Uber Economics: There is No Such Thing as Bad Publicity

Yves here. This post on Uber raises a sobering point about activism and human cognition. How do you opposed a cause you regard as dubious without unwittingly legitimating it? For instance, remember when one of the many justifications offered for the Iraq War was that Saddam Hussein was in cahoots with Osama bin Laden? Even though that idea was patently false, efforts to debunk it actually reinforced the connection between Hussein and Bin Laden simply by featuring their names in close proximity.

If readers, particularly activists, have ideas for how to steer clear of effectively promoting ideas and causes you are challenging, please let us know in comments.

By Diogo Machado, Research Assistant at Bruegel in the economics of innovation and competition policy. Originally published at Bruegel

Last month we published a blog post examining the economics behind, and the challenges for, the Uber ridesharing company. We now want to consider how Uber might have been affected by opposition from vested interests – in Uber’s case, taxi drivers – and by regulation to restrict Uber. We take into account major events involving the company, and use Germany as a case study.

Uber arrived in Germany in February 2013. In April 2014 the first regulation imposing restrictions on its activity was passed, prohibiting the company from offering its services in Berlin.

In June 2014 there was a pan-European demonstration by taxi drivers against the company, possibly contributing to its ban in Germany later in August. The ban was revoked in September.

The following graph shows the individual index of Google searches for “Uber” (orange line) and the index of searches for “Taxi” (blue line), both in Germany [The chart is interactive, so visit Bruegel if you’d like to see the data associated with each bar on the chart].

Taxi v. Uber chart

Source: Bruegel based on Google trends. Note: The indexes are not in relative terms of each other, thus are not comparable in absolute terms.

Here we see two points of interest: Increasing volume of searches (increased curiosity) and greater correlation between the two indicators (potential greater usage).

The three main events affecting Uber in Germany (regulation, demonstration then ban/lifting of ban) are clearly identifiable along the orange line. As people became curious about what drove these events, Google searches for “Uber” sky-rocketed.

The lines show that after the first event the correlation between the Uber and taxi indexes became stronger. This could mean that, instead of simply googling it to have more information, people are increasingly searching for Uber in the same situations as they search for taxis. This could be evidence of an increase in Uber’s prominence in terms of the actual service that it provides.

Further supporting evidence comes from our computation of a 20 period window correlation (in bars), showing a low or even negative correlation in the early periods, and its explosion after the main Uber-related events.

If this is the case, public authorities and taxi drivers have done a great marketing job for Uber, and have underlined again that there is no such thing as bad publicity.

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28 comments

  1. Victoria Else

    The best way I know of to avoid giving publicity to arguments or ideas you are opposed to is to create a vivid narrative that dramatizes your own point of view–ideally without mentioning the other side’s version. [The case of Uber, above, is not really a demonstration of the point you raised in your comment since people who liked the idea of the service will have resented and opposed the ban once educated about it, so the publicity actually persuaded them in a different direction.] But in the case of linking Saddam Hussein to bin Laden, you would need to construct a vivid counter-narrative around Saddam’s life and political role in the region that made it clear he was no darling of muslim extremists. The problem would be getting air time for that narrative–which gets to my final point: if the media is against you, then you don’t really have any way of getting heard in mainstream culture.

  2. proximity1

    Example:
    Somewhere in the calculus of opposition there should come the careful avoidance of adopting the opponents’ own “loaded” terminology. My favorite example of the importance of this factor is in what was surely a stroke of PR genius when the insurgent group known as “Boko Haram” carrties in its very name an exhortation to its own goal since its name states, every time it is cited in the press, “western education is forbidden ( i.e., as wrong, evil, per ‘Islam’) ”

    Similarly, opponents of the “Islamic State” should adopt a prefix “so-called” to help delegitimize that, again, asserted rather than actual ‘outcome-carried-in-a-name.’

    Some news organizations–and some political pundits– seem to have already adopted such a deliberate avoidance of repeating the loaded language of such groups.

    The general principle extends, of course, to all sorts of political affairs beyond the realm of the conflicts between Islam’s self-appointed insurgent-group “saviours.” and insurgent

    1. Min

      “Somewhere in the calculus of opposition there should come the careful avoidance of adopting the opponents’ own “loaded” terminology.”

      Absolutely. I have seen this time and again. It seems like the conservatives are currently better at coming up with terminology than liberals. How often have I seen a debate between liberal and conservative pundits where a conservative will introduce a loaded term which is immediately adopted by the liberals! Along those lines I do not speak of bond vigilantes, since vigilantes imposed extra governmental law and order. I call them bond pricks. ;)

  3. amateur socialist

    This post reminds me of a story from chinese folk wisdom: If you want somebody to go away just stop using their name. Eventually they just disappear as the story goes.

    1. Furzy Mouse

      “When evil is branded, it looks for weapons.” I Ching
      This may be an accurate account of what has empowered Al Qaeda and other terrorist organizations, and attracts more adherents, post 9-11; the exhortation to “fight back”.
      It has taken me a lifetime to resist the bait of hateful and corrosive interactions. Abhorrent behavior revels in the attention it generates. A sad illustration is the many mass shootings that we are witnessing.
      Here is a simple example: where I live in SE Asia, misbehaving kids, crying babies, etc, are gently ignored. After a while, the kids wise up, and move to positive behaviors to get their adults’ attention.
      Would minimizing the attention we give to ISIS et al, rather than the hours of angst on the airwaves, start to reduce their influence? (I can hear CNN shrieking now!) As for confounding Saddam with Osama, it might seem counter-intuitive, but rather than railing at the Bush cabal’s lies with anger and despair, perhaps a sotto voce approach, with the truth soberly and quietly presented, might be more effective.

      As a realist, I don’t expect this will happen in the MSM, but perhaps this might be one of the great virtues of blogging on the ‘net!

        1. Furzy Mouse

          I am referring to fussy, naughty children…being a helicopter parent only makes them more self-centered! Of course, if a child is very upset about something, they need love and attention, or if they are hurting another kid, say, they should be properly reprimanded. But to reward every yelp or whine only turns them into baby egomaniacs….and of course, infants need a great deal of close affection and care, not being ignored…

  4. DJG

    It is possible that we have reached media saturation. It is producing stagnation. On the other hand, yesterday’s Water Cooler had a link to an article by Lacy at her Pando Daily about “asshole culture,” in which she states: “I’ve never had much of an issue with Kalanick’s hard charging competitive nature or libertarian beliefs. But this sexism and misogyny is something different and scary. Women drive Ubers and ride in them.” So the issue for her is that it doesn’t matter till it affects her privileges. She seems to have no concept that libertarianism is the U.S. is a club of white boys–and that politics matters. Too much posting? Or crappy thinking? Or is a problem with the Internet that it is an adjunct to the worldwide id?

    1. reslez

      Yes — witness the numerous libertarian politicians who believe in “bodily integrity” for everyone but women, and speak piously of one’s sacred right to do as one pleases with one’s body, unless you are a woman. I sense their rank hypocrisy on this subject is a way to signal their masculinity — much like the death threat-issuing bros who have invaded geek culture.

    2. jrs

      She overstates the danger to prospective users from mere statements. To show what she wants to, she’d have to show say Uber drivers, well sexually harassing would suffice, women passengers. And show it’s more likely in Uber than say Lyft or a cab. The Uber culture might look the other way more but she assumes a lot without much proof. When the main issue with Uber in the very issue she cites is to women *employees* of Uber.

    3. lyman alpha blob

      I read that one and was rather annoyed by her attitude. And her solution was to remove the UBER app and call Lyft instead, whatever that is. That’ll teach ’em!

      What about just calling a damn cab?!?!? Why can’t anything be done unless there is an app for it? I don’t own a mobile phone but I’m assuming it isn’t hard to look up cab companies for the city you’re in and then dial the number that comes up. So the UBER business model seems to be saving lazy people the 30 seconds it would take to do a search for a cab company. And this is somehow worth a mutli-billion dollar valuation. Crazy. One can only assume the person who comes with the app that will wipe a person’s rear end for them will be an instant squillionaire (my favorite neologism – thx to whoever came up with that one!).

      1. hunkerdown

        No, the return justifying the multi-billion-dollar valuation is smashing local government. As with dotcom boom 1.0, any amount of money is a reasonable temporary cost to gain a permanent structural advantage.

    4. hunkerdown

      She seems to have no concept that libertarianism is the U.S. is a club of white boys–and that politics matters.

      She and every careerist know full well politics matters. Do you really, honestly think any utterance of a careerist isn’t calculated to produce an effect?

  5. Tammy

    “The lines show that after the first event the correlation between the Uber and taxi indexes became stronger. This could mean that, instead of simply googling it to have more information, people are increasingly searching for Uber in the same situations as they search for taxis. This could be evidence of an increase in Uber’s prominence in terms of the actual service that it provides.”

    Or a simpler answer could be [in the words of Daniel J. Boorstin] “…what we see and read and hear encourages us to hope that our extravagant expectations may be coming true.” In our “fast-moving, progress conscious America” we choose to believe in an “emergent Truth.”

    How is that for the positive psychologists out there? Picture positive for self-fulfilling prophets I would think.

  6. Jeff N

    they have a commercial on the classical music radio station here in Chicago, from the traditional (rentier?) cab dispatch service. This cab dispatcher’s main gig is people going to/arriving from the main Chicago airport.

    Independent cabbies livery up their cars with this dispatcher’s name. For the arriving passengers, Hundreds of these cabs are parked at the two Chicago airports at all times, waiting for a call to come in from this dispatch service, for arriving fliers.

    Uber must be cutting into them, because this entire commercial is a list of reasons why an “unregulated car service” is a bad idea.

    And just like the main point of your post, thoughts cross my mind like:
    * this commercial is obviously a counter to Uber
    * why does this dispatch service deserve to extract rent from the cabbies any more than Uber does?

    1. hunkerdown

      The answer to #2 is fairly obvious (a modicum of democratic accountability), but doesn’t apply in Chicagoland.

      1. Nathanael

        Important point there: one of Uber’s most successful markets, and one of Lyft’s most successful markets, is Seattle.

        Where the taxis have an *appalling* reputation as a cartel which provides awful service, refuses to obey the laws (even trying to dump people out before they get to their destination), and restricts supply to a number of licenses which is *far* too low.

        In cities where people like the taxis and there are enough of them, Uber and Lyft are having trouble making inroads.

  7. Erick Borling

    After reading only the introductory paragraph to this article, I offer something to help answer to the question “how to steer clear of promoting ideas and causes you are challenging.” It comes from my experience in changing my own mind, healing, learning, and in sensitivity to the linguistic dimension. To opposed the “wrong” ideas; that is, the irrational, harmful, and fantasy-based ideas, they must be supplanted relentless focus on their opposite. Attraction, not promotion. You know this works because the GOP can’t obscure their war on women by changing their marketing. An example of my idea might be “We have a choice — we can create safe family-wage jobs here in Kentucky.” instead of “We’re not here to kill your coal-mining jobs…” The trouble is, there is no getting around how much time it takes to recondition the ideological environment. It is a long game and progressives are behind in the war of ideas. The Coke brothers and Rooburt Murdoch have played the long game and polluted the linguistic environment.
    The power of the written and spoken word still exists. I think that those with insight must teach clearly and without growing annoyed at the repetition and emphasis on basic ethics necessary to illuminate the truth. The discussion of values MUST occur as it is the bridge that enables everyone to “cross the aisle” because fortunately we all share those values. Gun nuts, libertarians, MMT-ers, and “liberals” are actually quite similar, just like Team America World Police said… However, we must invoke that fire in the belly like Obama did for his second debate. It’s not enough to offer “Sane Planning, Sensible Tomorrow,” for many of the constituents we need to reach will find that wonkish. Even I, with decades of education, have trubble following and dissecting the transgressions of the FIRE sector, but I am grateful for Nekkid Capitalism’s relentless presentation of that information, particularly since there is always an introduction that summarizes the articles.
    With so much info out there on the web-o-net, that brings me to a point about the construction of essays and articles. Well of course it’s important that they be thorough and as lengthy as necessary, but I have an awful lot of reading to do. Therefore it helps if I can get an understanding of what the article is going to say without ignoring the other practical concerns of my life while trying to be an informed citizen. Thanks again to Yves and the Naked Capitalism instructors.
    financial and FOMC
    I don’t know if I am enough of an activist – I am merely an active participant in democracy – for my answer to be of value to you.

    1. hunkerdown

      What democracy are you participating in, and what evidence do you have that it is such?

      Your attempt to sell utopia as the status quo has as much connection to facts on the ground as any other religious sales staffer that comes to my door on a weekday, and frankly it is never worth the effort to refute delusional narratives or faith-based rhetoric point-by-point because that’s not what they’re *for*.

      In particular, don’t you EVER tell me what MY values are, capiche?

  8. Otter

    Every one of those events would have been accompanied by a wave of media articles (or links as in the article above) extoling the virtues of Uber’s “low prices, short waiting times, and good service”. Not to mention a wee bit of Bolshie glee at raising the finger to monopolistic taxi companies and their unwashed drivers.

  9. Min

    The association between Saddam Hussein and Osama bin Laden illustrates how ad hominem attacks may unfortunately be necessary at times. You have to say such things as, “Bush is playing into bin Laden’s hands by waging war with Hussein. Bin Laden has hoodwinked him. Are Bush’s friends, the Saudis, behind Bush wanting to go to war with Iraq? War with Iraq means less oil money for Iraq and more for them.” And so on.

  10. nihil obstet

    Don’t use their names. Instead of inveighing against Uber, object to scab cabs. Make the idea negative without reinforcing name recognition. For al Qaeda and Hussein, sneer at attempts to link 9/11 to foreign leaders other than the Saudis, again without hitting the names to establish a link. You can go on with, the Bush administration is trying to link unrelated foreign countries to the events. The recount-in-order-to-rebut will just promote what’s recounted. Disdain at the general level gives the reader the mindset to reject the specifics on their own.

    1. jrs

      Are cab drivers unionized? I don’t think they are everywhere or even most places. Otherwise it’s a misuse of the scab term to promote one (capitalist) business model over another. Scab means hiring non-union workers to replace union workers, anything else is just arguing about who one prefers to be their capitalist masters, cab companies or Uber. Cab companies may pay more of have better working conditions right this moment, but that can change at any time, neither cab companies, nor Uber, nor Lyft etc. are what workers should ultimately trust to represent them.

      Unionization does seems underway for cab drivers:
      Are cab drivers unionized? I don’t think they are everywhere. Otherwise it’s a misuse of the scab term to promote one (capitalist) business model over another. Scab means hiring non-union workers to replace union workers, anything else is just arguing about who one prefers to be their capitalist masters, cab companies or Uber. Cab companies may pay more of have better working conditions right this moment, but that can change at any time, neither cab companies, nor Uber, nor Lyft etc. are what workers should trust ultimately to represent them.

      Unionization does seems underway for cab drivers:
      http://www.aflcio.org/Features/Innovators/Taxi!-Taxi!-Cabbies-Form-Unlikely-Union

      So it could be said that Uber could be threatening unionization in the bud perhaps.

      So it could be argued that Uber/Lyft/etc. could be threatening unionization in the bud perhaps. I’m not sure cab companies aren’t on the same side there though.

  11. gordon

    Interestingly, I had a brief exchange on another blog with an American about the word “welfare” recently. He said that Americans can’t use the word in its venerable sense of “satisfactory state; health & well-being; prosperity” (OED). Now, it only means “hand-outs”.

    If Americans can’t even argue against eg. “Saddam in bed with Osama”, all hope is lost. Your language no longer works. You can’t communicate any more.

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