“TO ride or not to ride” (Urban X, June 12) refers. To calculate the real trade-offs between owning and driving a car as opposed to using Grab (and/or public transport) there are a number of costs that need to be estimated. The hard ringgit that is paid out is easy to measure, but it is often not the most significant cost. In addition, we must consider risk, the value of travel time, stress and the impact on the environment and society.
For my sins it was once upon a time my job to calculate these costs for a motoring organisation in the UK. The number of costs which many people choose to ignore are vehicle insurance costs, road tax, the capital cost of the car, repairs and maintenance, and the value of the time taken to refuel and check tyres.
Going back further we could also calculate the cost of driving lessons, the cost of the licence and the time taken to take these lessons and tests. These latter costs are what economists refer to as sunk costs so are only relevant to those younger people who have yet to take up driving.
The mistake that most people make is to only consider what are referred to as the marginal costs (petrol) whereas new tyres, servicing, repairs, insurance, etc are all real costs which may be difficult to forecast in some cases but are all too real for the family budget.
Another real cost is parking (and the time taken to find a parking spot) in some cases for short journeys this can almost outweigh the cost of the Grab fare in itself. Clearly a parking fine also involves more money and more lost time.
Another far more difficult to measure cost is the risk of accident. If one’s car is hit and the insurers settle “knock for knock” then your premium will rise. Hiring a replacement car will again cost time and money. By using Grab, a taxi or public transport these costs disappear (although not of course the chances of an accident). Breakdown costs are usually not covered in most motor insurance policies so either protection needs to be bought or some figure calculated to cover the risk.
Time is money! Or so we are told. Travelling with another person doing the driving allows time for rest, reflection, emails or time to read the paper. Either way it is certainly less stressful and gives you a better chance of performing to the best of your ability once reaching your destination.
Driving in Kuala Lumpur is especially stressful due to a number of factors (kiasu drivers, red light runners, amber gamblers, kap-cai filtering at high speed on either side of you, poor road signs). Talking to strangers also apparently increases our happiness and feelings of social integration according to professors Epley and Schroeder.
Two issues that count against Grab are timing/accessibility, delay when it rains, drivers may be scarce and in addition surge pricing will increase the cost.
Second, if the trip is over a long distance then the cost can also escalate. The solution to this is to only use Grab or taxi for what is termed the “Last Mile Problem” that is to get you as far as the nearest fast public transport link and perhaps using Grab again at the other end to reach your final destination.
Finally, we come to what economists label as external costs. These are costs that are not borne by the driver but by the general population and society.
One of these costs is pollution and diesel particulates, exhaust fumes and factors which influence our health. The people most at risk are the elderly and the very young.
The second cost is the cost of congestion, which apart from being a driver of stress is also a massive drain on the economy.
So to make an informed decision about the true trade-offs between your own car and Grab or taxi a number of costs need to be pinned down. Once that has been done there is also a moral overlay concerning the environment and whether you are happy to off-load your external costs onto others (including your grandmother and grandchildren). Not having a large car loan repayment every month might also help family harmony, financial problems are after all the major cause of marital breakdown.
Michael M Dent
Principal Teaching Fellow
Sunway University Business School
Petaling Jaya
