The perverse incentives produced by institutional division

» In Chicago, conflicts between local transit services and the commuter rail network have impinged on peoples’ mobility for decades. The institutional context encourages divides, not cooperation, to the detriment of riders.

Metra tracks on Chicago's South Side.

All across the developed world,* cities have transitioned their commuter rail networks—services designed for infrequent, relatively long-distance travel at peak hours between suburbs and central cities—into regional rail systems. Regional rail, exemplified by Germany’s S-Bahn and France’s RER systems, encompasses all-day, two-way, frequent service, often with through-running, meaning service from suburb to suburb via downtown. Regional rail is typically also integrated into the metropolitan transit fare system, such that a ride on regional rail costs no different than one on a local bus and train, as long as the origin and destination are the same.

These regional rail services have transformed metropolitan travel in the places where they’ve been implemented because they make show-up-and-go, fast service available to whole regional populations, not just those who live in center cities, where frequent local rail and bus options are available.

Why is it, then, that U.S. transit agencies have failed, practically universally, to adopt such changes? Why is commuter rail service in every U.S. city where it’s offered so infrequent? And why is it typically so much more expensive than other types of transit?

There are a number of reasonable explanations—commuter rail often travels on tracks also used by freight, so it’s difficult to add service; commuter rail journeys are longer, so they cost more to provide; and suburban Americans are less comfortable using transit than their foreign counterparts, so there is less demand for the service.

Yet there are also institutional constraints that have made U.S. regions so incapable of investing in regional rail. These are resolvable problems, but doing so will require a significant political lift.

Even so, if American cities are serious about moving people into transit, reducing transportation-related greenhouse-gas emissions, and providing an alternative to car-dependence at the metropolitan scale, regional rail is a necessary investment. It is the only mechanism available to provide fast, frequent, reliable, and long-distance transportation for large numbers of people. Finding the political will to surmount these institutional constraints and develop regional rail should be a priority in virtually every metropolitan area.

Chicago: A difficult case study

The Chicago metropolitan area would, in theory, make for an ideal place to implement regional rail. Less than a third of the area’s nine million inhabitants live in the central city, but Chicago’s downtown Loop is a massive jobs hub, and much of the region grew out along rail lines, now operated by Metra, the commuter rail service.

For years, advocates in Chicago have pushed for improvements on Metra Electric, a commuter line that runs south from downtown through the city and into the suburbs. They argued that it could provide frequent, all-day service and allow transfers to-and-from Chicago Transit Authority (CTA) local bus and rail routes; the Electric, which once had faregates and frequent all-day service, also had the advantage of operating on tracks not shared with freight trains. These improvements, they suggested, would increase transit use, reduce commute times, and help reinvigorate a low-income community.

The Chicago region, like most metropolitan areas around the U.S., has rapidly lost transit riders over the last decade, and needs a new strategy to build back the use of public transportation.

This year, change finally seemed to be afoot: The state passed a huge gas-tax increase, providing new funding for transportation investments. And Cook County President Toni Preckwinkle announced that she wanted to subsidize Metra to increase service not only on the Electric, but also on the adjacent Rock Island line, and reduce fares to levels equivalent to those on the CTA—just $2.50 a ride in the city.

But this week, Chicago Mayor Lori Lightfoot announced her opposition to the proposal. The fact that Preckwinkle was Lightfoot’s opponent in last February’s mayoral race suggests that personality politics may be partly to blame. Officially, for the new mayor, however, the policy is problematic because it would shift riders from CTA onto Metra, hurting the CTA.

CTA is an independent agency that the mayor of Chicago controls through appointees. Metra is a state agency whose board is largely composed of appointees from Chicago-region counties, including Cook County.

This leaves Cook County’s proposal with an unclear future. It’s not obvious that Metra will be able to assemble the political constituency to move forward without the city’s agreement, since the majority of people who would benefit from the service live and work in the city.

If Mayor Lightfoot’s opposition is successful, the citizens of the city will be worse off. The proposal to improve and cheapen Metra services would boost overall transit ridership, reduce car dependence, increase equity of access, and generally make the Chicago region a better place to live.

So what gives? Much can be explained by the current institutional configuration of transit in the Chicago region, which isn’t so far off from those of transit systems elsewhere in the U.S.

Institutional constraints at play

Let’s consider the current institutional configuration of transit systems in the Chicago region. The CTA, again, is controlled by the mayor, since she can appoint four of its seven board members (the other three are appointed by Illinois’ governor). Of Metra’s 11 board members, five are appointed by suburban county boards, one is appointed by the Cook County president, one is appointed by the mayor of Chicago, and four are appointed by suburban members of the Cook County board.

There is also an organization called the Regional Transportation Authority (RTA), which is supposed to oversee CTA, Metra, and Pace, the suburban bus service, but whose actual power is largely limited to distributing a small share of grant funds and vetoing the other agencies’ budgets, a power it has not engaged in.

CTA and Metra largely receive funding from the same sources: Sales taxes collected throughout the Chicago region and state financial assistance; together, these accounted for 95 percent of public subsidies to the two services in 2019. In other words, generally the same taxpayers are paying for services operated by CTA and Metra (though the transit-related sales tax rate in Cook County and Chicago, 1.25%, is higher than in the rest of the region, 0.5%).

Despite these shared sources of funds and official oversight of both agencies by RTA, CTA and Metra operate as if they were competitors. As an example, the CTA runs express bus services to the South Side, such as the #6, J14, and #26 buses, which serve destinations just adjacent to station stops of the Metra Electric—despite the fact that Metra Electric services are faster and more reliable.

Metra services, meanwhile, are more expensive than their CTA equivalents. One-way travel between the Loop and the South Side of Chicago costs between $4 and $5.50, compared to $2.25 for CTA bus and $2.50 for CTA rail fares. Metra’s fare doesn’t allow for transfers to other parts of the city on CTA services, whereas such transfers cost $0.25 for those using the CTA.

Cook County’s proposal would address some of these deficiencies, making Metra trains more convenient from both a timing and cost perspective.

It is unquestionably true that Mayor Lightfoot is right in suspecting that such changes would move riders out of CTA and onto Metra.

People on much of the South Side of Chicago are currently using CTA services instead of Metra for two reasons. First, they’re cheaper; many people who ride transit are financially constrained, and they make choices that reflect that fact. Second, CTA is more convenient, since its buses and trains operate more frequently.

Making Metra cheaper and more frequent would address those two problems to a significant degree. Allowing people access to regional rail service would improve their lives, allowing them to spend less time in transit and increasing the distance they could travel in a given period of time.

But Mayor Lightfoot has little incentive to encourage people to move from CTA to Metra. Doing so would reduce her political constituency by moving riders from a service she controls to one she does not. It would also put pressure on CTA’s finances by reducing its revenues to some degree.

Moreover, CTA officials are right to believe that relying on Metra to make wholehearted change is a tenuous bet at minimum. For instance, despite a state mandate for Metra to accept the Ventra transit card used by CTA and Pace, the agency still doesn’t accept the card in conventional forms. The suburban control of Metra’s board, meanwhile, means the agency has for decades undermined its urban customers—those living in the city of Chicago—to prioritize service for suburban riders. And even as CTA has slowly but steadily improved—for example, buying up-to-date railcars and buses—Metra remains stuck in the 1970s from a technological perspective. So encouraging a shift to Metra won’t necessarily be all roses.

The result, however, is a continued competition for riders, an absurd situation when both CTA and Metra are relying on the same market of passengers and both are receiving public subsidies from the same tax sources.

This is not an effective strategy for growing transit ridership.

What is the purpose of public transportation?

Setting aside institutional conflicts for a moment, this Chicago case raises questions about what the purpose of public transportation is, and what its goals should be, in a modern city. From my perspective, the answer to this is relatively straightforward: Provide high-quality service that encourages people to stop relying on automobiles to get around, and that ensures that everyone has access to affordable and reliable mobility.

If this is a shared view, then increasing regional ridership should be one of public transportation’s primary goals. But increasing regional ridership does not necessarily mean increasing the ridership of every individual service—it means improving the services as a whole such that the system is more attractive in general.

This isn’t a particularly complicated concept. For example, when a transit agency opens a new rail line, it generally expects people using buses along the same route to move to the new line. And that’s great! When people move from buses to rail on the same route, they’re generally getting faster, more reliable, more comfortable service. There’s nothing wrong with that. And the investment in this improved service will, in turn, bring in more passengers.

The problem with Mayor Lightfoot’s approach is that it acts as if the goal for regional transit should be to increase ridership on the CTA, not on the system as a whole. To pursue this deeply questionably line of logic would be to oppose investing in a new rail line because doing so might result in less ridership on existing buses. On the face of it, the city’s position on improvements for Metra Electric appear to be motivated by agency promotion, not by the region’s best interest of increasing transit ridership.

The result of stopping improved Metra service may be, yes, the maintenance of existing levels of CTA ridership (though they are declining, so something is amiss already). But it certainly will not produce the increase in ridership associated with providing people who need it better access to transit.

As I noted, however, there are institutional and historic reasons why the CTA might be concerned about moving people out of its services and onto Metra.

A course forward for thinking about regional transit

I’m hardly the first person to suggest that a lack of regional integration in transit systems produces pathologies when it comes to the motivations of officials involved in related decision making.

But the Chicago case should remind us that an institutional configuration that separates control of transit agencies in the same metropolitan area to different political actors can produce negative outcomes for the region as a whole. We have yet to resolve this situation related to Metra Electric improvements, but decades of little to no integration between CTA and Metra suggests that the current environment isn’t working.

Simply integrating services does not necessarily solve the problem, however. New York’s MTA, for example, technically oversees the New York City Subway, buses, Metro-North Railroad, and Long Island Rail Road—and yet neither Metro-North nor Long Island Rail Road offer regional rail services, and neither offers free transfers to Subway or bus services, let alone reasonably priced fares in areas where service is overlapping.

Moreover, Chicago’s CTA does have the distinct benefit of being directly answerable to the city’s mayor, which I’m convinced improves political accountability and makes the service better over the long run.

So simply saying that CTA and Metra should be merged into a regional entity will not, by itself, make today’s problems disappear.

Even so, the agencies need to find a way to agree on a new set of ground rules. It should be self-evident that the goal of transit in the Chicago region is to grow overall ridership, not ridership on a particular service—and that might mean sacrifice on one service or another once in a while. Moreover, it should be obvious that the current situation, where customers are treated as if they’re supposed to choose between competing services—despite the fact that both are subsidized by the same tax revenues—is unacceptable.

If Chicago’s transit agencies are able to move toward such a détente, they would be taking a big step forward toward reducing the conflicts native to the current institutional configuration. They would also be moving the region toward a transit service that actually benefits the people of the metropolitan area. Perhaps Chicago could be a model for the rest of the country.

* Frequent, all-day, two-way regional rail services are currently available in Basel, Bilbao, Leipzig, Madrid, Milan, Munich, Paris, and Zurich, among others. They are in development in Brussels, Buenos Aires, Geneva, and Toronto, among others.

Image at top: Metra tracks on Chicago’s South Side, from Flickr user The West End (cc).

12 replies on “The perverse incentives produced by institutional division”

Is this zero-sum competition between transit agencies inevitable?

No. Because it is not actually zero-sum. CTA will receive the same tax subsidy as previously, and have the same number of buses and drivers. If ridership & fare revenue drops on certain bus routes due to improved Metra services, CTA can redeploy that bus service, for example on feeder routes to the improved Metra line, or improve frequency on overcrowded routes. The net effect could be similar or even increased CTA ridership and fare revenue.

This is not theoretical, as this exact scenario played out in Seattle in 2016. The Sound Transit U-Link light rail extension opened, adding 30,000 daily riders to the rail system. Some thought that ridership would decline on King County Metro, the local bus provider. But Metro reorganized the bus routes in the vicinity of the new rail line to emphasize high-frequency feeder buses, and bus ridership stayed even. The total transit ridership pie increased.

I don’t know if the MTA example is particularly useful; the NY MTA is effectively operates as a “holding company” of several properties (eg. NYCT, Metro North, LIRR, etc).

I believe the exact same issues you’ve outlined regarding the CTA and Metro exist with the NY MTA as well. For example, if the MTA operated as a truly regional body, the Gateway Program, East Side Access, and “West Side Access” would have all been one comprehensive vision to interline all of the commuter railroads through Manhattan, linking Grand Central and Penn Station, as well as building redundancy/new connections through Brooklyn and Queens to better context all five boroughs, Metro North to LIRR, and the NY railroads to NJ Transit.

The fact that NY is particularly bad at regional cooperation (the PANYNJ an obviously brilliant example of this) is not a good case to me that effective regional integration isn’t a prior for achieving useful regional rail services.

It speaks volumes that at the same time a basement terminus is being constructed underneath GCT, another is being proposed underneath PSNY; both could have been built as far less cavernous stations, at lower cost, with the remaining funds spent to improve infrastructure through to Philadelphia and to reconcile signals/electrification/etc on MNRR and LIRR.

Thanks for writing this piece and grappling with the larger issues. I was speechless when Lori nixed the proposal.
Then I thought a bit and recognized this is the recurring problem of Chicago’s Mayors, powerful but not effective for transit.

For eight years, Rahm tried to make the O’Hare to McCormick Place train connection; starting with a Union Station upgrade in the middle. He only managed to sell the air rights to one block. Despite two terms of talk driven by the nation’s most powerful politician in 2009, there was no serious discussion of through-runs or increasing capacity significantly; goals that Europe has nearly completed over the last four decades (which you so aptly reminded us of.)

Advocates for both the O’Hare run and Electric run to the south should take a look at my proposal to do an end-around our regional governance impasse. I propose a Plan B for the O’Hare run and think that a similar Corridor Authority could work to buy-out the Metra Electric line and convert it into a more useful service. Here is the link to that article on my blog.

(For your readers in other metros, my blog analyzes the commuter systems of New York, Boston, DC, California and Philly also.)

Since states rarely care enough to reform regional transportation (and Illinois may be among the worst) and since this impasse was created almost five decades ago with powerless caretaker “agencies”, it now is time for metros to shape their own policies corridor-by-corridor and using that incentive eventually to build regional government for transportation. This would be a 21st Century rendition of the corridor dynamic that created the rails in the 19th Century.

Since Illinois is broke, it should be glad to be relieved of responsibility for the huge capital deficits of Chicago’s and Chicagoland’s transit. The Big Question is what is the metro’s social contract to take care of its own commuting problems ? Do we have the solution ?

If not…. Then, start with the prototype running from O’Hare to the South Side.

The MED was designed and built to be high speed urban mass transit–high level platforms, sliding doors controlled from anywhere on the train, multiple tracks allowing locals, expresses, specials (branding for super expresses). Since Metra takeover, service was degraded, fares went up, and the turnstiles scrapped returning the operation to 19th century ticket punching. For a decade, various activists have been lobbying for fare integration or outright transfer to CTA because the ridership shed of MED is underserved and poor transport constrains employment options.
Mayor Lightfoot needs to serve the priorities of Chicago residents, not turf protection of CTA’s desk jockeys.

Viewing “Public” transit as a profit center is one of the big issues here. Public transit is a public service that sould be mostly funded through taxation. It is not a problem exclusive to the Chicago area either. Atlanta has their “MARTA” system as well as their “Express” buss services run through the Georgia Regional Transit Authority. Additinally, there are county specific bus systems at play. Fortunately, there are transfers between MARTA and the county services but suburbs resist any proposed expansion of rail service at every turn. Citing “property values” and “crime” as thinly veiled code for racism are part of the issue. When I hear a voter say, “I like the idea of better transit but I just don’t like “what it brings with it”” I know exactly what they are NOT SAYING.
What they fail to recognize is thaey don’t just prevent access to reliable, safe, affordable transit for minorities. The restrict access to the elderly, the disables, and visitors to the region who may not feel comfortable navigating some of the worst traffic in the nation. Until safe, affordable, reliable transportation are treated as a protected right, communities and politicians will continue to force their own agendas to the detrimin of the public at large.

Nice goals. The issue is that transit is simply not affordable. Private transportation is significantly cheaper. In fact, it’s cheaper just to buy every poor household a car and pay for all its expenses and to pay for cab fares for the disabled than to run transit. (And, yes, cars ARE self-funding–gas taxes are enough to pay for all infrastructure and its improvements as long as you aren’t also subsidizing transit with it.) Just because the cost is pushed onto taxpayers doesn’t make the cost go away.

Rail today is very silly when you see the autonomous vehicles just down the road. They’ll be standard long before the infrastructure is paid off, and then subsidies for the poor will be very easy to execute at far lower cost, while the traffic problem will fade into distant memory.

People who want to put the poor on transit hate the poor and want to sacrifice them to their own egotistical social engineering. Physical mobility is economic mobility. Study after study has shown this. Confining people to transit undermines their long term economic health. But that’s not a new thing for our social engineers. They’ve always hated the poor and experimented on them.

Mim: False. If you devoted 100% of the gas tax to roads, it would cover maybe 25% of the roads costs. There have been a lot of studies on this.

Roads are almost entirely paid for by property tax, sales tax, and income tax. Fact. Why are you a liar? You should stop lying. Lying is immoral.

It’s always the most tragicomical red herring when people parrot autonomous cars as the answer to transit need. There are two very simple rebuttals to this:

A. The “autonomous” portion of rail and non-rail vehicles can be very easily compared. The freedom permitted by non-rails (i.e., roads) is exactly why automating driving is so hard and expensive (computers, sensing equipment, and software to run them). The constriction created by rails, by contrast, makes automating them very cheap and very easy (steel rails, signaling systems, and–at most expensive–ballastless track and constant-tension catenary). How many autonomous rail services are there, and how many autonomous road services are there?

B. Private transportation will–always and forever–be more resource-intensive (read: expensive) than public transportation. This isn’t some artifice of regulation or tradition; it’s physics. Even within private transportation, this reality is acknowledged–in the form of HOV lanes. Private vehicles take up more space by simple virtue of there needing to be more of them per person. Nothing–not autonomous vehicles, not “car trains”, not vehicle electrification–is ever going to change this.

The diversion of public American attention to autonomous vehicles as the solution to our transportation woes is just to avoid the difficult discussion about how inefficient our suburbs and auto-centric cities are in almost every sense of the word, and how unprepared our public and private sectors are to ACTUALLY resolve this systemic issue.

I imagine that autonomous cars will happen, but they will not happen tomorrow, they will not be equitable when they do, and they will never make more sense than trains, bicycles, and feet on the ground (to anyone able).

I don’t know what the order of magnitude is here. But if CTA were to lose fare revenues, then that’s money they can’s use for service. Maybe CTA should be held harmlessly, or at least partially compensated, so that doing the right thing won’t have to come out of their hide.

CTA runs stupid duplicative bus service paralleling Metra Electric. If they lose some fares *from that service*, they can also *cut that service*. Since fares only cover around half of the costs of operating the service, CTA will have *more money*.

Metra will actually be the one with less money under this plan. For the City of Chicago / CTA to oppose the plan is the height of dumbassery. Metra is the one who would be expected to oppose it.

It’s rather misleading to say that “generally the same taxpayers are paying for services operated by CTA and Metra. After the great schism of 1983 that broke up the RTA, none of the sales tax collected in the city goes to Metra, and none of the sales tax collected in the collar-county suburbs goes to CTA.

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