Application of an incentive for bus drivers to achieve an improvement in the quality of service

Abstract

Concession contracts of operating companies of the public transport system of Santiago, consider important fines if companies fail to comply with the operating plan, regularity and other operational variables included in those contracts. On the other hand, drivers receive a fixed payment with no pecuniary incentive related with their performance. The main objective of this paper is to analyze the application of a monetary incentive for bus drivers focused on increasing the number of passengers transported to test the existence of multitasking, specifically checking the behavior of drivers regarding bus speed. We conducted a field experiment with an operator of Transantiago and we used a difference in differences analysis to show that with the pecuniary incentive tested, drivers raised their transported passengers in 9% when riding in long bus routes. We found some evidence of multitasking associated with a decrease in speed of 3%. Thus, our research provides suggestive evidence that inefficiencies may be occurring in the operation because of the lack of adequate incentives for drivers.