Ridesharing Part of the "Smart mobility" research report

Ridesharing: Modernizing how empty passenger seats in vehicles are filled

Bowling alone and driving alone: The long, slow decline of carpooling in America

For decades after World War II, the carpool to work was a daily ritual for millions of Americans, mostly suburban (and then, mostly male). Through the 1960s and into the mid-1970s, one in five workers carpooled to their jobs.¹

How times have changed.

Most suburban—and even many urban—households now have at least two cars. More often than not, both parents drive into work by themselves, in separate cars. Today, fewer than one in ten commuters nationwide shares a ride to work.² Fully 77 percent of Americans drive to work alone.

And, in contrast to the suburban business commuters of days past, carpooling today is often associated with lower-income workers with limited resources.³ Many of today’s carpoolers do so out of economic necessity rather than choice.

But the news on the ridesharing front isn’t all bad. Despite the 30-year decline in carpooling rates, several factors—new technologies enabling real-time ride matching, changing attitudes toward car ownership, the growth of the sharing economy, and an increasing number of managed lanes that provide incentives for carpooling—offer significant opportunities to revive ridesharing.

We analyzed ridesharing rates in 171 metro areas across the United States and identified some important factors that will help determine ridesharing’s future.

Measuring ridesharing’s economic potential

The beauty of ridesharing lies in the fact that it taps into an abundant yet underutilized resource: the empty seats in cars. Every day millions of Americans drive to work by themselves, in parallel with neighbors who very often are driving to similar locations. These empty seats in cars represent a huge source of waste in our transportation system—but potentially also a huge opportunity for improvement.

What is the potential impact from reducing this waste? To model potential rideshare savings in cities, we treat transportation choices as a function of fuel costs, congestion patterns, attitudes, and assembly costs. (See appendix B for a detailed description of our methodology.)⁴ We imagine a world in which assembly costs for ridesharing approach zero and societal attitudes toward ridesharing are more supportive. This scenario allows us to calculate the personal and societal benefits that could accrue if all commuters who could reasonably rideshare to work did so.

A detailed examination of our methodology can be found in appendix B, but here is the Cliff’s notes version. We used geospatial analysis of demographic data to calculate the number of likely ridematch pairs within each census tract who live within one mile of one another, leave for work at the same time in the morning, and travel to the same workplace tract. To account for commuters who engage in “trip chaining”—stopping along the way to and from work to carry out other business—we reduced this number by 16 percent.⁵ We then calculated the reduction in vehicle miles traveled (VMT) and fuel savings if the pair chooses to rideshare.

Figure 2 shows ridesharing’s economic potential, nationwide and for the 10 largest cities by projected number of new carpoolers.

We estimate that almost 19 million commuters in US metro areas could switch from driving to ridesharing if current barriers to ridesharing were eliminated, resulting in a 27 percent overall modal share.⁶ This switch would have enormous societal benefits: We project maximum potential savings from increased ridesharing at $30.3 billion annually. These savings would accrue from several sources: $15.8 billion in direct annual savings to new carpoolers due to reduced vehicle upkeep, $11.6 billion in indirect savings from lowered congestion costs, and $1.8 billion in reduced annual road infrastructure costs. Furthermore, traffic-related accidents could fall by 22,915 annually (yielding $847 million annual savings), while carbon dioxide emissions would fall by 9.1 million metric tons annually—yielding societal savings of $338 million.

To be clear, our estimates represent a best-case scenario that may take years to be fully realized. Our point is to show the vast, and currently mostly unrealized, potential of this mode of transportation. Our results further reveal some general trends indicating where ridesharing could be most effective.

An important finding of our study is that “ring” neighborhoods could become ridesharing hotspots. Neighborhoods with high ridesharing potential, according to our analysis, are usually distributed in a ring 10 to 15 miles outside each city’s urban core. These neighborhoods tend to have higher concentrations of commuters traveling each day to similar workplace destinations, both in the city center and in office parks and edge cities throughout the metro area. (Here’s a surprising fact about tomorrow’s ridesharing: It’s not only commutes from the suburbs to the city center which offer the best opportunities for increasing ridesharing. Many commuters who live in tracts that can be hotspots for ridesharing do not in fact work in a city center.⁷)

A classic example is Indianapolis, where neighborhoods with the highest numbers of potential new ridesharers are concentrated about 10 to 12 miles from the city center, in suburbs such as Carmel, Fishers, Greenwood, and Brownsburg (figure 3). The map in figure 3 shows census tracts with higher projected levels of ridesharers as darker blue. The bulls-eye pattern of carpool potential shows clearly here because there are relatively few physical boundaries near the city and no contiguous metro areas to complicate the pattern.

Eight ways to encourage ridesharing

Our analysis demonstrates the enormous economic potential of ridesharing—$30.3 billion in annual savings if ridesharing were embraced by its maximum potential user base, or about a fifth of US commuters. So how do we get there? Experience teaches that it won’t be easy. The following strategies, however, could help make progress.

1. Expand tax incentives to rideshare. Extending the employee pre-tax benefits currently available for parking, transit passes, and vanpool costs to ridesharing could increase its appeal to commuters. New technology that verifies vehicle occupancy could aid the implementation of this benefit. Carma’s new ridesharing app, for example, was tested in Austin, Texas in 2014, and program evaluation results are due in the spring of 2015. Carma’s app verifies the presence of two passengers in an automobile, which qualifies the automobile for an automatically applied 50 percent toll discount; with three or more passengers, the auto is eligible for a 100 percent rebate.⁸ The total cost of this pilot was slightly less than $1 million, partially funded through a federal grant. The program is continuing to grow. A mid-year interim report showed 322 new carpools encouraged by the program and approximately 250 daily carpool trips in the fourth quarter of 2014.⁹ The estimated cost of constructing new lanes to provide the same capacity would be between $5.8 million and $17.4 million.¹⁰
2. Improve ridematching platforms’ customer experience. Most cities we studied have already invested in online ridematching platforms (all but 6 of 79 cities¹¹) or participate in a statewide rideshare platform. But none of these platforms has attracted enough members to achieve a critical mass of commuter participation. Cities need to determine how best to marshal private sector innovation to bring first-class user interfaces, highly reliable service, incentives for participation, and widespread public awareness to ridematching. If policymakers and on-demand car service providers began to view each other as allies in the battle to reduce congestion, then the public sector might make quicker progress in achieving its goals. For example, states or cities could incentivize commercial platform providers with large user bases such as Sidecar, Uber, and Lyft to increase the percentage of their customers who share rides with other passengers. Such incentives might encourage providers to enhance their shared ride user interfaces, outreach, and marketing. Creating incentives for increasing carpooling might also encourage on-demand service providers to partner with carpool providers to create synergies, as recently announced by Uber and Carpooling.com in Europe. This new deal has Uber providing first-mile drop-offs and last-mile pickups to support Carpooling.com’s long-distance carpools.¹²Technological innovations are already poised to improve the customer experience for tomorrow’s ridesharers. Mobile apps that today measure driving habits to help convey insurance discounts will likely be used tomorrow to credit drivers and passengers with toll discounts in real time, without making them register as a carpooler.
3. Use infrastructure investments to support ridesharing. Commuters who carpool are motivated principally by the time or money they can save by doing so.¹³ And, as the Federal Highway Administration has observed, “Infrastructure plays an important role in helping dynamic rideshares accumulate time and money savings” by allowing carpoolers free or reduced-cost access to restricted lanes.¹⁴Real-time ridesharing initiatives should be bundled with high-occupancy vehicle (HOV) and high-occupancy toll (HOT) lane projects, as well as in any new designated commuter lots that can facilitate the convenient pickup and drop-off of passengers via dedicated entrance and exit ramps. For example, when a city or state secures funding to create managed lanes, we recommend they direct a portion of those funds into investments in digital infrastructure for real-time ridesharing. According to the Texas Transportation Institute, an average 7 percent of congestion reduction can be attributed to operational treatments such as HOV lanes, with higher percentages in large cities such as New York and Los Angeles.¹⁵ In our study, we found that carpooling rates are higher by almost 1 percent in metro areas with HOV lanes—a small but significant difference.¹⁶
4. Focus on building critical ridesharing mass in key corridors. Rather than trying to expand ridesharing across a wide region, planners should focus on building a critical mass of users in particular corridors.¹⁷ To understand which corridors offer the greatest ridesharing potential, planners should target the areas with the biggest potential supplies of carpoolers based on commuting behavior, neighborhood demographics, and supporting infrastructure. A base level of “guaranteed” service (meaning that a commuter will always be guaranteed a carpool on a corridor) is needed to generate repeat users until a critical mass is achieved.¹⁸ Many cities already have guaranteed ride-home programs (56 out of 79 in our sample). These programs typically offer vouchers to members to pay for a cab if they miss their vanpool. Such programs should be tied to real-time ridesharing initiatives to help provide a guaranteed service level until the corridor network is dense enough to achieve stable critical mass.
5. Recruit participants through trusted channels. The greater the number of employees in a given location, the more likely it is that rideshare matches can be found. Large companies, universities, and hospitals have hundreds or thousands of people working in the same setting, and they may have a strong incentive to encourage carpooling to reduce the need for parking infrastructure. Recruiting efforts are most effective when they involve trusted channels such as employers.¹⁹ New employee orientations, for instance, represent an effective channel for improving awareness of ridesharing as a commuting option.²⁰ Cities such as Indianapolis, IN and Jacksonville, FL are exploring strategies to use employer outreach to increase ridesharing.²¹ Transportation demand management (TDM) agencies—usually housed in a city’s metropolitan planning organization (MPO)—can serve as a bridge between employers and ridesharing providers.
6. Target younger commuters. Recent years have seen significant shifts in attitudes toward vehicle sharing, especially among Millennials. Forty-two percent of Generation Y consumers in the United States (versus 28 percent for other generations) say they are willing to carpool if carpooling is readily available and convenient.²² These shifts are reflected in recent census data: The median age of those who commute to work using shared rides (carpool or vanpool) in 2013 was 39, compared with 42.8 for single-occupancy vehicle drivers.²³ Similarly, cities with younger populations have slightly higher rates of ridesharing.²⁴
7. Establish public-private partnerships (PPPs) to improve mobility. PPPs are often used to finance large-scale capital projects. Forward-looking jurisdictions could expand their use of PPPs by adopting pay-for-success models that specify particular mobility outcomes (for example, by setting a goal of a certain year-over-year increase in carpooling’s modal share in a particular corridor), rather than the means by which those outcomes are to be achieved. Doing so could open up new kinds of partnerships with automakers, ridesharing companies, and others exploring new mobility services and stimulate innovative methods for reducing gridlock in some of the most congested corridors. A special kind of funding mechanism known as social impact bonds, which are contracts with government agencies that are only repaid if certain social benefits are achieved, could be used to provide additional incentives for innovation within such PPPs.
8. Encourage nationwide leadership in carpooling advocacy. Cities that have formal goals to increase ridesharing have higher rates of carpooling overall, suggesting that leadership plays a small but significant effect in influencing commuter transportation decisions. Yet, at present, there is no national carpooling/ridesharing alliance comparable to the National Alliance for Biking and Walking, which advocates for the interests of bikers and pedestrians in local communities. Few and far between are the federal and state government organizations that set carpooling goals for their own employees, let alone for their constituents. A nationwide ridesharing alliance and explicit public sector ridesharing goals for government employees could inspire commuters and coordinate efforts among cities, while helping local ridesharers find one another and organize grassroots interest groups.

These strategies are relatively cheap compared to infrastructure, and are likely to offer significant returns on investment for state and local transportation officials.

To explore further our projections for ridesharing’s potential and current rideshareing policy and infrastructure, we invite you to view our interactive map.

Explore our collection of research on smart mobility at the links below.

• Key findings from the smart mobility study
• The promise of smart mobility
• Ridesharing
• Bike commuting
• Carsharing
• On-demand ride services
• Alternative transportation atlas (interactive map)
• Impact by metropolitan area (interactive table)
• FULL REPORT—Smart mobility: Reducing congestion and fostering faster, greener, and cheaper transportation options