Don’t Get Mad At Uber’s Price Surge For New Years Eve

December 31, 2014 0 Comments

You were, after all, warned this would happen. Days in advance, no less. New Years Eve is no doubt the biggest party date of the entire year, especially since this will be the last day we spend in 2014. As always, there’s no better place to spend New Years in America than the city that never sleeps, but of course, I’m not setting foot in Times Square. You’d have to be completely nuts (or a foreigner/tourist) to actually want to do something like that. Times Square is practically a madhouse (although, for the first year ever, I think Shanghai has got New York beat). Even if you manage to survive all of the madness, you’ll have to survive the subway rides home. But don’t worry, your favorite technology start up company has got your back. Uber was kind enough to send users a chart of their busiest expected rush hours.

Price estimates of New Years Eve Surge - Uber

There isn’t a Y-axis on this chart, so there isn’t an indication of how high base fares are expected to go. I can only assume from 8:30 – 10 pm, surges are expected to happen anywhere from 2.10x – 2.80x normal fare, and decline after that time. Again, after the ball drops, base fares start to enter 3x – 4x normal base fare zone well into the night.

Needless to say, the Twitter universe isn’t happy about this.

This takes me back to the year 2012 around mid-October when Hurricane Sandy hit. Subway trains weren’t operating in certain parts of the city, so the only method of transportation was with an automobile. There was a severe gasoline shortage and everyone with cars wanted to refuel so they can get to where they need to go. However, because the mayor feared these greedy gas stations taking advantage of poor drivers, price controls were implemented. Long story short, gas shortages was the result of these well-intentioned, but foolish, plan.

The same concept applies. Lots of people want to go out on New Years Eve. Lots of people need transportation home after celebrating the incoming New Year. Unfortunately, not everyone will be able to have their own personal driver, as there are a finite number of Uber cars on the road. Considering this, what must happen as a result of the limited number of cars to provide transportation and the increasing number of people who want transportation?

I’m sure some of you already know where I’m going with this. Unfortunately, we are in the minority. If only there was a science that could explain the allocation of scarce resources in more efficient ways, as well as how price fluctuations are better managed and determined by what the market was supplying/demanding at any given time. A science like, oh say, Economics!?

This isn’t necessarily new. I seem to remember Uber surging their prices during New Years Eve in 2013, but apparently, people haven’t learned their lesson from the previous year. It’s really not their fault, because mainstream economics has all but failed the public. What makes this worse is that this occurs on the Uber app on a NORMAL day, as the Uber price model is intended to be fixed solely on supply and demand (it’s not like supply and demand is integrated in our everyday lives, or anything…). It’s really a mystery why people are suddenly behaving as if this is a new concept.

Considering that we have a growing amount of students at our universities graduating without learning a thing, I have a few suggestions on how to improve the quality of education in the US. It should be a statewide university requirement that all students MUST learn the basics of Supply & Demand before being allowed to graduate. At least the way Karl Marx understood it…

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