How Uber's surge pricing actually affects users, and how you can avoid it

Do those temporary higher prices increase supply or just boost prices? Northeastern University study holds the answer. Plus tips on how to avoid them!

How to avoid Uber surge pricing study how Uber surge pricing affects supply demand
Credit: Zach Miners/IDG News Service

I'll admit I can be a cynic sometimes, especially when it comes to companies justifying dubious business practices by saying that it's really all for the customers' own good. Classic example: when I first heard about Uber's surge pricing—the ride-dispatching company's habit of raising prices in times of peak demand, like rainstorms or terrorist attacks—I didn't believe the company's explanation that it was actually a good thing for its users. The idea, the company maintains, is that higher prices are an incentive for more drivers to hit the road, reducing the imbalance between supply and demand.

See also: How a Florida fender-bender could threaten Uber's business model 

It seemed too convenient to be true, I thought, and smacked more of profiteering than public service. But that was just a hunch, I had no evidence to support my cynicism.

Now I do.

According to Pro Publica, researchers at Northeastern University put the claim to the test in Manhattan and San Francisco and found, basically, that surge pricing does almost the exact opposite of what Uber says it does. Instead of increasing supply, higher prices cause demand to crater, which can then actually lower supply as drivers leave the area because they know passengers don't want to pay the extra tariff. In addition, while Uber has claimed that surge pricing affects fewer than 10% of trips, the researchers found some 14% of Manhattan trips involved surge pricing, while a whopping 57% of San Francisco trips were surge trips. 


Of course, Uber responded to the study saying that they knew better. A spokesperson told Pro Publica: "Contrary to the findings in this report—which is based on extremely limited, public data—we've seen this work in practice day in day out, in cities all around the world." Uber also said the percentage of surge trips in New York and San Francisco was "unrepresentative."

See also: A case for compromise on Uber's 'contractor' legal dispute

Of course, Uber didn't make any of its own data public, and the company doesn't share its surge pricing algorithms with its drivers or riders. But, hey, we should take their word for it, right?

Tips on avoiding surge pricing

According to the computer scientists behind the report, though, Uber riders can often avoid surge pricing with a couple of simple strategies.

First, if you don't like the prices, wait a few minutes and try again. The study found most surges were short-lived, and the prices could fall back to normal in as little as five minutes (which hardly seems like enough time for a flood of new drivers to become available, but that's a different analysis).

Secondly, if you don't like the surge prices, walk a few blocks and try again. It seems that Uber calculates surge pricing independently based on set geographic zones (see some of those here). Of course, Uber doesn't share the boundaries of those zones, but the helpful folks at Pro Publica used the Northeastern data to map them. Note that this tactic works better in Manhattan, where the zones are much smaller. In addition, the researchers noted, the San Francisco zones were more likely to surge together.

Good luck avoiding surge prices, and be aware that just because you're paying more, you're not necessarily any more likely to get a car when you need it.

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