Economics of day-to-day life: Lens through a Mumbai Local Trains
Mumbai is an island city in which 88% of the population travel by local trains. Mumbai railway is about 150 years old and it caters to the transport requirement of a population of about 22 million every day.
Local Trains are Mumbaikars’ basic necessity of day-to-day life. This teaches us many elements complex economics. Let’s say you need to reach to your workplace, say from Santa Cruz to Churchgate. How do you choose to commute? The options that you have are to shell 300-500 rupees (varies with traffic conditions) to travel by Taxi or take a bus that costs about 15 rupees (fixed) or take a local train which costs 10 (fixed).
The utility is the time taken to reach the destination; hence, the fastest mode gives the maximum utility. The cost paid for travel against the comfort of travel gives the cost benefit analysis. What are you willing to shell more – cost or comfort? If you want more comfort, you need to shell more money and vice-versa. And the third dimension is the time, even if you are willing to shell more money for comfort ride i.e roadways; it will take more time than local trains. Well, let’s say we prioritize time and next comes cost and comfort, which leads to taking a ride through local trains – maximising profits.
You stand in the queue to buy a train ticket. A lady approaches saying she is extremely late to work and asks for help to buy a ticket for her, so that she can avoid the queue. Will you help her? You equally have to reach work on time. The decision making of equality versus equity comes into place. Equity and equality are two strategies we can use in an effort to produce fairness. Equity is giving everyone what they need to be successful. Equality is treating everyone the same.
You move ahead not helping the lady, as everyone is equal and that she is not deprived of any opportunities.
On the way to catch the train, you come across beggars for alms, your moral conscious urges you to help the individual by giving some money. But your brain alerts you, what if the money is misused leading to alcoholic consumption or any other. You make a decision to donate the food in your bag making a calculative stand. You showcased care and individual social responsibility towards the society.
You board the train, and lucky enough to get a seat but you see a pregnant lady standing. This time you offer your seat on the basis of equity. Best part of local trains is the hawkers who offer goods at your hand. You plan to buy a pen set from a hawker, this is trading. A trickle down effect comes into play, as you can afford and have enough money to spend on the item the money flows generally from an upper class to the lower class.
But then, you find the item to be overpriced, and figure the same pen set is being offered at lower price from a different hawker. You have more vendors and more competition amongst them, leading to best price for you. Eventually, you settle at a price that you think the pen set is worth, this is equilibrium – where the demand meets the supply.
Government notices many hawkers coming up, who are crowding the over crowded train. Hence, the government puts regulations and limitations that only one hawker for each product. This gives the hawker an opportunity to raise prices abruptly leading to monopoly. Travelers protest this and stop buying products, government intervenes again and allows few hawkers as per their credibility. This is oligopoly. Government also puts a ban on Chinese products owing to degraded quality of products complained by customers. But the real reason behind the ban is to promote the Indian products. This is protectionism.
When any product is sold, a percentage of amount goes to the government. These are indirect taxes. Well, you reach your destination and have to cross over the road to reach workplace. But there is no foot over bridge, and due to heavy Mumbai traffic it is taking time to cross over. You think government should build a foot over bridge, a genuine taxpayer like you is having inconvenience daily. You question, where is the tax money invested?
Did you ever believe just a ride in a local train can teach you so much of economics, well, this is what is economics. It’s common sense in our day-to-day lives!