The effect of an unconventional fare decrease on the demand for bus journeys: A regression discontinuity approach

Abstract

We analyse the effect of a change in the fare structure for bus journeys in London on different demand measures using a regression discontinuity design. We utilise data obtained from Transport for London following the implementation of a new bus fare policy in September 2016, in which a follow-up journey made within the hour of an initial journey became free. Drawing on millions of individual paid and unpaid journeys between June and December 2016 – thus covering the period just before and after the introduction of the new fare – we estimate the effect of this price policy on the number of paid bus journeys, follow-up journeys and bus passenger numbers. We find that the policy significantly increased the number of bus trips by 5% and follow-up journeys by 8%. Passenger numbers increased by 4%. We also find that the increase in demand was not only driven by new customers, but also by more intensive demand by existing customers.

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