Cracking down on people skipping transit fares has a massive mental benefit for everyone else that’s worth way more than the money.
March 26, 2026
Original Paper
Behavioral externalities and the hidden cost of fare evasion in Santiago de Chile and New York City
SSRN · 6466716
The Takeaway
Economists typically focus on the money lost to fare beaters, but this study identifies a 'behavioral externality' where seeing others skip the fare significantly reduces the happiness and utility of paying passengers, regardless of the quality of the service.
From the abstract
This paper introduces and empirically identifies behavioral externalities, i.e. when other users’ behavior affects utility even when operational attributes remain unchanged. We show the willingness to pay for reducing common public transport misbehaviors (social norm-deviating behaviors) in two cities, focusing primarily on fare evasion. The costs of evasion have been typically analyzed only from a revenue perspective, however, additional (hidden) social costs may arise if it impacts experienced