Consumer Surplus of Alternative Payment Methods: Paying Uber with Cash joint with Fernando Alvarez

Abstract:

We estimate the private benefits for Uber riders of using cash as means of payment. We use three large field experiments as well as several quasi-natural experiments to estimate the consumer surplus that would be lost if Uber riders in Mexico were not allowed to use cash as a payment method, a policy that has already been in place in several cities. We find that riders of this platform that use cash as means of payment, either partially or exclusively, suffer an average private cost of approximately 30% of their total expenditures on rides. The incidence of the cost of the ban on cash falls disproportionately on lower income households.