The welfare effects of the free subway fare scheme for seniors: A discrete choice approach with the case of Seoul

Abstract

This study investigates the effects of a free subway scheme for the elderly on mode shift and consumer surplus for the Seoul metropolitan area, using discrete choice models. The analysis results can be summarized as follows. First, a comparative analysis of temporal and spatial subway trip distributions between the elderly and the general public shows that the majority of elderly subway trips were made during off-peak periods on a weekday, avoiding peak periods and busy stations. Second, the free subway scheme has contributed to shifting elderly modes from automobile, bus, and walk to subway, attracting about 54–58 thousand seniors’ trips per day to subway. Third, the scheme has generated about $60–74 million per year in net social welfare after accounting for the financial cost of the scheme, concluding that the scheme enhances seniors’ mobility and social welfare without putting a substantial burden on the existing subway system.