Pod Insights Freakonomics Radio 317. What Can Uber Teach Us About the Gender Pay Gap? About this episode The gig economy offers the ultimate flexibility to set your own hours. That's why economists thought it would help eliminate the gender pay gap. A new study, using data from over a million Uber drivers, finds the story isn't so simple.
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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2:54 Stephen J. Dubner? Hey there, it's Stephen Dubner, and yes, we are busting into your podcast stream a couple of days early because we've got a special episode. It was occasioned by the fact that we got our hands on a brand new research paper that we thought was so interesting and important that you would want to be among the first people to hear about it. It's called "The Gender Earnings Gap in the Gig Economy: Evidence from Over a Million Rideshare Drivers." Those rideshare drivers, as you may have guessed, are Uber drivers. The paper was written by five economists, two who are employed by Uber, two Stanford professors, and one researcher who's been on Freakonomics Radio several times, John List, who's chairman of the University of Chicago Economics Department, and he moonlights as head of the Ubernomics team at Uber.
3:39 Stephen J. Dubner? Hey, how you doing? List is one of three economists we'll be hearing from today. There's Rebecca Diamond from the Stanford Graduate School of Business. Hi, yes. And Jonathan Hall, who leads the Public Policy and Economics Team at Uber.
3:53 Speaker 01 Yes, I have been working at Uber for just about three years, 360 days, couple hours.
4:02 Stephen J. Dubner? So, talk to me about how you came to be involved in this crew and your role.
4:08 Speaker 02 Sure. You know, I work on various issues around the company that have an economics flavor. And one thing that has arisen recently is the gender pay gap.
4:21 Speaker 01 It's generally agreed that it's a terribly important topic in economics, but it's not one that's well studied because of the dearth of data and because people find it uncomfortable.
4:32 Stephen J. Dubner? So, you know, all of us who've read even a little bit about the gender pay gap problem, we're used to hearing all different sorts of factors described as determinants. We're also used to hearing all different sorts of figures. You know, the gap is 12 cents on the dollar. It's seven cents, it's 24 cents. And that's because, you know, it's hard to decompose and hard to measure. But a lot of the factors that we hear about are things like inflexible hours or temporal inflexibility. So here you're saying that kind of doesn't exist, right? In this Uber ecosystem, correct? Anybody can work whenever they want?
5:09 Speaker 03 Yeah, exactly. And that's one reason we were so excited to study this question in the context of Uber data because we could sort of rule out those theories from the beginning.
5:19 Stephen J. Dubner? So you write in the paper that unlike previous studies, you are able to, quote, "completely explain the pay gap." So can you unpack that just a bit?
5:28 Speaker 03 Sure. So Uber pays drivers based on a relatively simple, transparent formula that takes into account how long your ride is in miles, how long the ride takes, and potentially a surge multiplier where sometimes there's excessively high demand.
5:48 Speaker 02 So the fare itself is determined by an algorithm, which is gender blind. The dispatch itself is gender blind, and pay structure is tied directly to output and not negotiated.
5:59 Speaker 03 That transparency and that simplicity of pay is what makes this environment so interesting for studying a gender pay gap.
6:08 Speaker 01 Because we were able to work with such excellent, detailed data, we believe this is a first of its kind study insofar as it can actually fully explain the gender pay gap.
6:20 Stephen J. Dubner? So before you undertook this project, what were you looking for? What did you believe you'd find in the data? Did you think you'd see a gender pay gap here of zero?
6:30 Speaker 03 I think there are reasons to think it could be small, but I went in with a very open mind. I mean, we've never been able to look at any labor market like this before. But zero, I mean. It's hard to forecast any specific number.
6:46 Speaker 02 So my prediction was more or less that men and women would earn the same. But if there was a difference, I think the pay gap would slightly favor women. And this is kind of for two reasons. One, I knew that they had worked fewer hours per week, so they had a chance to cherry pick the better hours during the week. Point number two was if there was discrimination on the platform, I was thinking that riders would actually prefer female drivers to male drivers.
7:22 Stephen J. Dubner? So let's jump right to the number. What kind of pay gap did you actually find, if any, between male and female Uber drivers?
7:31 Speaker 02 Yeah, you know, we found something very surprising in the end, after you look at the data, just look at the raw data. What you find is that-
7:41 Stephen J. Dubner? Wait a minute. This is a big, juicy, new piece of research with a huge and detailed data set drawn from an economic ecosystem that's practically made for this kind of analysis. So let's not get ahead of ourselves. There will be plenty of time to hear about the findings and the ramifications right after this.
8:12 Speaker 04 From WNYC Studios, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner.
8:26 Stephen J. Dubner? Now, for people who don't know what Uber is or haven't used it, just give us a quick explanation of how it works and, you know, kind of what it is.
8:37 Speaker 03 Uber is a platform that connects drivers to riders. So people want to ride from A to B, and you put that into the Uber app, and it will match you with a driver who will happily give you that ride.
8:51 Speaker 02 When Uber receives a call from a customer like me- What they simply do is they put out a dispatch to drivers that are nearby and ask them to accept the trip.
9:03 Speaker 01 And then the driver who's on the system can decide whether or not to accept your request and he or she can come pick you up and take you where you need to go. So we ultimately coordinate drivers and riders.
9:17 Stephen J. Dubner? We're talking today about a new working paper that uses Uber data to explore the gender earnings gap. It was written by five economists, Cody Cook of Uber, Paul Oyer of Stanford, and the three economists we're speaking with today, Rebecca Diamond, Jonathan Hall, and John List. Okay, explain, if you would, why these data are particularly useful in trying to answer this question.
9:44 Speaker 02 So we have mounds and mounds of data. We have millions of drivers. We have millions of observations and 25 million driver weeks across 196 cities. So just the depth of the data and the understanding of both the compensation function and the production function of drivers gives us a chance, once we observe if there is indeed a gap, gives us a chance to unpack what are the features that can explain that gap.
10:19 Stephen J. Dubner? All right, so describe the data. I want to know both the overall universe of Uber driver data in the US and then which subset your data comprises of that.
10:31 Speaker 02 We look at driver weeks for Uber drivers from January of 2015 to March of 2017.
10:40 Speaker 03 That is over 1.8 million drivers during this time and over 740 million Uber trips. So we have really a lot of data to work with. And for part of the paper, we focus on one city.
10:55 Speaker 01 So we picked one city to go deep on for very practical reasons. The work that we're doing is very data intensive.
11:03 Speaker 02 So, you know, being from Chicago, I said, let's do Chicago.
11:07 Stephen J. Dubner? Now, how much of that was because you're from Chicago and how much was it was you're lazy and it's going to be easier for you to work with data from Chicago?
11:15 Speaker 02 No, no, no, no, no. No, no. So, the team is out in San Francisco and we've since done, you know, we've done Detroit, Houston and Boston and we find similar results.
11:24 Stephen J. Dubner? And give us just gender breakdown in Chicago and how representative that is of the rest of the US?
11:30 Speaker 03 So, in the nationwide sample, 27% of drivers are female and the Chicago data set, 30% of drivers are female. So, it's slightly more, but it's pretty similar.
11:42 Stephen J. Dubner? Let me ask you this. How big, if you know, is what we call these days the gig economy?
11:48 Speaker 02 Some estimates suggest that up to 15% of people are full-time employed in the gig economy. And other estimates tell you that up to 30% of people are employed at least part-time in the gig economy.
12:05 Stephen J. Dubner? And does the gig economy tend to lean more male or female?
12:09 Speaker 02 You know, I think the gig economy looks a lot like what we have on Uber, which is about a third of female drivers and 2/3 of male drivers.
12:19 Stephen J. Dubner? Is the Uber algorithm gender-blind?
12:22 Speaker 01 The algorithm is gender-blind, both in the literal sense that it doesn't, that gender is not fed into it.
12:29 Speaker 03 It does not incorporate gender into the, into the calculation at all.
12:33 Speaker 01 And in the sense that it doesn't facilitate discrimination by the users, the human users, who are more clever than the algorithm.
12:40 Stephen J. Dubner? Right.
12:41 Speaker 01 But that does not guarantee that the platform couldn't facilitate some kind of nefarious discrimination.
12:47 Speaker 02 There are two kinds of discrimination that might actually occur on Uber's platform. The first is from the dispatches or from setting the wages and that's what Uber's job is. And of course, there's no discrimination there. But on the other hand, There could be customer-side discrimination. It could be the case that we, as riders, prefer men or prefer women as our drivers.
13:13 Stephen J. Dubner? So, did you find discrimination on behalf of the users of Uber? Did riders tend to prefer male drivers to women?
13:21 Speaker 02 No, we find no evidence of discrimination on the customer side, meaning that riders don't prefer men to women or women to men. They view men and women the same when it comes to being their driver.
13:34 Speaker 03 That's right. And we don't see overall differences in rejection rates between male and female drivers. And if you were to put that in the regression, it doesn't contribute to a gender gap.
13:45 Stephen J. Dubner? Right. So, let me just make sure I'm clear. You're saying there's no discrimination on the Uber side, on the supply side, because the algorithm is gender-blind and the price is the price. And you're saying there's no discrimination on the passenger side. So, does that mean that discrimination accounts for 0% of whatever pay gap you find or don't find between male and female Uber drivers?
14:10 Speaker 02 That's correct.
14:11 Stephen J. Dubner? All right. So, you were telling us that your prediction was that there'd be either 0 or a positive pay gap for women. What kind of pay gap did you actually find, if any, between male and female Uber drivers?
14:26 Speaker 02 Yeah, you know, we found something very surprising. What you find is that men make about 7% more per hour on average.
14:35 Speaker 03 Which is pretty substantial.
14:37 Speaker 02 For doing the exact same job in a setting where work assignments are made by a gender-blind algorithm and pay structures tied directly to output and not negotiated.
14:47 Stephen J. Dubner? So, a 7% gap. How does that compare to the best research in other occupations?
14:56 Speaker 03 So there's been some previous work that has looked at within firm gender pay gaps. And 7% is not very different than the overall average we see across all firms, even in the traditional labor market.
15:10 Speaker 02 Sadly so.
15:11 Stephen J. Dubner? Were you despondent or depressed or a little sad when you saw the size of the effect here?
15:17 Speaker 03 I just wanted to know more. I wanted to know where it was coming from and what were the causes.
15:23 Stephen J. Dubner? OK, so I want to get into what are the factors in the paper. You write that there are three, number one.
15:30 Speaker 02 So after reaching the dead end of discrimination doesn't seem to be a determinant, we then decided to ask, well, what about where and when? So what I'm thinking about here is time of day, day of week, and where in Chicago they actually drive. And here, we had some success. So what we find is that after you explore the wheres and whens, we find that we can explain roughly 20% of the gender pay gap by choices over where to drive and when to drive.
16:08 Speaker 03 And an important contributor to the gap is particularly where the rides started. So different neighborhoods are going to differ in the types of rides that you're going to get and also potentially the frequency of rides you're going to get called for. So men and women tend to target different neighborhoods of where they're driving. And men are targeting more lucrative pay areas than women.
16:36 Stephen J. Dubner? And does that have to do with like 3 o'clock in the morning on Saturday and I want to go out and where all the bars are and there might be a surge? Or is it more, I don't know, early morning airport trips? Can you characterize the nature of those most lucrative trips that men seem to be doing a little better at?
16:50 Speaker 02 So what is more important than when you drive is exactly which trips or routes do you tend to focus on? So One particularly salient example here is that airport trips tend to be the most profitable trips on the Uber platform. So what you have is that men tend to complete more airport trips than women complete.
17:16 Speaker 03 There are differences between when men and women drive. Men are much more likely to drive the graveyard overnight shift, which could have more people coming home from bars or whatnot. But women are actually dramatically more likely to drive the Sunday afternoon shift, and that is also a very lucrative driving time. So it's not so much that there aren't differences about when men and women drive. It just doesn't seem to be super related to a pay gap because they're both driving at lucrative times, they're just different times. I mean, Sunday afternoon, that's when football's on. Maybe women are more willing to go drive for Uber then.
17:55 Stephen J. Dubner? And why is Sunday afternoon a more lucrative time to drive? Is it because so many men are male drivers are watching football, so they're not flooding the market with supply of drivers and therefore the price goes up?
18:07 Speaker 03 I mean, that's a theory. We haven't unpacked what's so magical about Sunday afternoon. But the pay tends to be high then, and women work disproportionate hours then.
18:17 Stephen J. Dubner? OK, but for all those potential differences, the absolute amount is still relatively small. You're saying 20% of a gap of 7% can be explained by time and location, right?
18:27 Speaker 02 No, I think that's right. But now, after looking at time and and location, that analysis actually hinted at a deeper effect, which I will call driver experience.
18:42 Speaker 01 Yeah, so there are pretty large returns to what we call experience, which is literally the number of trips that you have done. This is an area that's pretty well studied in economics, and it's learning by doing. And so we estimate that the more trips you do as a driver, the more you learn about how to make money on the platform.
19:04 Speaker 03 So obviously, this is not getting a raise from Uber in the sense that the formula of pay is changing. Drivers are just getting better. At figuring out when and where to drive, a little bit about how fast to drive, and also how to strategically accept or cancel rides that they think are a bad match.
19:24 Speaker 01 And we estimate that men and women learn identically quickly in trips. So a man or a woman in the data who have done the same number of trips will have accumulated the same amount of learning. However.
19:40 Speaker 02 When you look at the experience of our drivers or the average tenure, this is heavily tilted in men's direction. What you have, you know, men are far more likely to have been driving on Uber for over two years. Women are likely to have just joined in recent months. And this is because women leave the platform much more often than men.
20:04 Stephen J. Dubner? What is the overall driver attrition rate? I don't know whether it's measured in six months or a year, whatever.
20:10 Speaker 03 Yeah, six months is what we've been looking at.
20:13 Speaker 02 More than 60% of those who start driving are no longer active on the platform six months later.
20:20 Speaker 03 So the six-month attrition rate for the whole US for men is about 63%. And for women, it's about 76%.
20:29 Stephen J. Dubner? Wow. So that would connote, to me, an amateur at least, that maybe this gender pay gap among Uber drivers is reflected in the fact that women leave it so much more. Maybe it's just a job that, on average, women really don't like. Is that measurable?
20:48 Speaker 02 That's a good question. I like to think about people liking to be a rideshare partner rather than disliking it. But it is measurable. When you look at the attrition rates, it is true that women do fall off the platform more, but they're also earning less. So it's not clear whether it's because of preferences for not liking to drive as much as men like to drive, or if it's simply an earnings effect.
21:16 Stephen J. Dubner? Right.
21:17 Speaker 02 You know, it's likely the combination of both those two.
21:19 Stephen J. Dubner? Yeah, but does this higher female attrition rate mean that the average female is likely to be less experienced than the average male driver and therefore will earn less? Yeah?
21:29 Speaker 02 No, that's right. When you look at experience, really, men are more experienced than women because of two primary reasons. One, women drop off the platform more often than men. But two. Even for those who are on the platform for the same amount of time, since the average man drives about 50% more trips per week than the average woman, you still have the experience effect for those who have been on the platform the same, you know, number of months.
22:00 Speaker 03 So at any given day or time, the men driving for Uber have a higher level of experience under their belt than women, and that plays an important role in compensation.
22:09 Speaker 01 And that explains about 30% of the pay gap that we measure.
22:15 Stephen J. Dubner? OK, a third of the gap can be explained by returns to experience. You said about 20% of the gap can be explained by time of location and work, but that leaves almost half that can be explained by the third factor. What is that?
22:28 Speaker 02 That's right. So after we account for experience, now we're left scratching our heads. So we're thinking, well, we've tried discrimination. We've done where, when. We've done experience. You know, what possibly could it be? And then what we notice in the data is that men are actually completing more trips per hour than women. So this is sort of a eureka moment.
22:55 Stephen J. Dubner? They're driving faster, aren't they?
22:58 Speaker 01 Yeah. So the third factor, which explains the remaining 50% of the gap, is speed.
23:06 Speaker 03 So men happen to just drive a little bit faster. And because driving a little bit faster gets you to finish your trips that much quicker and get on to the next trip, you can fit more trips in an hour and you end up with a higher amount of pay.
23:22 Stephen J. Dubner? Now, how did these Uber driver data for male female speed compare to male female driver speed generally? Do we know for a fact that men generally drive faster than women?
23:34 Speaker 01 Yeah.
23:35 Speaker 02 What you find is that in the general population, men actually drive faster than women.
23:41 Stephen J. Dubner? OK, so male Uber drivers drive faster than female Uber drivers, and therefore that helps them make more money. Is that, however, more dangerous, the faster driving?
23:52 Speaker 03 So the gap is small. Men drive about 2% faster than women. So it doesn't suggest that that's leading to big differences in risk.
24:03 Stephen J. Dubner? But I also did see that the University of Michigan Transportation Research Unit, they looked at a big nationally representative sample of police-reported crashes, and they did seem to find that females, on average, on a per-mile-driven basis, have more crashes than males. In your data, certainly, you have all of that data, right? You have miles driven, you have crashes presumably. Could you look, if you wanted to, and see if on a per-mile basis, women crash more or less than men?
24:34 Speaker 03 I haven't worked with that data. We've been just working with the labor market data. Uber maybe could look at that, but that hasn't been something we've worked at.
24:44 Speaker 01 We don't have an answer to that. It's something that we would like to study, but we do not have an answer to it.
24:50 Speaker 03 I think on the flip side of the, if you look at the female having, women having more accidents, I think men have more fatal accidents. So there's sort of a quality/quantity trade-off, so it's not clear who's actually driving safer. One thing I can say is we've looked at the ratings of customers on faster versus slower rides. And if anything, it's marginally correlated with a higher rating. So it looks like riders do value getting there faster.
25:25 Stephen J. Dubner? So in summary, this is a labor ecosystem, Uber drivers, that would seem to remove all gender discrimination, and yet, women earn 7% less for doing essentially the same work.
25:39 Speaker 03 I mean, I think they're not doing the same, right? That's what we're showing. They're doing different, they're making different choices in the labor markets. I think it's really, the whole point is that they're not doing the same. And once you control for the differences, they are paid the same.
25:52 Speaker 02 That's right. We've stripped away all of the factors that we thought were underlying determinants of the gender pay gap.
26:04 Speaker 02 And we go to this new vibrant gig economy that promises worker flexibility and labor flexibility and equal pay for equal work. You know, when you analyze the mounds and mounds of data, it ends up that we have a 7% difference. Now, what's interesting and intriguing is that after you unpack those differences, what you find is that they're perfectly reasonable explanations for what's happening on the Uber platform.
26:42 Stephen J. Dubner? Perfectly reasonable explanations, maybe, but the bottom line is that women are still making less money. So coming up on Freakonomics Radio, what, if anything, should be done about that?
26:54 Speaker 02 Well, I'm going to allow our policy experts to answer that question.
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29:09 Stephen J. Dubner? We've been speaking with three economists, Jonathan Hall of Uber, Rebecca Diamond of Stanford, and John List of the University of Chicago and Uber, about their new working paper, which uses Uber data to explore the gender gap in earnings. They found that even in a labor market where discrimination can be ruled out, women still earn 7% less than men, in this case, roughly $20 an hour versus 21. The difference is due to three factors: time and location of driving, driver experience, and average speed.
29:44 Speaker 02 So, by and large, these three things are causing men to be more productive on the platform, and in return, they're getting a higher wage.
29:57 Stephen J. Dubner? Two years ago, we put out a Freakonomics Radio episode called "The True Story of the Gender Pay Gap." The labor economist Claudia Goldin argued that the gender gap doesn't seem to be driven primarily, or even much, by discrimination. This new uber research very much confirms that. According to Goldin, the main culprit is, in economist speak, female demand for temporal flexibility, also known as a preference for flexible work hours, a preference often driven by the fact that women have more family care obligations than men. Here's how Goldin laid it out.
30:31 Speaker 05 I like to think about an individual who gets a degree, let's say, a law degree. It's a woman, and now I have an individual, a man, who gets a law degree, and they graduate from law school. And they're both equally brilliant, and they both get jobs in approximately the same type of firm. By and large, they're going to earn approximately the same amount when they start. Things will continue in their lives. They'll both perhaps find partners, get married, have kids. It's often the case that women will leave the very large law firms that put a lot of time demands on them and go to smaller firms or become corporate counsel, become part-time
31:16 Speaker 05 corporate counsel perhaps for a while. They will go to smaller firms where the workload is somewhat different. They may work, in fact, the same number of hours, but they may work hours that are their hours rather than the hours imposed on them by the firm. The woman will then begin to make, if she's the one who did this, she will make considerably less than the man. And a lot of what we see, not all of it, but a lot of what we see, is this choice to go into occupations that have less expensive temporal flexibility, that allow individuals to do their work on their own time.
32:00 Stephen J. Dubner? Earlier, John List told us what he thought the Uber data would show.
32:04 Speaker 02 So my prediction was more or less that men and women would earn the same. But if there was a difference, I think the pay gap would slightly favor women.
32:17 Stephen J. Dubner? That prediction turned out to be wrong. So, John, one of the explanations that is often given for the gender pay gap, coming from Claudia Goldin at Harvard, is that it has to do with temporal flexibility or inflexibility. How did that factor into your prediction of what these Uber data would show? Because I would assume, but maybe I'm wrong, that if ever there was a job that offered total temporal flexibility, it would be an Uber driver.
32:44 Speaker 02 No, I think that's exactly right. Claudia is the world's expert in this area. And she's argued, I think quite persuasively, that once we take off the table this idea that if you labor long hours or work specific hours during the week, once we take those off the table, then it's much more likely that this gender pay gap might entirely vanish. So kind of my intuition actually arose from Claudia's work. This type of job is at the extreme of temporal flexibility. This allows you to work anytime, anywhere you want.
33:28 Speaker 02 And what we observe is that even when you give a lot of flexibility, you don't see a really tiny or nonexistent gender pay gap.
33:38 Speaker 03 But I mean, it can definitely be true that there exist occupations outside of Uber in the labor market that do exhibit this hours earnings relationship that compensates long hours of work.
33:51 Stephen J. Dubner? That's Rebecca Diamond, again, talking about Claudia Goldin's research.
33:55 Speaker 03 If you look at her previous work, for example, on workers in the financial industry, the pay gap there is enormous, is bigger than 7%. And in the financial industry, there's this huge compensation for working.
34:09 Speaker 03 Extremely long hours and never having interruptions in your career. But Uber shows that even when you strip away all of this stuff, you definitely don't go to a gender gap of zero, and you still have this important experience component where you work more and you learn about how to do the job better and you get better at doing the job. So you can't say it's all going to be perfect in this new gig economy. We won't have total equality, but the reasons we don't have total equality are not because of discrimination or problems in how we compensate workers. It really is about working more hours and gaining knowledge on the job and differences in gender preferences.
34:51 Stephen J. Dubner? And when an economist like you says differences in gender preferences, can you unpack that a little bit? Because I think you guys mean something a little bit different by the word preferences than the layperson does.
35:02 Speaker 03 Sure. For example, women prefer to work fewer hours per week than men on Uber and in the broader economy. That's a choice by men and women, given the other aspects of their life that they're taking into account when deciding how much to work. Women are choosing to drive slower, which is a choice likely just based on preferences of just how they've learned to drive in their broader life. Those aren't aspects of the labor market, but those are just differences between men and women outside of the labor force that happen to lead to differences in compensation in the labor force.
35:43 Stephen J. Dubner? Right. But then what if I say, well, I know they may look like preferences on paper that I choose to work 20 hours a week instead of 30, but the reason I'm doing that is because I'm the one who needs to, let's say, take care of my elderly mother, or worse, my mother-in-law, my husband's mother, because he's not going to do that. So, yeah, it shows up in the data as a preference, but in fact, it's much more of a structural component that I really can't do anything about. So are those two the same thing, or is something being lost in the data?
36:19 Speaker 03 So there's a separate question about why in the broader world that we live in, men and women have different roles in the household and in life. Does this, obviously, those differences have gotten a lot smaller as time has progressed. Obviously, women are still the ones to be pregnant and bear children. That's never going to change. Don't say never. You never know. And those differences can lead to labor supply differences. But in the labor market, there could be changes in how women and men supply hours over time as our broader society evolves.
37:00 Speaker 03 But we shouldn't necessarily be worried about a problem in the labor market because of these differences in gender choices. We may be worried or interested in understanding why broader society leads men and women to make different choices outside the labor market, and that can lead to different outcomes in the labor market. But it's not a problem in the labor market.
37:25 Speaker 02 So I think when you look at our data, I think it's actually a mixture of preferences, you know, driving fast. But I also think it's a mixture of constraints. And what I mean by that is men work more hours and take more trips than the average woman. So why is that? Part of it is because women have more constraints, i.e. take the kid to school in the morning, be responsible for taking Johnny to the soccer game. And I think those constraints then lead women to actually receive less experience and less learning by doing. So I think it's actually a mixture of preferences and constraints.
38:10 Speaker 02 Now, as policymakers, what we want to do is make sure that we can alleviate those constraints as much as possible.
38:16 Stephen J. Dubner? So Uber could just, I guess, increase its baseline pay to female drivers by 7%, but I guess that would be discriminatory, wouldn't it, against men? Or would it not?
38:28 Speaker 02 Well, I'm going to allow our policy experts to answer that question.
38:33 Speaker 01 I mean, in the literal sense of the word, that would be discriminatory.
38:37 Stephen J. Dubner? That, again, is Jonathan Hall, who directs public policy at Uber.
38:40 Speaker 01 But what I've learned as an economist and as a practitioner at Uber is that simple sounding solutions don't always work. What I would call for is a scientific approach that not just Uber, but lots and lots of people and lots of companies should take to trying things and testing scientifically, ideally with academic collaborators, whether or not those things work.
39:04 Stephen J. Dubner? So this is brand new research. The findings are just out. Uber has had some well-publicized issues with sexual harassment and discrimination recently, including in the headquarters. So I'm sure some people might look at this and think, well, maybe this is a kind of a reputational fix for Uber. Or some people might think that, well, the fact that women drivers at Uber earn less is indicative of the problem. Do you think Uber is worried or was worried about publishing this finding? Because on the one hand, you could praise the company for inventing essentially a gender-blind labor ecosystem, right? On the other, you could imagine some headline writer saying, Uber underpays women drivers by 7%.
39:48 Stephen J. Dubner? There's some risk, and I'm curious how Uber approached that.
39:52 Speaker 01 Nobody denies that Uber's made mistakes in the past and that we need to improve. One thing I know that we have done recently is review pay equity across levels, jobs, and geographies. So it's something that we're very keen to continue to improve on. But I take your point that this project could be cast in a similar light. So I can't guarantee that nobody will write a bad headline, but my perspective is much longer term. I feel very strongly that what we, as a company, need to do is develop a long-run, credible perspective on difficult problems.
40:33 Speaker 03 I think we should really be happy and excited that Uber wants to take on these really important questions that...
40:44 Speaker 03 As you pointed out, if you're not careful and understanding what's really going on, could lead people to misinterpret the data. And they were willing to take that risk and show how data created by Uber and their business model has these super interesting benefits to the academic community and to just knowledge overall. And they're willing to take that risk and put knowledge first.
41:10 Stephen J. Dubner? Right. So, OK, the million dollar question, based on what you've learned from this research, how should Uber and the rest of the world respond?
41:19 Speaker 03 I think this is showing that the gender pay gap is not likely to go away completely anytime soon, unless somehow things in our broader society really change about how men and women are making choices about their broader lives than just the labor market. But it's not also a worry that the labor market is not functioning correctly. It makes sense to compensate people who are doing more productive work. It makes sense to pay people more if they work more hours.
42:00 Speaker 03 I mean, I don't think those are things that we would ever consider thinking should be changed because they're a problem. Those are just real reasons that productivity can differ between men and women, and we should compensate people based on productivity.
42:16 Speaker 01 We want to dive much deeper into this to understand what the space of potential interventions looks like in order to reduce the gender gap. So, for example, I mean, we're not committing to anything simply because I feel strongly that we do not have an understanding of this yet. But for example, you could imagine that if we make our software easier to use and we can steepen up the learning curve, then if people learn more quickly on the system, then that portion of the gap could be resolved via some kind of intervention. But that's just an example, and we're not there yet with our depth of understanding to simply write off the gender gap as a preference.
43:02 Stephen J. Dubner? Now, as I understand it, these data were gathered before Uber allowed riders to tip drivers. I'm curious to know what you think tipping will do to the gender pay gap?
43:13 Speaker 02 We've just been compiling some data on tipping. Now, the tipping algorithm has just started in the past year, so we don't have the exact data set we need to look at for this issue. But what you do find is that women do receive more tips on the platform compared to men. In fact, 10% to 20% more in the tip category.
43:37 Stephen J. Dubner? I'm curious, do females get higher tips in restaurants and so on than men?
43:43 Speaker 02 Yeah, I think when you look at the tipping data in general, you do find a tilt in favor of women compared to men in general. We'll have a tipping paper for you in a few months because the economics of tipping is sort of wide open. And we'll have a paper just like this one called something like a nationwide experiment on tipping. And we'll do the tipping rollout and show you how earnings change with the introduction of tipping. And the earnings actually go down a little bit. They don't go up after you introduce tipping.
44:19 Stephen J. Dubner? Now, how can that be?
44:21 Speaker 02 What happens is the supply curve shifts out enough to compensate the higher tips. And when the supply curve shifts out, the organic wages go down. And what you have is drivers are underutilized. So what I mean by that is typically they'll sit in their car empty 35% of the time. With tipping, maybe it'll go up to 38% of the time.
44:48 Stephen J. Dubner? So in other words, the wage declines because more drivers think they're going to make more money since tips are now included, but that increases the supply of drivers, which means there's less demand to go around?
45:00 Speaker 02 Exactly. That's perfect.
45:10 Stephen J. Dubner? Wouldn't it be interesting if one form of gender imbalance, higher tips for women, wound up closing the gender pay gap at Uber? Again, the paper we've been talking about today is called "The Gender Earnings Gap in the Gig Economy: Evidence from Over a Million Rideshare Drivers." We spoke with John List of the University of Chicago and Uber, Jonathan Hall of Uber, and Rebecca Diamond of Stanford. The other co-authors are Cody Cook of Uber and Paul Oyer of Stanford. Thanks for checking out this special episode. We will be back soon with our next regular episode, the latest installment in our Secret Life of a CEO series, when we talk about what happens when things go wrong.
45:51 Speaker 06 There were maybe 15,000 or 20,000 people who were very upset.
45:55 Stephen J. Dubner? That's next time on Freakonomics Radio.
45:59 Stephen J. Dubner? Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Greg Rosalsky. Our staff also includes Alison Hockenberry, Stephanie Tam, Max Miller, Merritt Jacob, Vera Karuthers, Harry Huggins, and Brian Gutierrez. The music you hear throughout the episode was composed by Luis Guerra. You can subscribe to Freakonomics Radio on Apple Podcasts or wherever you get your podcasts. We can also be heard on NPR stations across the country and on SiriusXM. You should also check out our archive at Freakonomics.com, where you can stream or download every episode we've ever made. You can also read the transcripts and find links to the underlying research. We can also be found on Twitter, Facebook, or via email at [email protected] .
46:44 Stephen J. Dubner? Thanks for listening.
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