Revealing social weights in reduced fare programs

Fare transit trip discounts are offered for preferential groups in most cities, presenting a wide variation across places. Transit and higher-level authorities give a variety of qualitative justifications for those reduced fares, which suggests that observed reduced transit prices are the result of a cumulative process of political will. As this is a quantitatively unexplored field, an approach is proposed to reveal the implicit social weights behind the fares applied to the different groups. The method rests upon a theoretical model that yields socially optimal fares as if weights on the welfare of the various groups had been applied. By inverting the results, those weights turn into the unknowns that happen to be a function of observed fares, demand elasticities, and operators’ marginal costs. Two examples show that revealed social weights can be lower or higher than what the discounts suggest when compared to full fares. The method can be used to inform decision makers of the (in)consistency between the implemented fares and their declared intentions.