When MIT researchers said last week that the median pre-tax hourly income for Uber and Lyft drivers was a mere $3.37, and that 30% of the drivers were losing money rather than making it, Uber was less than pleased. CEO Dara Khosrowshahi quickly hit back, suggesting that MIT stood for “Mathematically Incompetent Theories,” and the company’s chief economist, Jonathan Hall, used a blog post to highlight problems with the researchers’ methodology.
Now the lead researcher behind the draft paper has admitted that Uber’s criticism was actually pretty valid—while also asking Uber and Lyft to make more data available, in order to improve his analysis.
As Hall noted in his post, other studies (conducted with Uber) had shown drivers’ average hourly pay to be around the $19-$21 mark.
The issue with the draft paper from MIT’s Center for Energy and Environmental Policy Research (CEEPR), Hall said, was this: The researchers asked drivers how much money they made on average each week from such services, but then asked “How much of your total monthly income comes from driving”—without specifying that such income must relate to on-demand services.
Of course, many people driving for Uber and Lyft also earn money from regular jobs and other income sources. And this, Hall alleged, skewed the researchers’ results.
“Hall’s specific criticism is valid,” wrote Stephen Zoepf, the executive director of Stanford’s Center for Automotive Research, who led the MIT study, on Monday. “In re-reading the wording of the two questions, I can see how respondents could have interpreted the two questions in the manner Hall describes.”
Here is my statement regarding the recent CEEPR working paper "The Economics of Ride Hailing." pic.twitter.com/lHJkaB0frX
— Stephen Zoepf (@StephenZoepf) March 5, 2018
Zoepf said he would be updating the CEEPR paper, but in the meantime he recalculated the figures using a methodology suggested by Hall, and found that the median profit was $8.55 per hour, rather than $3.37, and only 8% of drivers lose money on on-demand platforms.
Using another methodology, he added, the median rises to $10 per hour and only 4% of drivers lose money.
“Transparency and reproducibility are the foundation of any academic endeavor,” Zoepf wrote. What Hall and Khosrowshahi’s assessment laid bare was an assumption about revenue that I made in the absence of public ride-hailing data and a paucity of independent studies outside Uber’s own analysis.”
Zoepf asked Uber to “help make an open, honest and public assessment of the range of ride-hailing driver profit after the cost of acquiring, operating and maintaining a vehicle,” and to “transparently present the difference between actual and tax-reportable vehicle expenses used in the business.”
Uber had not responded to a request for comment at the time of writing.
