How Uber has transformed the on-demand economy
Executive Summary
Economy
By facilitating a more convenient and on-demand form of transport, Uber Taxi helps save time, expand mobility, and provide flexible earning opportunities for thousands of taxi driver-partners in Hong Kong.
In 2021, Uber Taxi unlocked an estimated HK$860 million in economic value for the Hong Kong economy. This includes both the impact of earnings of taxi driver-partners, and the wider indirect and induced multiplier effect created throughout the company's wider supply chain.
In total, in 2021 we estimate that this increased flexibility is worth an estimated HK$160 million to driver-partners.
Consumers
The on-demand economy has helped make everyday life easier for Hongkongers - saving time, increasing choice, and improving mobility. For consumers, the primary reason for using Uber Taxi is convenience. Taxi e-hailing platforms like Uber Taxi have made it easier to travel from point A to point B.
91% of taxi riders say that convenience is an important reason they use Uber Taxi. In a normal year, we estimate that Uber Taxi saves taxi riders over 2.7 million hours a year.
In 2021, we estimate that taxi services with Uber Taxi produced HK$1.5 billion in consumer surplus for Hongkongers.
Taxi Driver-Partners
Taxi driver-partners overwhelmingly choose to use the Uber App because of the flexibility it provides, and the ability to control their own hours. The majority report highly satisfied with their experience, and that Uber Taxi has helped them earn additional income.
In total, in 2021, we estimate that taxi driver-partners earn an additional HK$60 million a year in higher income through Uber Taxi, or an average of 12% more than their next best alternative source of income.
71% of taxi driver-partners say that schedule flexibility is important to them when looking for work, and on average flexibility was a more important factor than earnings in why drivers choose to work with Uber Taxi. In total, in 2021 we estimate that this increased flexibility is worth an estimated HK$160 million to driver-partners.
Communities
Uber Taxi 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.
90% of female taxi riders say that safety is an important factor in their choice to use the Uber App, and 75% of female riders agree that it is now easier to get home late at night.
38% of taxi riders without access to a car said the availability of services like Uber Taxi was important to their choice of not owning a vehicle.
In total, we estimate that 1 in 9 Uber Taxi trips connect with public transport.
Consumers
How we use Uber Taxi
In the last two years, Uber Taxi has increasingly become a part of everyday life. In Hong Kong, Uber offers its Uber Taxi service, which allows consumers to connect with, book and pay for a traditional taxi through the Uber App. 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 taxi services has become something many people in Hong Kong increasingly rely on. When you book an Uber Taxi, you know exactly how far away it is, and have much greater certainty of when you might arrive at your destination.
In our poll, which is representative across the entire city, we found that:
- 46% of the respondents said that they had used the Uber App in the last two years, rising to around 64% for those aged under 35.
- There was no significant difference in gender in how likely someone was to use the Uber App
Outside the pandemic period in a more normal year, Uber Taxi 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 Taxi is being widely used to help with work, everyday chores and childcare.
And Uber Taxi is an important option for when you really need to get somewhere fast or on time. On average, riders say Uber Taxi saves around 21 minutes per trip compared to their next best alternative means of travel. Building off this, we estimate that Uber Taxi saves riders over 2.7 million hours in a normal year.
Why do riders choose Uber?
When we asked riders about the most important reasons why they used Uber Taxi, convenience (91%) came top, with other factors such as safety (89%) and reliability (88%) seen as just as important as time saved (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: convenient.
In your own words, why do you use Uber?
Why do you use Uber? 1
“I know when a ride is available. There is no need to wait for an unknown amount of time for a taxi.” Female customer, 31, from Hong Kong
“I work shifts sometimes, and I have to go out at around 5:00 AM. At these times, other transportation options aren't available, so I use Uber.” Female customer, 24, from Hong Kong
“Uber is convenient, and I don't think public transport is safe while the Coronavirus pandemic is ongoing.” Male customer, 31, from Hong Kong
“When you travel with Uber, you know how much you need to pay for the ride before it starts.” Female customer, 28, from Hong Kong
“I use Uber when the travelling distance is long and when alternative means of transportation are not available plus the expenses can be shared by a number of people” Male customer, 62, from Hong Kong
How much value does Uber create for consumers?
How much is the increased convenience, safety and reliability enabled by Uber Taxi 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 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 Taxi are producing HK$1.5 billion in consumer surplus for Hong Kong taxi riders. That’s the equivalent of 0.05% of GDP.
Taxi driver-partners
Driver-partners are highly satisfied with the experience of using Uber Taxi
In our survey:
In total, in 2021, we estimate that taxi driver-partners earn an additional HK$60 million a year in higher income through the Uber App, or an average of 12% more than their next best alternative.
When we asked taxi driver-partners what were important reasons they chose to drive through the Uber App, the most popular answers were wanting higher earnings, that they enjoyed driving, and that they wanted more flexibility.
If they weren’t driving Uber Taxi, the majority say they would look for another similar role. Just 26% 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 taxi driver-partners what they most liked about driving on the Uber App, freedom was by far the leading response.
In your own words, what do you like most about driving for Uber?
Many taxi driver-partners balance their time on the Uber App with jobs, platform work, education or caring responsibilities. In our driver-partners survey, 71% of taxi driver-partners say that schedule flexibility is important to them when looking for work.
In order to test its importance, we asked taxi 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 HK$160 million to Uber Taxi driver-partners.
Flexibility matters for many reasons. 63% of taxi driver-partners say that they earn income from other sources, as well as via the Uber App - 25% have a traditional full-time job too - and it is only a small minority of driver-partners who use the platform for more than 40 hours a week.
Flexibility can be particularly important for those with other caring responsibilities for children, elderly relatives or others who need support:
- 63% of those with children aged 18 or under or caring responsibilities said that the flexibility provided by App-based work made it easier to balance family and work responsibilities.
- 71% of those with children aged 18 or under or caring responsibilities said that working via the Uber Taxi platform provides them with significantly more flexibility than their past jobs.
What do you like most about driving with Uber? 2
“There are opportunities to have a better income and more flexibility.” Male taxi driver-partner, 42, from Hong Kong
“With Uber, I can transport passengers to their destination in the fastest and safest way, and the other person feels that the money paid is worth it.” Male taxi driver-partner, 52, from Hong Kong
“I like to drive, go to places that I've not visited before and interact with guests! I enjoy being able to earn income from Uber!” Male taxi driver-partner, 37, from Hong Kong
“I get to see new places” Female taxi driver-partner, 38, from Hong Kong
“You can freely choose when to take orders and when to stop taking orders!” Male taxi driver-partner, 61, from Hong Kong
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, 35% of women under 25 said they generally feel unsafe travelling home at night. Before taxi services like Uber Taxi, it could be difficult, if not impossible, to get home 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 Taxi available in a city reduces drunk driving, traffic accidents, and the number of arrests for physical and sexual assault.3 In our polling, over half of taxi riders (59%) agreed that Uber Taxi 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 Cities are concentrated sites of carbon emissions, accounting for ~70% of all emissions globally.
Technologies such as ridesharing can help fill in any gaps in the services offered by public transit, making it easier to get around and reducing the need to own your own car. In our polling, 38% of riders without access to a car said the availability of e-hailing platforms like Uber Taxi was important to their choice of not owning a vehicle.
Almost nobody relies exclusively on e-hailing 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 or go without access to Uber for one month and get paid HK$X?”
The price offered was randomised between HK$1.25, HK$2.50, HK$5, HK$10, HK$20, HK$50, HK$100, HK$200, and HK$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 Taxi on total driver payouts and the number of driver-partners partnering with Uber Taxiby 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 surplus per user, averaging the results of the two models. This model was conditional on both driver-partner type (taxi) and location. This was then scaled up to a national level and regional level by data provided by Uber Taxi on taxi driver-partner numbers.
Total Economic Impact
Total economic impact is calculated as the sum of:
- Taxi driver-partner payouts.
- Indirect and induced impact of taxi driver-partner spending on vehicles.
- Induced impact of additional taxi driver-partner income.
This measure is a gross estimate, looking at the total amount of economic activity supported by Uber Taxi in Hong Kong. It does not attempt to measure what would happen in a hypothetical where Uber Taxi no longer existed. Our modelling does not include the impact of Uber Taxi'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