The dematerializing nature of the world can be a boon to the middling classes, and the sharing economy provides an example of this.
Last weekend I was in NYC visiting family and friends, and I had the chance to use Uber for the first time. In fact, I used it 6 or 7 times during the weekend, since I needed to visit various people. As compared to the normal yellow cabs, it was a glorious experience.
I had, of course, heard about Uber – see this great Econtalk interview with Mike Munger – but had not had the chance to use it out in San Diego, where I drive my own car everywhere. It turned out to be as good as everyone says it is.
First, the app gets you a car quickly. You don’t have to call a service far in advance and you don’t have to go out on the street and hail a cab. It simply comes – usually within a couple of minutes – to where you are. What is more, the app is reliable. When it tells you 3 minutes, it usually is. Further, it shows you a little map, and you can follow your cab as it approaches from a distance.
Second, the drivers are identified and rated. When you ask for a car and someone accepts, a picture of the driver comes up on the app, his name, his rating, the type of car and the license plate number. Usually, the ratings are quite high, as drivers whose ratings fall below a certain number (4.6 out of 5 according to Munger), are dropped. With all this information and the rating, one feels safe and I was uniformly treated well. I gave all but one of the drivers 5 stars, with the remaining driver receiving a 4. For what it is worth, one is also on one’s own good behavior, since the drivers rate you.
Third, the payment system is seamless. One simply inputs a credit card on the app and you are done. When a car comes, you get in and get out without exchanging any money. Tipping is not typical, so when the ride ends, you simply say goodbye and get out. You then receive a copy of your receipt in your e mail. This e mail is particularly helpful if one needs the receipt later for tax or other purposes.
Fourth, the price for the Uber appears to be lower than a normal cab. I compared the two a couple of times, with family members who were taking yellow cabs. Moreover, the fact that you are not giving a tip also helps. While one might pay more for a Uber during peak times, that will often be worth it, since you would normally have a hard time getting an ordinary cab during those periods.
One additional thing. Not only is Uber better than a working cab system, it completely avoids outrageous inefficiencies that one sometimes see in a cab system. If one tries to get a cab out of Newark Airport and wants to pay with a credit card, one has to use a peculiar system. You have to go to a strange machine on the sidewalk, put your credit card in, and then that somehow allows your driver to charge your credit card. For the privilege of using this system, you get surcharged $6. Amazing, simply amazing.
And, of course, Uber is not alone. New apps are emerging all the time. There is an app called Via that involves cars that simply run up and down the avenues in New York. The car picks you up and you may have to share the car with one or two others. It does not deviate from the avenue, simply stopping on the street of your choice. So it is not as convenient as an Uber, but it is much cheaper, costing only $5 for a ride (when the subway is $2.75).
Update: Uber has another advantage. It is leading the Taxicab Industry to provide its own app. Competition is a wonderful thing. Government might want to try it occasionally.