What Can Uber Teach Us About the Gender Pay Gap? - Freakonomics Freakonomics
"DUBNER: it’s hard to decompose and hard to measure. But a lot of the factors that we hear about are things like inflexible hours, or temporal flexible — inflexibility. So here you’re saying that kind of doesn’t exist, right, in this Uber ecosystem, correct? Anybody can work whenever they want?
DIAMOND: Yeah, exactly. And that’s one reason we were so excited to study this question in the context of Uber data, because we could, sort of, rule out those theories from the beginning.
DUBNER: So you write in the paper that unlike previous studies, you were able to, “completely explain the pay gap.” So can you unpack that just a bit?
DIAMOND: Sure. So Uber pays drivers based on a relatively simple, transparent formula that takes into account how long your ride is in miles, how long the ride takes, and potentially, a surge multiplier where sometimes there’s, excessively high demand.
LIST: So the fare itself is determined by an algorithm, which is gender-blind. The dispatch itself is gender-blind. And pay structure’s tied directly to output and not negotiated.
DIAMOND: That transparency and that simplicity of pay is what makes this environment so interesting for studying a gender pay gap.
HALL: Because we were able to work with such excellent, detailed data, we believe this is a first-of-its-kind study, insofar as it can actually fully explain the gender pay gap... The algorithm is gender-blind, both in the literal sense that it doesn’t — that gender is not fed into it.
DIAMOND: It does not incorporate gender into the calculation at all.
HALL: And in the sense that it doesn’t facilitate discrimination by the users, the human users, who are more clever than the algorithm...
LIST: No, we find no evidence of discrimination on the customer side, meaning that riders don’t prefer men to women or women to men. They view men and women the same when it comes to being their driver...
DUBNER: So does that mean that discrimination accounts for zero percent of whatever pay gap you find or don’t find between male and female Uber drivers?
LIST: That’s correct... We found something very surprising. What you find is that men make about 7 percent more per hour on average …
DIAMOND: … which is pretty substantial.
LIST: For doing the exact same job in a setting where work assignments are made by a gender-blind algorithm and pay structure’s tied directly to output and not negotiated.
DUBNER: So a 7 percent gap, how does that compare to the best research in other occupations?
DIAMOND: So there’s been some previous work that has looked at within-firm gender pay gaps. And seven percent is not very different than the overall average we see across all firms, even in the traditional labor market...
LIST: So after reaching the dead end of discrimination doesn’t seem to be a determinant, we then decided to ask, “Well, what about where and when?” So what I’m thinking about here is time of day, day of week, and where in Chicago they actually drive. And here, we had some success. So what we find is that after you explore the where’s and when’s, we find that we can explain roughly 20 percent of the gender pay gap by choices over where to drive and when to drive.
DIAMOND: And an important contributor to the gap is particularly where the rides started. So different neighborhoods are going to differ in the types of rides that you’re going to get, and also potentially the frequency of rides you’re going to get called for. So men and women tend to target different neighborhoods of where they’re driving, and men are targeting more lucrative pay areas than women...
HALL: There are pretty large returns to what we call experience, which is literally the number of trips that you have done. This is an area that’s pretty well-studied in economics, and it’s learning-by-doing. We estimate that the more trips you do as a driver, the more you learn about how to make money on the platform...
LIST: When you look at the experience of our drivers or the average tenure, this is heavily tilted in men’s direction. Men are far more likely to have been driving on Uber for over two years. Women are likely to have just joined in recent months, and this is because women leave the platform much more often than men...
When you look at experience, really men are more experienced than women because of two primary reasons. One, women drop off the platform more often than men. But, two, even for those who are on the platform for the same amount of time, since the average man drives about 50 percent more trips per week than the average woman, you still have the experience effect for those who have been on the platform the same number of months...
HALL: Yeah. So the third factor, which explains the remaining 50 percent of the gap, is speed.
DIAMOND: So men happen to just drive a little bit faster, and because driving a little bit faster gets you to finish your trips that much quicker, and get on to the next trip, you can fit more trips in an hour, and you end up with a higher amount of pay.
HALL: And that explains about 30 percent of the pay gap that we measure...
DUBNER: So, John. One of the explanations that is often given for the gender pay gap, coming from Claudia Goldin at Harvard, is that it has to do with temporal flexibility or inflexibility. How did that factor into your prediction of what these Uber data would show? Because I would assume — but maybe I’m wrong — that if ever there was a job that offered total temporal flexibility, it would be an Uber driver.
LIST: No, I think that’s exactly right. Claudia is the world’s expert in this area. And she’s argued I think quite persuasively that once we take off the table this idea that if you labor long hours or work specific hours during the week — once we take those off the table, then it’s much more likely that this gender pay gap might entirely vanish. So, kind of my intuition actually arose from Claudia’s work. This type of job is at the extreme of temporal flexibility. This allows you to work any time, anywhere you want. And what we observe is that even when you give a lot of flexibility, you don’t see a really tiny or non-existent gender pay gap...
We’ll have a tipping paper for you in a few months. Because the economics of tipping is sort of wide open, and we’ll have a paper just like this one called something like “A Nationwide Experiment on Tipping.” We’ll do the tipping roll out and show you how earnings change with the introduction of tipping. And the earnings actually go down a little bit. They don’t go up after you introduce tipping...
DUBNER: The wage declines because more drivers think they’re going to make more money since tips are now included, but that increases the supply of drivers, which means there’s less demand to go around."
Patriarchy is just *that* powerful