Ok. I take cabs/taxis a lot in Abuja,Nigeria and they can easily burn your trouser- not a hole in your pocket-your whole trouser. It is bleeding expensive! I hear prices in Lagos & Port Harcourt are worse (sorry to you poor folks out there). The way it works here is; the taxi driver calls a price, you call something lower and you guys haggle it out till you reach a consensus or in economic terms, an equilibrium . (Only possible in Naija, cause we don’t have meters that accurately charge one on Mileage) It’s odd to see some taxis call N500($3.16) for a place, while others call N1000($6.32) for the same place. Twice the amount! And their cars are basically the same. Unlike places abroad where the cabs are relatively nice with a glaring TAXI on them, we only know Taxis in Nigeria because they’re broken down, scratched up, and panel-beaten up!
Anyways, I find it lazy to simply chuck down the arbitrary nature of taxi price to greed, so I’ve been thinking of possible price-influencing factors. And after much taxi trips, I’ve come up with a number of variables that might contribute to the price a cab driver quotes.
“Oga, enter, I know that place na!” …*Doesn’t know the place*
- Driver’s Knowledge of Destination: does the price go up or down if the driver has no real idea where you plan on going? He might charge a passenger more cause he feels he’ll be driving around a bit before he figures out the right destination. Also, he might charge more cause he’d prefer to overshoot in case the destination’s turns out to be far. Contrastingly, he might also charge less cause he assumes the destination is closer than it really is.
- Passenger’s Knowledge of Destination: What about when the passenger has no idea where he’s going? Well. That’s obvious. Correlation would be high. Cab drivers love ignorant passengers.(I can sadly and shamefully attest to that.)
- Amount of Traffic along route to destination: This definitely increases price. Nothing pisses those cabbies off like Traffic. (I once had one threaten to kick me out of the cab cause ‘we’ didn’t inform him how much traffic there would be! ) Apart from the no-one-fancies-traffic factor, there’s an economically sound reason for the price hike in areas with high traffic. Every minute a cab driver spends in traffic, he loses money because he loses a new customer. In areas with no traffic, he simply drops a passenger and picks up another in a few minutes. So he makes twice/thrice as much than he does sitting in traffic with a flat rate (originally-agreed-upon price). To account for this, the taxi driver hikes up his initial price.
- Time of the day: This correlates a lot with traffic. Cab drivers tend to charge more around 4-5 pm. Basically, when work ends and there’s a lot of traffic. Same concept works everywhere else. Rush hour using some Metro/Trains in the U.S. means higher ticket prices. Late into the night, a cab driver is definitely charging more. This makes sense, no one really wants to be driving around at night facing those pesky Abuja policemen perching at every intersection.
- Availability of other cabs in the immediate vicinity: The more cabs in one place, the better. Well..for the passenger. More supply obviously pushes down price: basic economics. (Once had a colleague go through all the cabbies in an area till he found the lowest price!)
- Probability of Picking a New Customer at Passenger’s Destination: Prices are higher for destinations where the taxi driver is unlikely to get a new passenger after the current one has alighted. Again, this isn’t cause they’re greedy buggers; it actually has a financial justification. A taxi driver will use up the same amount of fuel driving back after he’s dropped a passenger-with or without picking up another. So if he doesn’t pick up a new passenger somewhere close to your drop zone, that’s a cost for him with no benefit. However, he makes money if he leaves with a new customer.
- Popularity of Destination: means it’ll be well known. So Lower price quote? However, this is more complicated than it seems as it has multicollinearity issues. i.e other independent variables interacting way too much with each other. Popular destinations could mean traffic jams, availability of new customers, or type of passengers at the place. These factors all interact and muddle up each other.
- Availability of Substitutes: Prices of taxis might be lower in areas where substitutes exist e.g. ‘Okada’ (Bikes) and ‘Kekenapep’ (Hard to explain if you haven’t seen one).
- Look of the vehicle: well. Some cabbies charge more cause their cabs look nicer. Ha. Fair enough. Who wouldn’t want to be in a nice ride? (For those who can afford them, Silverbird Abuja has got them.)
- Gender of the Passenger: Ok. This is proven. Girls ALWAYS get lower prices. Sucks for you if you’re a guy who needs cabs all the time. No idea if cabbies think charging a lower price increases their probability of getting the girl’s number. And yes, I’ve seen them ask for phone numbers. It could also be the beauty bias at work: more attractive people are more likely to receive help or be treated better. On the other hand, I’ve been informed that being a pretty girl can lead to a higher price. That makes more economic sense, as taxi drivers assume that attractive girls are more financially endowed. Apparently, prettier people are assumed to be happier and wealthier. Surprisingly, that same beauty bias has an equally negating effect. Moreover, if the girl’s with a guy, then the price’s certainly going up as cab drivers might assume the guy wouldn’t want to look cheap by bargaining too much.
- Dressing of the Passenger: This still ties in to the previous variable. You dress nice, you pay high. At least that’s how I imagine a cabbie would think. Nicer dressing suggests a propensity and ability to pay more. It’s always necessary to remember that some individuals could be outliers. Some of these things just don’t seem to affect them.
- Stubbornness of the Passenger: How much would a passenger’s stubbornness to agree to a given price affect the final price? Obviously, a passenger with a lack of stubbornness would pay any price called out, hence paying a high price. I wonder how one could measure that. Dummy variables? 1 for those who are stubborn, 0 for those who aren’t. Or a more incremental method. 1 for those who aren’t, 2 for those who are a bit, and 3 for those who really love to haggle. (Think we can group my Grandma in 3. I’d avoid going to the market with her if I could!) Would the second method give a more accurate correlation?
- Area Where Cab gets Flagged Down ( influential area or not): taking a cab to or from Asokoro, Abuja (rich-man part of Abuja) tends to be more expensive cause they assume you live amongst the rich, so you can afford the high price. (good luck if you’re a ‘house-girl’ in such areas)
- Amount of money already made by cab driver: does the cab driver charge more or less depending on how much he’s already made? Will his fat pocket spur him on to try and make more money or just chill on his price quotes?
- Differing fuel prices might be another important factor. Go to NNPC and see people queue for fuel cause it’s relatively cheaper than that of other fuel stations. I do wonder if its effect becomes muted by its interaction with the other variables once the regression is done.
- Other Factors: Amidst these might be other (possibly) negligible factors like how much Pounded yam he had for lunch, if his wife annoyed him in the morning, if he bashed his car the day before, if his engine is knocking, if the Police or VIO (Vehicle Inspector Officers…Mean buggers!) stopped him an hour ago and made him drop ‘something for the boys’. Fuel scarcity variable might also be left out cause it only happens once in a while.
- The obviously really huge determinant of taxi price is Distance. The farther the destination, the higher the fare. Next question: is it really about distance or the perception of distance? As I previously said, there’s lack of meters that accurately measures distance, so these cabbies essentially use their knowledge/memories to set their prices.
Conclusively, all of these complications exist due to what Economists describe as Information Asymmetry: both parties are not privy to the same information on the transaction. It also shows how our decisions-both rational and irrational-come into play in such uncertain situations. In places like Nigeria, this creates a lot more headache than necessary. I have a post out on this in the future.
I wonder how one could run an actual regression analysis using price as a dependent variable and the other factors as independent variables. How do we account for exogenous factors or errors in variables? Or account for multiple variables being highly correlated (Multicollinearity)? Might we have to convert some variables to their Logarithmic equivalent or multiply variables in order to create interaction variables? Who knows…accumulating the data for this would be quite a task.
NB: Thanks for reading such a long and hopefully not-too-boring article. Let me know in the comments if there are any other variables I’m missing. And please don’t forget to share this article, follow us, and bookmark us! There’s more coming soon! 😀