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Researcher Admits Study That Claimed Uber Drivers Earn $3.37 An Hour Was Not Correct (fortune.com)
Last week, an MIT study using data from more than 1,100 Uber and Lyft drivers concluded they're earning a median pretax profit of just $3.37 per hour. Uber was less than pleased by their findings and used a blog post to highlight problems with the researchers' methodology. "Now the lead researcher behind the draft paper has admitted that Uber's criticism was actually pretty valid -- while also asking Uber and Lyft to make more data available, in order to improve his analysis," reports Fortune. From the report: The issue with the draft paper from MIT's Center for Energy and Environmental Policy Research (CEEPR), Uber's chief economist Jonathan Hall said, was this: The researchers asked drivers how much money they made on average each week from such services, but then asked "How much of your total monthly income comes from driving" -- without specifying that such income must relate to on-demand services. Of course, many people driving for Uber and Lyft also earn money from regular jobs and other income sources. And this, Hall alleged, skewed the researchers' results.
"Hall's specific criticism is valid," wrote Stephen Zoepf, the executive director of Stanford's Center for Automotive Research, who led the MIT study, on Monday. "In re-reading the wording of the two questions, I can see how respondents could have interpreted the two questions in the manner Hall describes." Zoepf said he would be updating the CEEPR paper, but in the meantime he recalculated the figures using a methodology suggested by Hall, and found that the median profit was $8.55 per hour, rather than $3.37, and only 8% of drivers lose money on on-demand platforms. Using another methodology, he added, the median rises to $10 per hour and only 4% of drivers lose money.
"Hall's specific criticism is valid," wrote Stephen Zoepf, the executive director of Stanford's Center for Automotive Research, who led the MIT study, on Monday. "In re-reading the wording of the two questions, I can see how respondents could have interpreted the two questions in the manner Hall describes." Zoepf said he would be updating the CEEPR paper, but in the meantime he recalculated the figures using a methodology suggested by Hall, and found that the median profit was $8.55 per hour, rather than $3.37, and only 8% of drivers lose money on on-demand platforms. Using another methodology, he added, the median rises to $10 per hour and only 4% of drivers lose money.
Nice to see a researcher as well as Uber being respectful and honest about their results. Everyone benefits from this type of transparency.
Exactly, I'd mod you up if I had points. The fact that the lead economist of the company is performing "estimations" instead of providing even ball-park figures that they must know of because they're at the core of their business should be a clear enough indication that this is a smokescreen and nothing else.
I get that they do not want to give out detailed numbers due to competition being so tight, but it's ridiculous to read the man playing guessing game instead of giving even a range inside which the actual median and average hourly incomes falls. I can bet you the guy has these numbers memorised, because they're directly tied to how much the company is making.
And that tells you the true reason he's doing this. He saw the study pushed out and, like any good tactician, saw an opportunity to use it against their competition. Even though what he's really said is only 'Our drivers maybe making as much as this, the signal he's sending to their competitors is 'Look at how much more money than you we are making.", while also simultaneously trying to lure drivers to switch from the competition to their service. And instead of doing any actual journalism and confronting them about this, Fortune plays directly into their hands giving them essentially free advertising space by running his claims without any criticism of his motivation for not providing any actual numbers.
"It is the business of the future to be dangerous" -Alfred North Whitehead
I have several friends who do it for extra cash (or, in one case, because they actually enjoy it - weird, but that's their thing), and none of them are anywhere near dumb enough to do it for a net of $3 and change. That number should, literally, be unbelievable, and yet many people believed it anyway because it fit a highly (absurdly) hyperbolic narrative.
We'll no one would work for a check that comes out to $3/hr, but lots of people work for net N dollars where they get paid P dollars and have to incur E incidental expenses, where E is on the order of N. Because the expenses are incurred at a different time and not necessarily for direct expenses, they may not be considered in the true earnings equation. Uber is one example. How many drivers actually sit down to calculate their total profit after expenses on a spreadsheet? Working, married moms are another example, where the taxes at the husband's high marginal rate coupled with child care expenses often yield surprisingly low net true earnings.
And the less common, but still valid example of working, married dads, where the taxes at the wife's high marginal rate coupled with child care expenses often yield surprisingly low net true earnings.