How our values and means shape optimal transit fare policy

This study examines how optimal fare policies are shaped by the need to balance moral values and financial means. Motivated by the growing interest in fare-free transit (FFT) and the lack of rigorous modeling frameworks to evaluate its impacts, we develop a joint transit design model that incorporates a means-based step-fare structure encompassing full-fare-free (FFF), partial-fare-free (PFF), and standard-discount-fare (SDF) policies. The model accounts for behavioral responses such as the zero-price effect, as well as operational and administrative savings from eliminating fare collection. It is then employed to identify optimal fare policies under both utilitarian and egalitarian objectives across a range of financial scenarios. Applied to the case of Chicago, our analysis yields several key findings. First, optimal policies depend critically on funding levels: FFF is both egalitarian and utilitarian only when robust financial support is available. Second, contrary to common belief, a utilitarian is more likely than an egalitarian to support FFF, as equity goals often require targeted benefits. Third, increasing financial flexibility does not always lead to more publicly acceptable designs. These findings offer guidance for transit agencies navigating the post-pandemic fiscal landscape and planners pursuing more sustainable and equitable urban mobility for their communities.