Why Equally Talented Workers Often Earn Different Salaries and Other Mysteries of the World of Work Why do taxi drivers quit early on rainy days?
(Linda Babcock, Colin Camerer, George Loewenstein, and Richard Thaler) In most cities, it is possible to hail a taxi at a moment’s notice when the weather is good. But when it’s raining, people have a much harder time finding one. One obvious reason is that many people who walk short distances during good weather prefer to take a cab in the rain. So any given fleet of taxis will tend to be more fully occupied on rainy days. But the supply of available taxis is also smaller because taxi drivers work shorter hours when it rains. Why? According to a recent survey, the reason is that many taxi drivers work only as long as it takes to reach a targeted income each day. On sunny days, they must spend much of their day cruising for fares, so it takes longer to reach the target. They can reach the same target more quickly when it’s raining, because cabs tend to be full most of the time. That taxi drivers knock off earlier is precisely the opposite of what their economic incentives might seem to
