The Political Economy of Public Transportation

EconTalk host Russ Roberts talks with Michael Munger of Duke University about Munger’s 2008 trip to Chile and changes to the bus system in Santiago:

What was once a private decentralized system with differing levels of quality and price has been transformed into a system of uniform quality designed from the top down. How has the new system fared? Not particularly well according to Munger. Commuting times are up and the President of Chile has apologized to the Chilean people for the failures of the new system. Munger talks about why such changes take place and why they persist even when they seem inferior to the original system that was replaced.

The Santiago example helps highlight the distinction between user-centered service design and the top down system perspective that replaced it.

Near the end of the podcast, Munger and Roberts step back from their critique of the bus system to a more general discussion about politics, economics and incentives. I think service designers would benefit from a better understanding in this area. Getting the incentives right is a tricky balance that comes up in a lot of service design case studies.

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