Quantifying the ex-post causal impact of differential pricing on commuter trip scheduling in Hong Kong

Abstract

• Estimated the causal economic impact of an off-peak fare discount in Hong Kong. • Applied the difference-in-difference method to control for confounding bias. • Found the aggregate effect to be small but statistically significant and heterogeneous. • Responsiveness was governed by travel costs and crowding. • Produced novel causal estimates of trip rescheduling elasticities. This paper quantifies the causal impact of differential pricing on the trip-scheduling of regular commuters using the Mass Transit Railway (MTR) in Hong Kong. It does so by applying a difference-in-difference (DID) method to large scale smart card data before and after the introduction of the Early Bird Discount (EBD) pricing intervention. We find statistically significant but small effects of the EBD in the form of earlier departure times. Leveraging the granularity of the data, we also allow for the treatment effect to vary over observed travel characteristics. Our empirical results suggest that fares and crowding are the key determinants of commuter responsiveness to the EBD policy.