On Friday, board members of Metra, the government agency that runs the commuter trains in greater Chicagoland, expressed bewilderment that sales of 10 ride tickets fell markedly when the prices of those tickets were raised. Formerly, one could by a 10 ride ticket for the price of 9 one way tickets. With the February 1 increase in the price of 10 ride tickets, that discount was eliminated, and along with it much of the incentive for buying a 10 ride. Sales of 10 ride tickets dropped 14.8% in February and 15.7% in March. At the same time, sales of one ride tickets and monthly tickets, the latter of which still imbeds a discount, increased.
This very logical consumer response to a change in incentives, a response that would not surprise in the least anyone who has taken Economics 101, utterly baffles the board members of Metra. They just can’t figure it out. They are puzzled and scratching their heads. That increasing prices leads to decreased demand is far beyond their intellectual capabilities.
To be fair, these estimables expected a drop in sales of 10 ride tickets when virtually all the incentive to purchase those tickets was eliminated. They were just surprised by the magnitude of the drop. Doubtless, they hired a consultant (probably politically connected, but I digress) who told them that the elimination of the 10 ride discount would result in a small decrease in sales, but that drop would be negligible. Thus, the important, prestige-laden, respectable, and wise people who serve on the Metra board displayed ignorance not only of Econ 101 but also of one of the basic principles of business that I impart to just about all my classes, to wit…one can always deduce the conclusion of study, even before that study is conducted, if one knows who paid for the study.
Two conclusions can be drawn from the utter stupefication that has befallen the Metra board in the wake of a real life demonstration of perhaps the most basic of economic principles.
First, what you hear is true; the Metra board is a repository for hacks, hangers-on, suck-ups, toadies, lackeys, and other virtually unemployables. That anyone would express surprise that an increase in price results in a decrease in demand is utterly incomprehensible to anyone who can breathe, let alone think.
Second, economics should be a required subject in every college, and high school, in this country.
See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics.
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