Are you factoring in fixed costs to that estimate? That may be partially misleading if so.

tristanj 12 hours ago | parent | next [-]

Obviously yes, you have to since the vast majority of expenses (>70%) are fixed costs. If you only exclude them and only look at marginal costs, they're profitable.

But you cannot run a transit system on marginal costs, so using that comparison is also misleading.

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lxgr 9 hours ago | parent | next [-]

Thought experiment: What would happen with total profitability, given positive marginal unit economics, if readership were to greatly increase?

	▲	trollbridge 4 hours ago \| parent [-]
		I’d imagine it would get really congested unless massive fixed costs were expended to make the system higher capacity.

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jltsiren 11 hours ago | parent | prev [-]

The usual rule of thumb is that fixed costs of public transit are covered by increased property values. It could mean a private transit company developing the areas around stations (as it often works in Japan), or it could mean the government getting more money from property taxes. Or it could even mean more money from income taxes, if the transit project stimulates economic activity.

If a transit project doesn't increase property values enough to justify the investment, or if the entity funding the project cannot extract that value, the project rarely makes sense.

	▲	trollbridge 4 hours ago \| parent [-]
		Now you’ve created a property tax regime where nobody is going to want to own residential property near a transit station.

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what 12 hours ago | parent | prev [-]

How is it misleading? Taking the total cost to operate and dividing by the number of rides tells you what it costs per ride.

I’d be more interested to know how so many people are paying less than $1 for a mini trip when the fare is closer to $3.

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dcrazy 12 hours ago | parent | next [-]

Because it makes in implicit comparison with a hypothetical transportation mode with zero dollars of government subsidy.

The automobile analogue to fares is gas taxes, so the first crack at a true comparison is to compare the Caltrans budget to gas tax receipts.

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toufka 12 hours ago | parent | prev | next [-]

Subsidies for public goods create economic multiples. It’s not plainly obvious that it’s bad to subsidize a trip by $10. And compared to what? How much is interstate infrastructure subsidized per trip? Or airline infrastructure?

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skew-aberration 12 hours ago | parent [-]

I think most economists would contend that the value of the subsidies is largely captured by landowners. Public investment, private profits.

	▲	adgjlsfhk1 10 hours ago \| parent [-]
		and that's why property tax exists (land value tax would be better, but anyway).

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hiddencost 11 hours ago | parent | prev [-]

They're discarding the cost per mile to a driver. If you add that back (and especially if you add externalities back) driving is more expensive.