How Uber has transformed the on-demand economy
Executive Summary
Economy
By facilitating a more convenient and on-demand form of transport, Uber helps save time, expand mobility, and provide flexible earning opportunities for thousands of driver-partners in Bangladesh.
In 2021, Uber unlocked an estimated ৳45 billion in economic value for the Bangladeshi economy. This includes both the impact of earnings of driver-partners facilitated by Uber, and the wider indirect and induced multiplier effect created throughout the company's wider supply chain.
According to Bangladeshi riders, ridesharing is the most significant transport innovation they have experienced in the last decade, and more impactful to them than any new transportation infrastructure project.
In total, in 2021 we estimate that this increased flexibility is worth an estimated ৳720 million to driver-partners
Consumers
The on-demand economy has helped make everyday life easier for Bangladeshis - saving time, increasing choice, and improving mobility. For consumers, the primary reason for using Uber is convenience. Ridesharing platforms like Uber have made it easier to travel from point A to point B;
90% of riders say that convenience is an important reason they use Uber. In a normal year, we estimate that Uber saves riders over 17 million hours a year.
In 2021, we estimate that ridesharing with Uber produced ৳70 billion in consumer surplus for Bangladeshis.
Driver-partners
Driver-partners overwhelmingly choose to use the Uber app because of the flexibility it provides, and the ability to control their own hours. The vast majority report being highly satisfied with their experience, and that Uber has helped them earn additional income.
73% of driver-partners said they were satisfied with their experience using the Uber app. In total, in 2021, we estimate that driver-partners earn an additional ৳522 million a year in higher income through Uber, or an average of 26% more than their next best alternative source of income or work.
53% of driver-partners say that schedule flexibility is important to them when looking for work. In total, in 2021 we estimate that this increased flexibility is worth an estimated ৳720 million to driver-partners.
Communities
Uber helps provide a safer way to get home late at night, and helps complement public transport by filling in the gaps it can’t reach.
96% of female riders say that safety is an important factor in their choice to use Uber, with 72% of female riders agreeing that it is now easier to get home late at night.
84% of riders without access to a car said the availability of ridesharing services like Uber was important to their choice of not owning a vehicle.
In total, we estimate that 1 in 5 Uber trips connect with public transport.
Consumers
How we use Uber
Over the last decade, Uber has increasingly become a part of everyday life. From getting home from a restaurant to travelling between meetings, helping carry heavy items to being there in an emergency, the availability of convenient, safe ridesharing services has become something many Bangladeshis increasingly rely on. In 2019, Uber served 2 million customers in Bangladesh.
Outside the pandemic period in a more normal year, Uber is being widely used to help us get to and from friends and family, eating out and entertainment.
But it is not just being used for leisure. We also found that Uber is being widely used to help with work, everyday chores and childcare.
And Uber is an important option for when you really need to get somewhere fast or on time. On average, riders say Uber saves around 21 minutes per trip compared to the next best alternative. Building off this, we estimate that Uber saves riders over 17 million hours in a normal year.
Why do riders choose Uber?
When we asked riders about the most important reasons why they used Uber, comfort (95%), safety (95%) and time saved (95%) came top, with other factors such as privacy (93%) and convenience (92%) seen as just as important as reliability (88%).
Which factors tend to be important or unimportant in why you choose to use Uber?
Even more striking, however, was when we asked as part of the survey for riders and consumers to write in their own words why they use the service - and one answer came back far more than others: safety.
In your own words, why do you use Uber?
Why do you use Uber? 1
“Uber is available everywhere. It is easy to use and the cost is low.” Male customer, 35, from the Khulna Division
“I think Uber is really helpful for students like me. They sometimes give me discounts and I go to my university for a much cheaper price. When I am in a hurry I'll often book an Uber to get to where I need to go. It helps me save my important time!” Male customer, 20, from the Chittagong Division
“In case of an emergency I use Uber. In case of family members going out on trips I suggest Uber for a hassle free and comfortable journey.” Male customer, 21, from the Chittagong Division
“I find it more convenient than any other form of public transport. It saves time, which is worth the cost. And of course it's comfortable.” Female customer, 29, from the Dhaka Division
“To avoid the hassle of hiring other forms of local transport. Uber also helps me to save time and money.” Female customer, 36, from the Dhaka Division
“I use Uber for many reasons, such as going to my tuition classes, going to the hospital, going to a wedding, or if I'm in an emergency! I don't have a car, so Uber is very helpful for me!” Male customer, 19, from the Chittagong Division
“I use Uber as it is very convenient and helps to travel fast. You can also use Uber for long distance travel and it is safe, moreover the cost is worth it. You can go with your family and friends anywhere by Uber, as it is easy to access and reliable. I recommend Uber to my friends!” Female customer, 26, from the Dhaka Division
How much value does Uber create for consumers?
How much is the increased convenience, safety and reliability enabled by Uber worth to riders and consumers?
One of the most important measures of economic welfare is the consumer surplus - the amount you would have to pay someone for them to voluntarily give a good or service up. If a good has a zero consumer surplus, that implies we can take or leave it - whereas goods with a high consumer surplus are playing an important role in our lives.
As part of their poll, we asked riders and consumers how much they would have to be compensated to lose access to the Uber app for the next month.
In total, in 2021 we estimate that rides with Uber are producing ৳70 billion in consumer surplus for Bangladeshi riders. That’s the equivalent of 0.25% of GDP.
Driver-Partners
Driver-partners are highly satisfied with the experience of using Uber
In our survey 73% of driver-partners said they were satisfied with their experience using the Uber app, compared to 20% who said they were unsatisfied.
In total, in 2021, we estimate that driver-partners earn an additional৳522 million a year in higher income through Uber, or an average of 26% more than their next best alternative.
If they weren’t driving with Uber, the majority say they would look for another, similar driving role. Just 22% say that they would look for a traditional full-time job as a replacement, while:
The Importance of Access to Flexible Work
When we asked driver-partners what they most liked about using Uber to drive, driving was by far the leading response.
In your own words, what do you like most about driving for Uber?
The ability to choose your own hours is often particularly important to driver-partners. Many driver-partners balance their time on the Uber app with jobs, platform work, education or caring responsibilities. In our driver-partners survey, 53% of driver-partners say that schedule flexibility is important to them when looking for work. Only a minority said that using Uber was their only source of income.
In order to test its importance, we asked driver-partners whether they would prefer a hypothetical situation in which they received higher earnings, but had to work fixed hours. A majority of driver-partners said that they would rather retain the right to choose their own hours, even if the alternative was a 20% increase in earnings. In total, in 2021 we estimate that this increased flexibility is worth৳720 million to driver-partners.
Flexibility matters for many reasons. 27% of driver-partners say that they earn income from other sources, as well as via the Uber app - 11% have a traditional full-time job too - and it is only a small minority of driver-partners who use the platform more than 40 hours a week.
What do you like most about driving with Uber? 2
“It feels good to provide services to people.”
“Freedom, owner of one's own work.”
“New people, new experiences, new attitude, new conversations.”
“Opportunities to work independently.”
“It feels good to drive independently.”
“I earn more money with Uber.”
“Freedom and income.”
Communities
Keeping communities safe
After they have enjoyed a good evening out, many people can be anxious about travelling home in the dark. In our polling, 58% of women under 35 said they generally feel unsafe travelling home at night. Before ridesharing, it could be difficult, if not impossible, to find a taxi at the end of a night out - and taking public transport could require a long walk in the dark to your front door, or waiting alone at a bus stop.
Independent academic research has found that having Uber available in a city reduces drunk driving, traffic accidents, and the number of arrests for physical and sexual assault.3 In our polling, about three-fourths of female riders (74%) agreed that Uber is often the safest way for them to travel home.
Sustainability
Decarbonizing transport is one of the most important steps for countries to achieve net zero emissions, with the sector responsible for around a fifth of global CO2 emissions.4
While ridesharing increases overall mobility, this does not need to come at the expense of worsened sustainability:
- Because of Uber’s on-demand nature, Uber achieves much higher utilisation rates than taxis, reducing the amount of time driving without transporting riders.5
- Driver-partners are investing heavily in hybrid and electric vehicles, with the company committing to become a zero-emissions global platform by 2040.
- For riders, the availability and reliability of Uber makes it possible to replace a driving trip with a multi-modal trip, combining public transport and rides with Uber - and for a number of riders to go without owning a car altogether.
Technologies such as ridesharing, carpooling and electric bikes are making it easier to get around, and reducing the burden of congestion. In our polling, 84% of riders without access to a car said the availability of ridesharing services like Uber was important to their choice of not owning a vehicle.
Almost nobody relies exclusively on ridesharing services to travel around an area - instead they form an important complement for public transport, covering those journeys for which other modes of transport would be unsafe, inconvenient or take too long.
Appendix - Methodology
Consumer Surplus
Following the methodology of Brynjolfsson, Collis and Eggers (2019), we asked riders a single discrete binary choice question in the form:
“Now imagine you had to choose between the following options. Would you prefer to keep access to [Uber for rideshare] or go without access to [Uber for rideshare] for one month and get paid ৳X?”
The price offered was randomised between ৳1.25, ৳2.50, ৳5, ৳10, ৳20, ৳50, ৳100, ৳200, and ৳500.
We then computed both a linear and logarithmic regression of the results of this poll to derive a demand curve and the total consumer surplus per user, taking the average as the headline measure.
Time Saved
As part of our polling, we asked riders for the duration of their most recent trip with Uber, and how long the next best alternative would have taken. We then used the difference to estimate time saved per trip, multiplying by Uber provided data on total number of annual trips by region to estimate total time saved per year. We then calculated the monetary value of this using average hourly salary.
Gross Increase in Driver-Partner Income
Gross Driver-Partner Income is calculated from proprietary data provided by Uber on total driver-partner payouts and the number of driver-partners partnering with Uber by region.
Increase in Income (%) is taken from the driver-partner survey, and the average response to:
“If Uber did not exist, how much do you think you would be likely to earn per week in your next best alternative?”
Value of Flexibility
As part of the driver-partner survey, we asked the following single discrete binary choice question:
“Imagine you had to choose between one of the following two options:
- Fixed schedule but MORE consistent weekly earnings at X% [lower/higher] level than you do now
- Flexibility to choose your own hours, but earning only the same amount per hour that you do now
Which would you choose?”
X was randomised between 5%, 10%, and 20%. We then used a probit and logit regression to derive a demand curve, and the total driver-partner surplus per user, averaging the results of the two models. This model was conditional on location. This was then scaled up to a national level and regional level by data provided by Uber on driver-partner numbers.
Total Economic Impact
Total economic impact is calculated as the sum of:
- Driver-partner payouts.
- Indirect and induced impact of driver spending on vehicles.
- Induced impact of additional driver-partner income.
This measure is a gross estimate, looking at the total amount of economic activity supported by Uber in Bangladesh. It does not attempt to measure what would happen in a hypothetical where Uber no longer existed. Our modelling does not include the impact of Uber's direct investment or employment footprint as a company, or any spillover effect this has to the wider tech ecosystem.
Frequently Asked Questions
About the Report
- New nationally representative polls of approximately 1,000 consumers in each country, run by Public First.
- A new survey of driver and delivery people for each country, reaching over 7,000 drivers and delivery people in total. While Uber invited drivers and delivery people to complete the survey, the actual data was hosted by Public First, with individual level data kept anonymous and not shared back with Uber.
- Internal data provided by Uber on the number of drivers, driver payouts, restaurant/merchant payouts, and hours worked in each country.
Measuring Uber’s Economic Impact
- Payments to drivers, delivery people and restaurants
- Indirect and induced impact of driver and delivery person spending on vehicles (eg estimated car rental, insurance, fuel, running costs etc)
- Induced impact of additional driver and delivery person income
- Indirect and induced impact of restaurant spending via Uber Eats
We do not include the impact of any direct investment from Uber in each territory (eg its offices, employees etc).
The aim of GVA is to try and take account of the additional value created by a company and organisation - the value added - on top of the value of the raw materials and inputs it takes in.
- The indirect impact looks at the impact of an organisation’s procurement and supply chain - in this case, for example, driver spending on vehicles or restaurant spending on food and kitchen supplies.
- The induced impact looks at the impact of the wages of a business and its supply chains employees, and how their spending supports other businesses. In this case, we are looking at the impact of spending of drivers and delivery people, as well as the wider supply chain.
Other Estimates in the Report
In order to do this, we took the data Uber provided us on the total level of payouts for restaurants and merchants per territory, and then estimated the proportion that was additional based on averaging two sources:
- The average self-reported proportion from this question in our polling in each country: In your experience, how has the availability of food delivery apps affected the amount of food you order for delivery?
- The incremental spend for restaurants calculated in Collison (2020)
“If Uber did not exist, how much do you think you would be likely to earn per week in your next best alternative?”
“Imagine you had to choose between one of the following two options:
- Fixed schedule but MORE consistent weekly earnings at X% [lower/higher] level than you do now
- Flexibility to choose your own hours, but earning only the same amount per hour that you do now
One way to think of this is that most goods in the market charge the same price to all or a group of customers - but they are not likely to create equal amounts of value. The price you pay for something is likely to be at least equal to the minimum value it creates for you - or you would not have chosen to buy it - but there is no reason the value it creates can not be significantly more than this. By totalling the surplus consumer value, we produce a measure called the consumer surplus.
Following the methodology of Brynjolfsson, Collis and Eggers (2019), we asked riders and Uber Eats users a single discrete binary choice question in the form:
“Now imagine you had to choose between the following options. Would you prefer to keep access to [Uber for rideshare/Uber Eats] or go without access to [Uber for rideshare/Uber Eats] for one month and get paid $X?”
The price offered was randomised between $1.25, $2.50, $5, $10, $20, $50, $100, $200, and $500, or a local equivalent with similarly valued price points.
We then computed both a linear and logarithmic regression of the results of this poll to derive a demand curve and the total consumer surplus per user, taking the average as the headline measure.
We then used the difference to estimate time saved per trip, multiplying by Uber provided data on total number of annual trips by region to estimate total time saved per year.
- Quotes have been edited for spelling and grammar, but are otherwise unchanged.
- Quotes have been edited for spelling and grammar, but are otherwise unchanged.
- Driving Safety : An Empirical Analysis of Ridesharing’s Impact on Drunk Driving and Alcohol-Related Crime, Frank Martin-Buck, 2016, https://pdfs.semanticscholar.org/3f1e/b273fcee888441147105882dd12ca811fd35.pdf; Ride-Sharing, Fatal Crashes, and Crime, Angela K. Dills and Sean E. Mullholland, 2016, https://onlinelibrary.wiley.com/doi/abs/10.1002/soej.12255; Assessing the Impact of Ridesharing Services on Public Health and Safety Outcomes, Marlon Graf, 2017, https://milkeninstitute.org/sites/default/files/reports-pdf/110117-Ridesharing-and-Public-Health.pdf; Rideshare Utilization Decreases Motor Vehicle Trauma and Impaired Driving, Christopher R Conner, Ryan S Kitagawa, Samantha Parker, 2020, https://academic.oup.com/neurosurgery/article/67/Supplement_1/nyaa447_101/5982419
- https://ourworldindata.org/co2-emissions-from-transport
- Disruptive Change in the Taxi Business: The Case of Uber, Judd Cramer & Alan B. Krueger, 2016, https://www.nber.org/system/files/working_papers/w22083/w22083.pdf