the first question for now.

I believe the impact of the sharing economy goes beyond improving transport.

It has the potential to address one of the biggest issues every modern city faces – inequality.

Companies working on ride-sharing, car-sharing and autonomous vehicle fleets have the potential to make a much more fundamental impact on society than some might think.  

1. One of a city dweller’s most acute experiences of inequality is the daily commute.

Very few of us have the rising Gini coefficient at the top of our minds, but we feel its impact when we go about our daily lives. For example, in Singapore, the daily commute is a constant reminder of luxuries we may never afford. Just five years ago, there were three ways to get around the city:

  • I buy a car. It costs $100-$150k to buy a car[1], but I get the ultimate customisation in my commute. I can leave my house whenever I want, I don’t have to wait, I sit in air-conditioned comfort. I get to my destination in half the time of the equivalent journey on public transport.
  • I take public transport, which is cheap but the experience is quite the opposite of customisation. If I’m lucky, I get to the bus stop just as my bus is pulling in. If not, I wait 10 minutes, which has a knock-on effect on catching my next bus or train. I squeeze with strangers and hardly have room to move. I walk from my bus stop to work and am drenched in sweat from the 98% humidity.
  • I take a taxi, but only if I’m desperate and/or feeling rich, and it’s not always easy to catch one. At some point, taxis were waiting outside the Central Business District during peak hours so they could make an extra buck from being called, rather than hailed.

Five years ago, the trade-off between cost and comfort in the transport experience was extremely stark. A city dweller experiences inequality when he knows he will never be able to afford the comfort of a $100-$150k car, and feels like he doesn’t have a good alternative.

2.  By providing good travel experiences without the cost of car ownership, the sharing economy reduces the experience of inequality in the daily commute. 

The sharing economy has always played a central role in moving people around the city – in the form of public transport. Too bad public transport in most places gives the sharing economy a bad name.

Fortunately, technology and business innovations have given the sharing economy a much needed boost. For example, technology has enabled people to find a ride in real-time, with the click of an iPhone button. Business innovations such as Uberpool have brought down the cost of rides – in many places, below the traditional taxi fare.[1]

As a commuter, I now have a wide range of options sandwiched between owning a car and taking public transport. On the spectrum closest to car ownership, I can get an Uber or short-term rental car (e.g. Zipcar) on demand. For a slight decrease in cost, I can share my ride with others in a LyftLine/Uberpool. If I want to trade off some flexibility for an even cheaper fare, I can submit a bid on crowd-sourced bus services like Beeline or SWAT. Even public transport has improved significantly with LTA providing real-time information on bus arrival times and crowdedness.

Importantly, this expansion of good options means that commuters don’t need to make such a stark choice between cost and comfort when deciding whether or not to buy a car. This reduces the experience of inequality in the daily commute.

3. The best has yet to come – with the promise of autonomous vehicles, participating in the sharing economy will not just be a concession, but a superior option to car ownership.

Some people are already beginning to see shared transport as a superior option to owning a personal car because of the flexibility it brings. I can choose the option which fits my lifestyle – sometimes public transport works just fine, but if I’m in a hurry or on a date, I may pay more for a more comfortable experience. Importantly, I never have to worry about where to park.

In contrast, car owners can feel compelled to use their cars even if there are better options. Behavioural economists refer to car owners in Singapore as having a “sunk cost mentality”. Put simply, once you pay a bomb to own the car, nothing – not road taxes, expensive parking, the prospect of circling the block for an hour to find an empty lot, or for some, being caught drunk-driving – will stop you from using your car, because in your mind you’ve already sunk such a huge investment and you should use it as much as you can. It can be a psychological trap.

I believe that when autonomous vehicles are ready to be deployed in fleets (imagine Uber without drivers), shared transport will become even more attractive compared to car ownership. Commuting in the shared economy can become an experience, not just a necessary evil. When cars do not need to be driven by humans, new design possibilities open up. A steering wheel and front-facing seats are no longer necessary, and a car can be configured like a meeting room, for example. A car ride can be a place to meditate, focus on work or even have wine with your friends on the way to a party.

When many different designs of vehicles are deployed in a fleet, you will be able to summon precisely the vehicle (and accompanying service) you want. In the morning you could use a minivan to ferry your family to school and work, in the evening you could summon a sleek, designer vehicle to bring you to your company’s dinner function. On the weekend, a jeep could take your family around the island for some R&R.

Today, owning a private car is the standard for luxury transportation. People make a large financial outlay upfront in exchange for on-demand, customised transportation. With fleets of autonomous vehicles deployed round-the-clock, providing the ultimate customisation in travel experience, more efficiently and without the pains of parking, this paradigm will be overturned. Shared transport will be the more affordable and customised and comfortable experience. Fewer and fewer people will aspire to own a car.

4. A transportation system dominated by the sharing economy frees up precious city space for community, housing, and commercial activities

So far, I’ve talked about how technological developments may make many of us prefer shared transport over car ownership, and how that could help mitigate our experience of inequality in the city.

If more people choose shared transport instead of car ownership, this will also enable us to use our land more equitably and progressively: think about how roads and parking spaces are disproportionately used by those who have the resources to own cars. If we can reduce the number of cars on the road, this land can be used for purposes that benefit a more diverse population such as homes, community facilities and commerce.

In cities like Singapore, where land is a constrained resource, it is even more important to make sure we use it to benefit everyone, not just those who can afford it.

5. The vision of a more equal transportation experience and society can only be realised if Governments and businesses work together. Stay tuned for more.

I’m deliberately painting an ideal picture here.

Many things can detract from this vision of a less unequal transportation experience. For example, if the business models for autonomous vehicles target only the rich, or if we fail to make multi-modal transportation seamless for commuters in the shared economy (commuters really dislike the process of transferring from a bus to a train, and vice versa).

Furthermore, I’ve mainly spoke about issues pertaining to the “middle class” Some groups have not been addressed, such as the elderly and disabled. How can we ensure that the system benefits those with limited mobility?

In my next series of posts, I will explore these issues in greater detail, and talk about how partnerships between Governments and businesses can ensure that the forces of talent and technology powering the shared economy will be used towards maximum societal and business benefit. Stay tuned!

[1] Though the extent to which fare decreases are structural versus artificially depressed by Venture Capital investment is yet to be seen, a topic I discuss at https://techandpublicgood.com/2017/02/07/the-dark-side-of-the-shared-economy-in-transport-and-three-solutions/

[1] For an explanation on why cars in Singapore are so expensive, see this link. At a macro level, it’s about restricting the supply of cars to manage traffic and road space. http://dollarsandsense.sg/no-nonsense-explanation-on-why-cars-in-singapore-are-so-expensive/

[2] If the “sharing economy” is defined as a having access to an asset that you do not own. I find this to be the most compelling definition.