The Economics of Taxi Prices in Nigeria by Chuba Ezekwesili

 

Oga. Dat Price No Reach. Walai!  

Ok, I take cabs/taxis a lot in Abuja,Nigeria and they can easily burn your trouser, not just a hole in your pocket, your whole trouser! It is blessing expensive! The way it works here is the taxis driver calls a price, you call something lower and you guys haggle it out till you reach a consensus or in economic term, an equilibrium. ( Only possible in Naija cause we don’t have meters that accurately change one on mileage) It’s odd to see some taxis call N500 ($3.16) for a place and other will call n1000 ($6.32) for the same place. Twice the amount! And their cars  are basically the same. (You know how we know Taxis in Nigeria? It’s the broken down, scratched up, Panel beaten ones that are cabs! You see a fine car doing Taxis, you’d be suspicious!) Why? What explains the difference in price? So I’ve been thinking, can we come up with an equation or run a regression analysis that could explain what factors are significant to determining the price of taxis. And I’ve come up with a number of variables that might contribute to the price a cab driver quotes.                    

Factors that could influence pricing:

Driver’s Knowledge of Destination: does the price go up or down if the driver has no real idea where you plan on going? Probably up, cause he might feel he’ll be driving around a bit before he figures out the right destination.

Passenger’s Knowledge of Destination: What about when the passenger has no idea where he’s going? Well. That’s obvious. Correlation would be high. Cab drivers love ignorant passengers.(I can sadly and shamefully attest to that. 

 Popularity of Destination: means it’ll be well known. Lower price quote?

Amount of Traffic along route to destination: This definitely increases price. Nothing pisses those cabbies off like Traffic. (I once had one threaten to kick me out of the cab cause ‘we’ didn’t inform him how much traffic there would be! *smh*)

Time of the day: This correlates a lot with traffic. Cab drivers tend to charge more around 4-5 pm. Basically, when work ends and there’s a lot of traffic. Same concept works everywhere else. Rush hour using some Metro/Trains in the U.S. means higher ticket prices.

Availability of other cabs in the immediate vicinity: The more cabs in one place, the better. Well..for the passenger. More supply obviously pushes down price: basic economics. (Once had a colleague go through all the cabbies in an area till he found the lowest price!)

Look of the vehicle: well. Some cabbies charge more cause their cabs look nicer. Ha. Fair enough. Who wouldn’t want to be in a nice ride?

Gender of the Passenger: Ok. This is proven. Girls ALWAYS get lower prices. Sucks for you if you’re a guy who needs cabs all the time. No idea if cabbies think charging a lower price increases their probability of getting the girl’s number. Hell, I’ve seen them try! (I have a female friend who’s vicious! When she’s done haggling with a cabbie, you’ll feel sorry for him. The price he end up with is nothing close to the price he called. I try that and the cabbie will slap me and drive away!) On the other hand, I’ve been informed that being a fine girl can lead to a higher price. Something about ‘Bigz girls’ level. Haha!

Look of the Passenger: this still ties in to the previous variable. I would imagine that more beautiful girls get better prices, but apparently, prettier girls get charged more. Apparently, prettier people are assumed to be happier and wealthier. So it wouldn’t be surprising if they got charged more.  Another might be the dressing. You dress nice, you pay high. At least that’s how I imagine a cabbie would think. Nicer dressing suggests a propensity and ability to pay more. It’s always necessary to remember that some individuals could be outliers. Some of these things just don’t seem to affect them.

Stubbornness of the Passenger: How much would a passenger’s stubbornness to agree to a given price affect the final price? Obviously, a passenger with a lack of stubbornness would pay any price called out, hence paying a high price. I wonder how one could measure that. Dummy variables? 1 for those who are stubborn, 0 for those who aren’t. Or a more incremental method. 1 for those who aren’t, 2 for those who are a bit, and 3 for those who really love to haggle. (Think we can group my Grandma in 3. You really should avoid going to a market with her if you can!) Would the second method give a more accurate correlation?…

Area Where Cab gets Flagged Down ( influential area or not): taking a cab to or from Asokoro, Abuja (rich-man part of Abuja) tends to be more expensive cause they assume you live amongst the rich, so you can afford the high price. (good luck if you’re a ‘house-girl’ in such areas)

Amount of money already made by cab driver: does the cab driver charge more or less depending on how much he’s already made? Will his fat pocket spur him to try and make more money or just chill on his price quotes.

Amidst these might be other (possibly) negligible factors like how much Pounded yam he had for lunch, if his wife annoyed him in the morning, if he bashed his car the day before, if his engine is knocking, if the Police or VIO (Vehicle Inspector Officers…Mean buggers!) stopped him an hour ago and made him drop ‘something for the boys’. Fuel scarcity variable might also be left out cause it only happens once in a while. Who can guess what the huge dependent variable(primary variable) is?…. Distance obviously! Then next question is, is it really distance or the perception of distance. As I previously said, there’s lack of meters that accurately measures distance, so these cabbies essentially use their knowledge/memories to set their prices. Differing prices of fuel might be another important factor. Go to NNPC and see people queue for fuel cause it’s relatively cheaper than that of other fuel stations. I do wonder if its effect becomes muted by its interaction with the other variables once the regression is done.

(SKIP THIS PART IF STATISTICS FLY OVER YOUR HEAD LIKE THE PRESIDENT’S PRIVATE JETS)

I wonder how one could run an actual regression analysis using these variables. We would have to use price as the dependent variable and the other factors as independent variables. How do we account for exogenous factors or errors in variables? Or account for multiple variables being highly correlated (Multicollinearity)? Might we have to convert some variables to their Logarithmic equivalent? What software would be best for running such this regression analysis? SPSS? STATA? 

Well. For those of you that are like WTH?Who thinks about this kind of stuff? Well. Lovers of Economics… At least I hope they do, & I’m not just the only weird one.. *Very Awkward Laugh*

Thanks for reading such a long and hopefully not-too-boring article. Let me know in the comments if there are any other variables I’m missing. And please don’t forget to share this article, follow us and bookmark us! There’s more coming soon!