Surge Pricing Can Save Hundreds of People

Author: David Perell URL: https://www.perell.com/blog/surge-pricing-can-save-lives One-line: An early-Perell defense of Uber surge pricing — after a NYC bombing, turning surge off felt humane but ignored basic economics: surge is the signal that pulls drivers toward danger and steers non-urgent riders away.

Key claims

• Turning surge off was a PR move, not an economic one. Within an hour of the bomb, Uber disabled surge in the explosion area, abiding by a prior agreement with New York to cap surge during emergencies — a response to past public uproars. But the popular argument against surge “ignores basic economic theory.”
• Surge pulls supply toward the crisis. Drivers are independent contractors who optimize for safety and profit; naturally they flock to the highest-surge neighborhoods, increasing the supply of rides exactly where demand is most urgent.
• Surge is a new equilibrium, not greed. Prices are simply supply-of-drivers meeting demand-for-rides; though they seem immoral, they signal an equilibrium where supply meets demand and consumer utility is maximized.
• Surge rations by urgency. Quoting Russ Roberts (EconTalk): high prices ask “potential passengers whose desire for a ride was not urgent to step aside” for those in real need — deterring the non-endangered and freeing supply for the desperate. Without surge, resources go to riders at random.

Notable quotes

“Naturally, drivers will flock to the neighborhoods where surge is highest to maximize their earnings, and in turn, profits.”

“Surge prices actually signal the creation of a new equilibrium… by which the supply of drivers can meet the demand for rides, and consumer utility can be maximized.”

“Surge pricing deters people who are not in danger from calling a ride, thereby increasing supply for people in desperate need of one.” (paraphrasing Russ Roberts, EconTalk)

How it connects

• David Perell — an early-career piece applying price-theory to a charged news moment.
• Behavioral Design — price as an incentive signal that reallocates scarce supply toward urgent need.