Shopping malls and their impact on taxi trips in Singapore
A study by Lee and Cheng (2023) reveals that the opening of shopping malls in Singapore can significantly reduce the number of taxi trips taken by residents, particularly those living within a short walking distance.
Wong Wei Chen
28 August 2024
In a dense, bustling metropolis like Singapore, traffic congestion, air pollution and other negative externalities are among the various issues that policymakers would have to contend with. As we go about our daily lives, we make numerous commutes to work – and beyond office hours, we make many trips for leisure, shopping, dining, or visiting friends and family.
In Singapore, retail trips account for the highest percentage of non-work trips and a substantial proportion of taxi trips here. This underscores the role of retail amenities in shaping travel behaviour, and at the same time highlights taxi transportation as a highly salient phenomenon worth studying as a factor influencing urban well-being.
In their 2023 study “Neighborhood Retail Amenities and Taxi Trip Behavior: A Natural Experiment in Singapore”, Lee and Cheng analysed the impact of newly developed malls on the retail trip behaviours of nearby residents, and found reduced frequency as well as lower mileage of taxi trips to other retail locations.
The study’s findings generate implications for urban planning in terms of liveability, more vibrant neighbourhoods, less road congestion and overall public welfare. Additionally, since taxis are considered a reasonable substitute for private vehicles, the findings can also be generalised to all private vehicular travel.
Empirical design and data
As a well-known shopping destination, Singapore presents a diverse array of retail amenities over a wide geography, both in the downtown and suburban areas. This unique context, characterised by heterogeneous neighbourhoods and a thriving retail sector, provided an ideal setting for studying retail travel patterns.
The researchers used GPS-based, taxi-trip data provided by the largest domestic taxi operator here, which accounted for up to 60% of market share, and with monthly ridership ranging up to 12 million trips. This extensive dataset offered a comprehensive representation of the taxi market in Singapore, allowing for a detailed analysis of travel behaviour.
To effectively isolate the causal impact of newly opened malls, Lee and Cheng focused on data over a period from January 2009 to September 2012. This time frame was chosen to avoid potential confounding factors introduced by ride-hailing, food delivery, and logistics services technology companies, which emerged after 2012.
The researchers employed a difference-in-differences (DID) approach to identify the causal effect of new malls on retail trip behaviour. This involved comparing changes in taxi trip patterns for residents living in close proximity to a newly opened mall, within a locus of 800m (i.e. treatment group) with those living in similar neighbourhoods, but without any shopping mall nearby within a 1,500m radius (i.e. control group). By controlling for pre-existing trends and other factors, this method allowed the researchers to isolate the specific impact of the new malls. The radius of 800m was defined for the treatment group because it translates approximately into a 10-minute walking distance.
Findings
After deploying DID methodology with controls for locational and socio-demographic factors, the study found a significant reduction in taxi trips to other retail destinations for residents living within 800m of newly opened malls.
Residents in the treatment group (within 800m) took an average of 33 fewer taxi trips per month to other retail destinations after the mall opened compared to the pre-opening period. As a result, the share of retail trips out of total taxi trips also decreased by a statistically significant 1.4 percentage point for the treatment group.
In comparison, for those living between 800m and 1500m, the reduction was negligible and not statistically significant. This suggests that proximity to the mall played a crucial role in influencing travel behaviour. Hence, the treatment effect of the mall opening on taxi-trip behaviours for retail is highly significant for households that reside within an approximate 10-minute walking distance of 800m to the location of the mall, and dissipates beyond this threshold.
The results also show that a mall opening reduces the taxi-trip distance for retail. After a mall opened, households in the treatment group decrease their taxi trips to other retail destinations by about 355km per month on average.
While Lee and Cheng’s study did not directly track travel mode changes, it is likely that some treatment group residents might have switched to walking or cycling to reach the new mall, contributing to the reduction in taxi trips.
Given that the trips to shopping malls account for about 23% out of total retail trips (or 8% of total taxi trips) in Singapore, results from the study suggest that the 20 malls that opened in Singapore between January 2009 and September 2012 reduced 5,049 taxi trips to retail destinations and 54,315 km travelled on the road per month.
Policy implications
On the overall, Lee and Cheng’s study provides evidence that the opening of new malls in Singapore can significantly reduce taxi trips to other retail destinations, both in terms of frequency and distance travelled. Additionally, residents living within a short walking distance of newly opened malls are likely to switch to non-motorised travel modes such as walking or cycling for their retail activities.
Given that research findings also showed that the most significant reduction in taxi trips occurred during evening peak hours, between 5pm and midnight, decanting commuters away from taxi transportation during such a busy timing would do much to alleviate road traffic congestion.
This highlights the importance of strategically dispersing retail amenities islandwide to promote sustainable transportation and improve the quality of life for residents.
Lee, Kwan Ok is an Associate Professor and Dean's Chair at the Business School at the National University of Singapore (NUS). She also serves as the Deputy Head in the NUS Department of Real Estate.
Cheng, Shih-Fen is an associate professor of computer science at the Singapore Management University (SMU), and is also an Urban Fellow at the SMU Urban Institute.