The value of simplicity: an investigation of travellers' response to simplified fare structures

After a brief summary of the relevant behavioural theory and of findings from earlier work on consumers' responses to complexity and on drivers' responses to highly differentiated road user charges, we describe new work seeking to establish the likely behavioural response to simplified bus fares, and discuss the implications of the findings in the wider context of traveller behaviour. Ticket sales data suggests that the introduction of simplified fare structures has usually been associated with increases in demand but it has not been easy to distinguish the contribution of simplification per se, from that of the changes in individual fare levels, and of the marketing and service changes which usually accompany any change in fare structure. This new study sought to isolate the effect of simplification by collecting data on attitudes and stated choices via a questionnaire. Attitudinal questions probed the respondents' decision-making style, their knowledge of existing fare structures and their perceived need to know the exact fare before travelling. Other questions asked whether, and to what extent, the number of bus trips they currently make might change if bus fares were simplified in specified ways. Stated Preference (SP) questions sought to disentangle the effect of price changes and of simplification. It was not possible, in the SP exercise, to specify the existing, un-simplified, fare level (if respondents had been told what the un-simplified fare was the value of the simplification would thereby have been negated) and so respondents were asked to make their own estimate of the existing, un-simplified, fare. Three hundred interviews were conducted in Autumn 2008 in three areas of the UK where the bus fares have not yet been simplified, among people who did not rule out the possibility of making additional journeys by bus. Analysis of the resulting data suggests that people have poor knowledge of the exiting fares and that some, but by no means all, of them (particularly low income infrequent travellers) claim to be reluctant to travel without knowing the fares in advance. Modelling work revealed that a significant proportion of respondents misunderstood the concept of zonal fares but that, when this was allowed for by using a random coefficient with a discrete distribution, it becomes apparent that travellers would be prepared to pay a significant premium for having fixed or zonal fares. Interestingly, willingness to pay this premium is very unevenly spread among the population; some people apparently put a very high value on being able to estimate the fare with ease while others seem not to care. This distribution reflects expressed attitudes to uncertainty. Our findings have implications for public policy (raising issues such as the equity implications of imposing a simplified fare structure across the whole population) and for optimal commercial pricing. They also have implications for the wider understanding of travel choice; they add to the growing body of evidence that some travellers profess to take little account of price when making travel decisions and that only a minority claim to be unwilling to choose travel options whose key attributes they do not know.