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Statistical Discrimination Enabled by New Technology: The Case of NYC Taxis
There is a new smart phone app that allows you to prearrange taxi rides with taxis. In Los Angeles, you can’t flag down a cab on the street so I just call in to arrange a ride. In NYC, it will be a game changer if you can prearrange your ride. The taxi rider wants to minimize the wait time and the uncertainty about this wait time.
In a statistical sense (i.e per 1000 rides arranged using this app rather than picking 1,000 people off of the street at random), the taxi driver gains several benefits from using the app;
1. Richer people are more likely to use the app so the driver will collect a larger tip.
2. The richer rider who uses the app is more likely to be left off in a prime part of Manhattan where the cab driver can quickly find another fare paying customer.
3. The app user is less likely to mug the cabby or try to avoid paying the fee.
So, this app allows for ”beneficial” statistical discrimination at work!
2012-09-05 19:01:33
Source: http://greeneconomics.blogspot.com/2012/09/statistical-discrimination-enabled-by.html
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