
Economist behind Uber study admits error, adjusts numbers - resalisbury
https://twitter.com/StephenZoepf/status/970754550968676352/photo/1?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Fwww.recode.net%2F2018%2F3%2F3%2F17074782%2Fuber-mit-study-less-than-4-hour-flawed
======
BurningFrog
Alex Tabarrok pointed to the well done study, that of course never got
anywhere near this level of attention:
[https://twitter.com/ATabarrok/status/969651065695227904](https://twitter.com/ATabarrok/status/969651065695227904)

"Dubious. Cited paper uses self-reported data from 1100 drivers. Cook et al.
use exactly measured data on 1.8 million drivers and calculate average wage
after expenses of $13 per hour.
[https://web.stanford.edu/~diamondr/UberPayGap.pdf](https://web.stanford.edu/~diamondr/UberPayGap.pdf)
"

~~~
gcb0
It definitely does not look like you describe.

The original article is self-reported income, which i agree is crap and proof
that it can be interpreted any way one wants, as is show in this thread: this
is clearly PR damage-control from uber.

The one you linked is the other end of the spectrum. It is a math formula on
values provided by uber and _completely ignores the associated costs_ with the
profession. It does not account for down time, it does not account for
insurance, car depreciation etc. The $13 is just more meaningless data because
all it measured in the paper is "income from uber, taking into account avg on-
meter time with pool+surge pricing variations". (they do include the costs,
but as "The primary costs drivers face are fuel, maintenance, depreciation,
and fines for parking or moving violations. Zoepf et al. (2017) estimate
median driver’s expenses are 32 cents per mile." which is very far from actual
data)

IMHO both are utter garbage.

~~~
tantalor
> does not account for down time, it does not account for insurance, car
> depreciation etc

Most jobs have those costs. You need a car to get to work; you pay for gas,
insurance, tolls, etc. Time is wasted during transit/commute.

Are drivers special in this respect?

~~~
teawrecks
Yes, insurance rates for ride share cars is higher because it's a commercial
vehicle. And yes, most people commute an hour or 2 each day, not rack up
hundreds of miles for 8+ hours a day. So yeah, the cost is not comparable.

~~~
macintux
> Yes, insurance rates for ride share cars is higher because it's a commercial
> vehicle.

Do Uber/Lyft drivers typically make their activities known to their insurance
companies?

~~~
toomuchtodo
State Farm had a warning in their recent mailer for policy renewals that you
_are not_ covered under your auto policy for any ridesharing activities,
although you could purchase a rider to insure you at additional cost.

~~~
weaksauce
Also, if you say 12 or 24 thousand miles a year and get into an accident with
widely unexpected mileage on your car, they will suspect something is amiss
and likely investigate.

~~~
toomuchtodo
State Farm also obtains your mileage data from "third party providers".

[https://splinternews.com/how-car-insurance-companies-spy-
on-...](https://splinternews.com/how-car-insurance-companies-spy-on-your-
mileage-1793860442)

------
allthenews
Do any of the naysayers ever actually talk to their uber/lyft drivers? I've
never met a single one with bad things to say about the job. Most seem to
enjoy the social aspect, and many foreigners take it as an opportunity to
practice English while making some spare cash.

Who are you people to presume that these rational agents need to be restricted
from earning money in a way that they deem convenient? Especially when their
work is at will and unforced? Do you really feel that there is some kind of
net good to the loss of work that comes with forcing uber to pay minimum wage,
when it means that many content drivers will lose work?

~~~
olefoo
Have you considered the incentives that they have when talking to a paying
customer? Particularly one that is going to rate them based on the
interaction?

Of course they "love their job"; they want to create a positive experience in
the mind of someone who has a lot of power over them.

What I'm saying is that your anecdata has an observer effect that you are
strongly discounting.

~~~
savanaly
If I collected the same anecdata with Uber drivers I know in real life, not in
the context of an uber ride, would the observer effect still apply?

~~~
amelius
Yes, lots of people brag about their jobs, life, see Facebook.

------
prepend
$8.55 is the profit but it is compared to minimum wage. Minimum wage is not
profit as there are costs associated with getting to work (bus/car) and
mandatory taxes.

Shouldn’t the $8.55 be compared with net income from minimum wage? This seems
like a meaningful comparison for people choosing to drive or work minimum
wage.

~~~
theptip
This is a very good point; if you drive your car to work then you pay gas and
depreciation just like an Uber driver, except you don't get to tax-deduct it.

~~~
camgunz
Definitely, but "I commute to/from work" is a lot different than "I drive for
10 hours a day, every day".

~~~
prepend
It’s certainly different, but I think it should be in the comparison.

I drive 10 hours a week, not per day. But there’s a cost. To say “you make
$10/hour” and an Uber driver makes $8.55 after expenses and taxes is not very
useful because the Uber driver has more cash in pocket.

I think this is useful for an academic paper to compare apples to oranges. And
the author directly compared this to minimum wage which seems like an amateur
mistake for a researcher from MIT. Unless they have a policy angle they are
promoting and are not a fair broker of info.

~~~
theptip
Agreed - if it was an apples-to-apples comparison we wouldn't need an academic
paper.

------
patmcguire
It's too late. Corrections don't really work in the social media age, two
different interpretations of the same base facts won't propagate through the
same path. I don't know whether the adjustments are valid or invalid, but
$3.37 will be an incontrovertible fact for an influential swath of people for
a long time.

~~~
taoistextremist
Kind of makes me think of the divide in opinion on modern wage inequality. I'm
still not sure whether to think it's purely because of women not being in as
well paying positions or whether discrimination within the same job is a
significant player, because I see conflicting reports.

~~~
TangoTrotFox
I find very basic sniff tests tend to score relatively well at figuring out
the truth on 'controversial' issues. So for instance this $3/hour earnings
just did not make sense as there would rapidly approaching 0 drivers of > 'x
months' experience driving for Uber, whereas drivers that have been doing it
for years are hardly unicorns.

For the wage gap take as an assumption that companies were genuinely able to
pay women less for doing the exact same quality and quantity of work as men.
Well what would happen? We already live in a world where big companies
relentlessly squeeze every penny they can from minimizing labor costs. The
notion that people are intentionally paying more to men just to be around more
men defies belief, to put it mildly.

And there's a corollary to this as well. As 'wage gap' entered the zeitgeist,
there's no doubt that some companies, ever anxious to provide a bump to their
next quarterly, did actively look to see if they could replace their male
workers with females to save on labor costs. And the results of their
research, in that no companies seem to be doing this, speaks for itself.

~~~
ksenzee
Controversial issues are controversial precisely because there's no "basic
sniff test" that fits all the data. If you find you come to an easy conclusion
on a controversial issue, you might not have all the information others do. To
take your wage gap example, your explanation only works in the case where
hiring managers know men and women are equally qualified, but choose to pay
women less because they can get away with it. That's almost certainly not
what's going on.

~~~
TangoTrotFox
You're describing _complex_ issues, not _controversial._ Controversial issues
tend to be controversial because people assume a conclusion, and then defend
that to the death - facts be damned. When a sufficient number of people on
either side of a topic engage in this behavior, suddenly we have a
controversial issue.

So for instance on this case, I agree with you. I've no doubt women get paid
less than men on average. And tall men get paid more than short men. And fat
men get paid less than non-fat men. And I suspect that if we broke it down
into hair color, you'd also find discrepancies there. Differences do not mean
discrimination.

A problem would be if companies were unlawfully actively discriminating
against people. As you yourself said, that is almost certainly not what's
going on.

~~~
ksenzee
Disagreeing with you again. Controversy doesn't happen just because people
ignore facts. It happens when the facts don't lead to an obvious conclusion,
or when there aren't enough facts to go on, so intelligent people can reach
different conclusions. When the only people on one side of a debate are
obviously stupid or self-serving, we don't call it a controversy. We call it
nonsense and make YouTube videos mocking it. (see also, Flat Earth)

> A problem would be if companies were unlawfully actively discriminating

It's a problem that companies discriminate, period, whether they're doing it
intentionally or not. Overlooking skilled short people to hire and promote
tall people means they're working against their own best interest and against
society's interest, at the same time. (That doesn't mean I'm advocating for
any particular solution, or that I think height should be a protected class.
I'm just saying it is in fact a problem.)

~~~
TangoTrotFox
Now you're getting into a touchier issue and making a very large assumption, I
suspect without even realizing it. By suggesting that there is a problem
you're indicating a belief that you believe all people are roughly identical.
As I imagine you may be doing, let's avoid touchier issues and talk about
height -- my examples were not off the cuff.

It's extremely difficult to try to objectively measure the competence of an
individual in general, but IQ does tend to provide a workable measurement that
does tend to be quite predictive and map well to aggregate performance in
'mental' fields. But we're talking about height, so why am I bringing this up?
As counter intuitive as it is, height correlates strongly with IQ. We could
discuss the possible reasons for this ( _environmental? sexual selection?
shared genetic markers? something else?_ ) but the point is that this is not
disputed. Here [1][2] are a couple of sources if you were not aware of this.
You can find countless more on google scholar searching for 'height iq
correlation'.

But this raises the issue that not only do tall people earn more than short
people, but that it's highly likely that companies paying more to tall people
are indeed working in their, and society's, best interest. The long and short
here is that you cannot assume differences are a result of irrational
decisions.

So you're left to try to argue that short people bring something to table
that's valuable but less visible than their individual competence (at least in
so much as IQ is reflective of that). This could be true, but I think that
there's scant evidence for such. The first issue you'd need to overcome is the
existential case. And I find the way most people try to do this is by getting
back to assuming discrimination, yet now you're stuck in circular logic or
having to assume your conclusion. _' All people are equal. What about these
vast quantities of data showing substantial differences from ostensibly
objective assessments? It's caused by environmental issues and discrimination.
Why do you think that? Well because it doesn't show all people being equal!'_

And to be clear, everything I'm saying above applies to people considered as
groups - not individuals. Einstein, for instance, was about 5'7". It just
means there are different distributions among different groups, and so when
you consider these groups as a whole you'd expect to see these different
distributions reflected.

[1] -
[http://journals.plos.org/plosgenetics/article?id=10.1371/jou...](http://journals.plos.org/plosgenetics/article?id=10.1371/journal.pgen.1003451)

[2] -
[https://www.sciencedirect.com/science/article/pii/S105381191...](https://www.sciencedirect.com/science/article/pii/S1053811911010251)

------
wgerard
I feel somewhat vindicated now:

[https://news.ycombinator.com/item?id=16503558](https://news.ycombinator.com/item?id=16503558)

~~~
mc32
Sometimes we are too quick to agree with things that reinforce our beliefs. In
this case that ride service platforms are squeezing out the last penny from
their captive servants.

Do, hats off to you for doing some due diligence and doing some back of the
napkin calculations proving a study incorrect in its assertion.

~~~
jmull
Well, while ~$9/hr is a lot better than ~$4, it's still well in the category
of squeezing drivers, IMO.

In fact, if your goal is to squeeze your drivers, you actually don't want to
squeeze too hard because soon you'll have no one left to squeeze. $9/hr is
perhaps a level a number of people can (barely) subsist at (at least for a
while) while $4/hr may be untenable for almost everyone.

(I agree, though, that drivers aren't like captive servants, as some seem to
assume.)

~~~
wgerard
FWIW I actually agree with you re: squeezing, just something about the numbers
either way didn't seem to add up (others were quoting $13/hr, study was saying
$3/hr).

------
FlyingSideKick
Even with this revision the hourly wage is well below the $15.00 minimum wage
here in Seattle. I wonder if after expenses Instacart and Amazon delivery
drivers make any more than the typical Uber driver? I think contractors across
all income levels need better protections. Laws should be enacted to guarantee
after vehicle expenses that if one drives an Uber for an hour one makes at
least a minimum wage.

~~~
Consultant32452
If there are $15/hr jobs, why do you believe so many people are willing to
accept half that to drive for Uber? I wonder what their total pay is after
tips.

~~~
jakob223
Since nobody seems to have any idea how much these things actually pay after
costs (see: this correction and the original study), it's plausible that
people would expect this to pay more than it does.

~~~
acchow
You think these people making $15/hr don't watch their actual take-home after
expenses carefully?

~~~
Consultant32452
The difficult thing to calculate in the short term is wear and tear on the
vehicle. Average Joe is potentially only counting fuel and not total costs per
mile.

~~~
acchow
Do you talk to Uber drivers?

~~~
Consultant32452
No, but I worked at a pizza place for several years. Everyone was vaguely
aware of the fact that they were using up car value delivering pizzas, but
only a couple of older full time "career" drivers seemed to actually calculate
it out so they knew what they were getting.

------
falcolas
This value seems to make a bit more "common sense" style sense - but it's
still way too low for a "non-tip" job. Hell, it's probably even too low for a
job with tips (which bugs me, but separate topic).

Given that Uber is most popular in the bigger cities where the cost of living
is correspondingly higher, is it enough?

~~~
losteric
> it's still way too low for a "non-tip" job. Hell, it's probably even too low
> for a job with tips

Tangential to your main point, but Uber does have tipping

------
saas_co_de
This is still median profit from a sample group where > 80% worked less than
40 hours per week.

The median is someone working well under 40 hours per week.

I wish they would release the overall income distribution based for their
model instead of just one number.

------
cratermoon
So they still don't make minimum wage and some lose money.

------
rossdavidh
Definitely too low for a primary job. However, it might make sense for people
to do as an extra 5-10 hours a week, or during peak festival times when the
taxi system is overloaded. If a person needs to turn their extra time into
money, but don't have enough extra time to get a second job, it could make
sense. I'm not sure either Uber or Lyft could survive on those kind of
drivers, though.

~~~
z2
There may be some ways to make it work more consistently--though not in a way
that Uber/Lyft wants. I've met drivers who mostly work 3am to 7am shifts, to
catch back-to-back airport runs. The enterprising ones also actively work to
get Uber/Lyft out of the process by offering their number directly.

~~~
prepend
“The enterprising ones also actively work to get Uber/Lyft out of the process
by offering their number directly.”

I do airport runs. A few have given me their card. At first I thought this was
cool as they charged $25 instead of $30. But then the driver was unavailable a
few times. Managing different cards with a hierarchy of backups is a pain for
users.

I switched back to Uber. Interestingly the last one I used charged $35 which
was more than Uber. I was already in the car so I paid.

People underestimate the service Uber makes in managing riders and drivers. I
don’t want to “have a guy” who’s not dependable. Perhaps one day, I can afford
a full time valet and driver. That day is not near.

~~~
username223
I don't see this working for Uber/Lyft drivers. For "gigs" like tutoring, it's
easy to get a student or parent to split the referral service's fee, because
they do more or less nothing after the first session, and a personal
relationship is valuable. For car services, you just want to get from A to B
at some random time, and Joe Driver may not be near A at that time.

------
ollin
Previous threads (on the original story):
[https://news.ycombinator.com/item?id=16498551](https://news.ycombinator.com/item?id=16498551),
[https://news.ycombinator.com/item?id=16501017](https://news.ycombinator.com/item?id=16501017)

------
thehnguy
Underwhelming correction from the author/economist.

------
abvdasker
Sad that the correction has fewer upvotes than both of the HN threads with the
original dubious statistic:

[https://news.ycombinator.com/item?id=16498551](https://news.ycombinator.com/item?id=16498551)

[https://news.ycombinator.com/item?id=16501017](https://news.ycombinator.com/item?id=16501017)

I think this speaks volumes about HN's user base being far less enlightened
and fact-oriented than we like to think. Instead it seems that the articles
reinforcing our biases are the ones we pay the most attention to.

------
samfisher83
According to the new study the driver make between 8-10 bucks an hour. I guess
its better than 3 dollars, but that still isn't a livable wage in America.

~~~
sol_remmy
Would you prefer earning $10 with uber where you set your hours and have
freedom or earning $10 at Walmart when you still have to work when your kid is
sick

~~~
fourthark
No.

------
crankylinuxuser
Uh huh. Does this include commercial insurance for "driving people for money"?
Because your personal insurance likely has a clause saying it does not cover
commercial activity.

What this means: if you get into an accident while engaging commercial
activity, you _aren 't_ insured. And your license is then revoked due to lack
of insurance.

Fun times.

~~~
anamexis
Uber provides insurance for drivers while they are driving for Uber:
[https://www.uber.com/drive/insurance/](https://www.uber.com/drive/insurance/)

------
jostmey
Either way is more than a grad student makes grading papers and carrying out
research plans

------
raiyu
Raising two billion dollars without having a product in the market is a huge
red flag.

Most major break throughs started from a very specific problem, that was
addressed, got some market traction, and then refined over time.

Large up front investment without testing the market has been done before, but
I can't really think of a single recent example where it went well.

Maybe perhaps SpaceX, but I'm not really familiar with their founding story
and costs associated. But also consider that one is literally launching
rockets into space, the other is creating a VR/AR headset.

Launching a single rocket costs millions! Buying this or any AR/VR headset
will ultimately cost $1,000. Hence I don't see why you need $2B to get this
off the ground.

And if they are having a problem shrinking the tech, well then it's not a real
product. Because they aren't pitching here is a refrigerator sized computer
and a headset, they are pitching here is a headset, so if you haven't shrunk
it, then you really haven't built the MVP you were looking far as portability
and comfort I'm sure are part of the essential requirements for this product.

~~~
dbatten
Commenting on wrong post maybe?

~~~
whois
Think so.

