Sometimes a free ride proves costly and inefficient
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Free public transportation creates unnecessary incentives. It may attract pedestrians and cyclists, who usually travel short distances, to use public transportation, which is not efficient at all. Even just a minimal charge would discourage people to use public transportation unnecessarily, leaving more room for others that really need it.
Since the Beijing Olympic Games, Beijing decided to make its subway service incredibly inexpensive: merely 2 yuan ($0.30) per trip. The subway discount proved to be an efficient policy that makes the service affordable to low-income households. Financially speaking, a $0.30 trip is almost the same as free ride, but it makes a significant difference as many potential free riders will use other means.
Guangzhou obviously wants to move further than Beijing by radically offering the service for free. A shrewd policymaker must anticipate individual responses accurately, and must realize the goal is to maximize social efficiency and benefit the most people in the community.
This is an arduous task because it is often hard to predict the consequences of some policies, and the government may lack accurate information about what people truly need.
A more scientific design that involves input from research institutions is badly needed and would be beneficial. More public hearings and public participation could ameliorate the discrepancy between government policy and people's true preferences.
