How Uber money dominates and distorts economic research on ride-hailing platforms

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njhaering
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from Norbert Häring

Ride-hailing platform operator Uber is often accused of undermining labor market regulations and of overpricing in times of peak demand by “surge prcies”. Uber counters such accusations not only with high-profile lobbyists, but also with the help of top-notch economists, who cooperate in exchange for exclusive data and lucrative consultancy assignments. Even reputable journals publish such sponsored analyisis as if it was science.

A recent paper by renowned MIT professor Joshua Angrist with Sydnee Caldwell and Uber Research Director Jonathan V. Hall  comes to the favorable conclusion that drivers benefit greatly from the fact that Uber exists. Also Princeton economist Alan B. Krueger, former chairman of the Council of Economic Advisors of the US president, wrote a paper on Uber, under contract with Uber together with Uber-Mann Hall an essay on the “An Analysis of the Labor Market for Uber’s Driver Partners in the United States” which makes the company appear as a very good employer.

The survey of “Uber driver partners” on which they heavily rely, was done by a firm hired by Uber for the purpose of producing a PR-brochure. The way it is done – and used by Kruger and Hall is highly problematic and hardly scientific. Severe biases are not mentioned, let alone addressed. One such bias: No disaffected drivers, who have left Uber, are included.

Kruger and Hall do not point out that Uber cut compensation for drivers in many markets after the end of the investigation period. He would not have any reliable data for that, Krueger said upon request for comment. 

Uber used to publish regular earnings evaluations for New York drivers. However, upon request, Uber could offer such published evaluations only until 2015, which is the year in which those cuts started.

Krueger says, he assumes that the drivers would not earn less because of such cuts. In fact, there is a paper with exactly this convenient result. It is co-written by John Horton of New York University and – you guessed correctly, Uber-economists Jonathan Hall and Daniel Knoepfle.

Data from interested parties

Krueger wrote a second contribution to Uber with his Princeton colleague Judd Cramer and placed it in the May 2016 issue of “American Economic Review”. Main Information: Uber “driver partners” have a much higher utilization rate than normal taxi drivers. The data on Uber drivers gathered the Uber team together, which could be considered problematic. Uber has a strong interest in the outcome, which states that taxi rivals are outperformed by higher efficiency rather than dumping prices – something that could be surmised by the billions in losses that Uber post every year.

In a literature survey called “  The Ridesharing Revolution: Economic Survey and Synthesis” on Uber research for the book “More Equal by Design,” Robert Hahn and Robert Metcalfe from the Universities of Oxford and Chicago conclude that Uber probably has positive effects overall.” –As evidence they cite the study “Cohen et al (2016)”: According to this study Uber users realized a huge consumer surplus, which would be lost if such services were prevented by regulatory means. Only a footnote mentions that Cohen works for Uber, but readers of Hahn’s and Metcalf’s chapter would not have learned, that Hahn and Metcalfe themselves belong are co-authors of “Cohen et al (2016)“, together with Uber-economist Hall and the author of the megaseller “Freakonomics”, Steven Levitt.  Hahn said that he would take care of the disclosure aspects of his book chapter, to which the Handelsblatt inquiry had drawn his attention, when working on the galley proofs for his book chapter.

Uber is also busy influencing buying favorable research to be published in non-US science journals. For example, the former head of the German Monopolies Commission, Justus Haucap, co-authored a survey on mobility markets with co-authors from Uber and under contract with Uber, which was published in 2015, among others, in the journal “List Forum”, which is conveniently edited by Haucap. In “Wirtschaftsdienst” 2 2015, a positive contribution from Haucap to Uber and other companies in the “sharing economy” appeared. A reference to the parallel contract work for Uber was missing. Upon request, Haucap said the disclosure was inadvertently omitted.

Neither I nor a Uber spokesman could find a scientific contribution with Uber involvement that which would not have resulted in convenient conclusions, which Uber could use to defend against public criticism. This shows how problematic it is, that Uber, with its financial power, dominates economic research on ride-hailing platforms.

Economic Journals play along

It is not uncommon for a company blessed with many billions of investor money to do PR with commissioned studies. Unlike most such commissioned studies, however, the studies commissioned by Uber are disseminated through renowned scientific publication channels – to which the prominent and well-connected contractors and authors have access. In this way, texts that border on company PR are dressed up as objective scientific findings. After all, they appear in the prestigious series “NBER Working Papers”, or reputable journals such as “Industrial & Labor Relations Review” (ILR) or in the “American Economic Review”. Even if the results are scientifically clean, which is not always uncontroversial, it is up to Uber to decide who has the exclusive data for what purpose. When the results of these papers are cited by other researchers, it is common the important disclosure of Uber involvement, contained in the original, is usually omitted.

Chicago economist Levitt said in a podcast, in which he talked about his Uber-related research:

“I love Uber,” and raved that Uber had created an ideal market from the perspective of economists. It was clear that Uber did not have to worry about overly critical interpretation of exclusive data when Levitt aproached them to gain access to such data for his research. Nevertheless, the company has resisted one year to provide the data, because he denied Uber a veto right against the publication of the results, Levitt reports. “In this case, everything was completely kosher,” he concludes. That is, however, only one way of looking at it. Eventually, two Uber economists acted as his coauthors. The had a whole year to check and select the data, that Levitt would eventually see, to be sure that it would lead to the desired result.

The head of the National Bureau of Economic Research (NBER), James Poterba, acknowledged that it raises difficult issues, when companies pay for studies or control access to data. The NBER makes sure that conflicts of interest are revealed and relies on the integrity of the associated researchers. Alan Krueger, however,sees no problem in the fact that Uber, can choose whom they will give which data, making sure that critical scientist will always be at a severe disadvantage relativ to Uber-loving ones like Levitt. For Krueger, Uber provides an example that should be emulated by other companies. .
Krueger, who has always correctly disclosed his financial relationship with Uber, emphasizes that he has contractually maintained full control over what he writes. However, there is no such statement by his co-author Hall, who is an Uber employee and shareholder. Krueger explains that he could have deleted Hall as a co-author at any time if they had not agreed on a something. Whether the removal of the co-author of a scientific text is compatible with the ethical rules of science is questionable, though. Lawrence Kahn, the editor of the ILR Review, in which the text of Hall and Krueger has been published, was also invited to comment on this issue. He had not response, apart from inviting me to write a comment for ILR, which would then be examined by reviewers for publication.