IDEAS home Printed from https://ideas.repec.org/p/bfi/wpaper/2020-173.html
   My bibliography  Save this paper

On the Effects of the Availability of Means of Payments: The Case of Uber

Author

Listed:
  • Fernando E. Alvarez

    (University of Chicago - Department of Economics; NBER)

  • David O. Argente

    (Pennsylvania State University - Department of Economics)

Abstract

We use three quasi-natural experiments in Mexico and one in Panama to estimate the effects of having the option to pay with cash on Uber rides. The ability to pay in cash affects the demand for rides, which is reflected in large changes in the total number of trips, fares, miles, and number of users after Uber introduced cash payments, particularly in lower-income city blocks. On the other hand, the effects on prices, estimated times of arrival, and competitor pricing are negligible, consistent with the supply of trips being very elastic. Although cash payments naturally increase the fraction of users that pay exclusively with cash, more than half of the users have access to both cards and cash, and alternate between payment methods. We find evidence consistent with cash and card payments being imperfectly substitutable at both the intensive and extensive margins, which magnifies the impact of policies that restrict the availability of payment methods.

Suggested Citation

  • Fernando E. Alvarez & David O. Argente, 2020. "On the Effects of the Availability of Means of Payments: The Case of Uber," Working Papers 2020-173, Becker Friedman Institute for Research In Economics.
    • Handle: RePEc:bfi:wpaper:2020-173
    as

    Download full text from publisher

    File URL: https://repec.bfi.uchicago.edu/RePEc/pdfs/BFI_WP_2020173.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Briglevics, Tamás & Schuh, Scott, 2014. "This is what's in your wallet... and how you use it," Working Paper Series 1684, European Central Bank.
    2. Sergei Koulayev & Marc Rysman & Scott Schuh & Joanna Stavins, 2016. "Explaining adoption and use of payment instruments by US consumers," RAND Journal of Economics, RAND Corporation, vol. 47(2), pages 293-325, May.
    3. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    4. Tamas Briglevics & Scott Schuh, 2014. "This is what's in your wallet... and here's how you use it," Working Papers 14-5, Federal Reserve Bank of Boston.
    5. Alexei Deviatov & Neil Wallace, 2014. "Optimal inflation in a model of inside money," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(2), pages 287-293, April.
    6. Alvarez, Fernando & Lippi, Francesco, 2017. "Cash burns: An inventory model with a cash-credit choice," Journal of Monetary Economics, Elsevier, vol. 90(C), pages 99-112.
    7. Carlos A. Arango & Dylan Hogg & Alyssa Lee, 2015. "Why Is Cash (Still) So Entrenched? Insights From Canadian Shopping Diaries," Contemporary Economic Policy, Western Economic Association International, vol. 33(1), pages 141-158, January.
    8. Firpo Sergio & Possebom Vitor, 2018. "Synthetic Control Method: Inference, Sensitivity Analysis and Confidence Sets," Journal of Causal Inference, De Gruyter, vol. 6(2), pages 1-26, September.
    9. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 819-863.
    10. Fernando E. Alvarez & David O. Argente, 2020. "Consumer Surplus of Alternative Payment Methods: Paying Uber with Cash," NBER Working Papers 28133, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christensen, Peter & Osman, Adam, 2021. "The Demand for Mobility: Evidence from an Experiment with Uber Riders," IZA Discussion Papers 14179, Institute of Labor Economics (IZA).
    2. Lucas A. Mariani & Jose Renato Haas Ornelas & Bernardo Ricca, 2023. "Banks’ Physical Footprint and Financial Technology Adoption," Working Papers Series 576, Central Bank of Brazil, Research Department.
    3. Alvarez, Fernando & Argente, David & Jimenez, Rafael & Lippi, Francesco, 2022. "Cash: A Blessing or a curse?," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 85-128.
    4. Brendon McConnell, 2023. "What's Logs Got to do With it: On the Perils of log Dependent Variables and Difference-in-Differences," Papers 2308.00167, arXiv.org, revised Aug 2023.
    5. Mariani, Lucas A. & Haas Ornelas, José Renato & Ricca, Bernardo, 2023. "Banks’ Physical Footprint and Financial Technology Adoption," IDB Publications (Working Papers) 12812, Inter-American Development Bank.
    6. Raphael Auer & Giulio Cornelli & Jon Frost, 2022. "The pandemic, cash and retail payment behaviour: insights from the future of payments database," BIS Working Papers 1055, Bank for International Settlements.
    7. Fernando E. Alvarez & David Argente & Diana Van Patten, 2022. "Are Cryptocurrencies Currencies? Bitcoin as Legal Tender in El Salvador," NBER Working Papers 29968, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alvarez, Fernando & Argente, David & Jimenez, Rafael & Lippi, Francesco, 2022. "Cash: A Blessing or a curse?," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 85-128.
    2. Martin Brown & Nicole Hentschel & Hannes Mettler & Helmut Stix, 2020. "Financial Innovation, Payment Choice and Cash Demand - Causal Evidence from the Staggered Introduction of Contactless Debit Cards," Working Papers on Finance 2002, University of St. Gallen, School of Finance.
    3. Martin Brown & Nicole Hentschel & Hannes Mettler & Helmut Stix, 2020. "Financial Innovation, Payment Choice and Cash Demand – Causal Evidence from the Staggered Introduction of Contactless Debit Cards (Martin Brown,Nicole Hentschel, Hannes Mettler, Helmut Stix)," Working Papers 230, Oesterreichische Nationalbank (Austrian Central Bank).
    4. Wang, Zhu & Wolman, Alexander L., 2016. "Payment choice and currency use: Insights from two billion retail transactions," Journal of Monetary Economics, Elsevier, vol. 84(C), pages 94-115.
    5. Arango, Carlos & Huynh, Kim P. & Sabetti, Leonard, 2015. "Consumer payment choice: Merchant card acceptance versus pricing incentives," Journal of Banking & Finance, Elsevier, vol. 55(C), pages 130-141.
    6. Tamás Briglevics & Scott Schuh, 2020. "This Is What's in Your Wallet...and Here's How You Use It," Working Papers 20-04, Department of Economics, West Virginia University.
    7. Bruno Ferman & Cristine Pinto & Vitor Possebom, 2020. "Cherry Picking with Synthetic Controls," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 510-532, March.
    8. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    9. Greene, Claire & Prescott, Brian & Shy, Oz, 2022. "How people pay each other: Data, theory, and calibrations," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 96(C).
    10. repec:zbw:bofrdp:2015_022 is not listed on IDEAS
    11. Carlos Arango & Yassine Bouhdaoui & David Bounie & Martina Eschelbach & Lola Hernández, 2013. "Cash Management and Payment Choices: A Simulation Model with International Comparisons," Staff Working Papers 13-53, Bank of Canada.
    12. Andrii Melnychuk, 2024. "Synthetic Controls with spillover effects: A comparative study," Papers 2405.01645, arXiv.org.
    13. Bautista, M. A. & González, F. & Martínez, L. R. & Muñoz, P. & Prem, M., 2020. "Chile’s Missing Students: Dictatorship, Higher Education and Social Mobility," Documentos de Trabajo 18163, Universidad del Rosario.
    14. Alberto Di Iorio & Giorgia Rocco, 2022. "Easier said than done: why Italians pay in cash while preferring cashless," Questioni di Economia e Finanza (Occasional Papers) 731, Bank of Italy, Economic Research and International Relations Area.
    15. Goryunov, Alexander & Ageshina, Elena & Lavrentev, Igor & Peretyatko, Polina, 2023. "Estimating the effect of Russia’s development policy in the Far Eastern region: The synthetic control approach," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 72, pages 58-72.
    16. Diego Zambiasi & Steven Stillman, 2020. "The Pot Rush: Is Legalized Marijuana A Positive Local Amenity?," Economic Inquiry, Western Economic Association International, vol. 58(2), pages 667-679, April.
    17. Robbert Maseland & Rok Spruk, 2023. "The benefits of US statehood: an analysis of the growth effects of joining the USA," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 17(1), pages 49-89, January.
    18. Stefano, Roberta di & Mellace, Giovanni, 2020. "The inclusive synthetic control method," Discussion Papers on Economics 14/2020, University of Southern Denmark, Department of Economics.
    19. Luisa Doerr & Florian Dorn & Stefanie Gaebler & Niklas Potrafke, 2020. "How new airport infrastructure promotes tourism: evidence from a synthetic control approach in German regions," Regional Studies, Taylor & Francis Journals, vol. 54(10), pages 1402-1412, October.
    20. Toshitaka Sekine & Toshiaki Shoji & Tsutomu Watanabe, 2021. "Going Cashless: Evidence from Japan’s Point Reward Program," Working Papers on Central Bank Communication 036, University of Tokyo, Graduate School of Economics.
    21. Gabriel, Ricardo Duque & Pessoa, Ana Sofia, 2024. "Adopting the euro: A synthetic control approach," European Journal of Political Economy, Elsevier, vol. 83(C).

    More about this item

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bfi:wpaper:2020-173. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Toni Shears (email available below). General contact details of provider: https://edirc.repec.org/data/mfichus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.