Designing better, not just spending more
When fuel prices surge and transport systems begin to strain, governments often reach for the most immediate solution: provide cash assistance and hope stability follows. It is a reasonable response, but recent experience shows that it is not always sufficient.
In the case of jeepney subsidies, financial support was intended to help drivers cope with rising fuel costs and keep public transport running. Yet in some instances, the outcome was the opposite. Drivers who received lump-sum assistance reduced their time on the road, choosing to rest after meeting their immediate income needs. The result was fewer jeepneys in circulation, longer queues for commuters, and a system under stress.
This is not a story of policy failure in intent. It is a story of policy design that did not fully account for how people actually behave.
The City of Manila’s jeepney lease program offers a compelling contrast. Instead of simply distributing cash, the city restructured incentives. Drivers and operators received fixed daily compensation, fuel costs were covered, and compliance was monitored through the presence of a traffic enforcer. At the same time, commuters were offered free rides.
The effect was immediate and visible. Jeepneys stayed on the road. Routes were followed more consistently. Commuters experienced shorter waiting times and more predictable travel. The program did not merely provide relief—it even improved the usual commuter experience.
What makes this approach effective is not the size of the subsidy, but its design. It recognizes that people do not always respond to incentives in the way policymakers expect. Drivers do not think in terms of monthly income maximization; many operate with daily earning targets. Once those targets are met, the incentive to continue working declines. A lump-sum subsidy can therefore unintentionally signal that “enough” has already been earned. In the case of jeepney drivers who received lump-sum aid, they decided to take a break, rest their bodies, and enjoy the cash that they did not need to toil for. However, by tying compensation to actual service, Manila’s program avoids this problem. Income is no longer detached from effort. Drivers are paid to operate, not simply to receive assistance. This realignment of incentives is subtle but powerful. It transforms the same amount of public spending from passive support into active service delivery.
The program also improves the experience of commuters, which is just as important. Free rides are an obvious attraction, but they are not the only one. The presence of a traffic enforcer increases the sense of order and safety. More importantly, because drivers are no longer dependent on waiting for additional passengers to maximize earnings, trips become faster and more predictable. The usual delays—long stops, inefficient routing, congestion caused by passenger hunting—are reduced.
This matters because commuters make decisions based on more than cost. They consider time, reliability, and safety. When public transport becomes not only cheaper but also more efficient, it becomes a genuinely competitive alternative to private vehicles.
That shift has broader implications, especially in the context of an energy supply shock. The country cannot instantly increase fuel supply, but it can influence how that fuel is used. Private vehicles consume significant fuel while carrying relatively few passengers. Public transport, by contrast, moves more people per liter of fuel. By encouraging commuters to shift toward jeepneys, Manila’s program effectively increases the efficiency of fuel use across the system.
The benefits extend beyond transport. When workers can commute reliably and at lower cost, attendance improves and disruptions are minimized. Businesses benefit from a more stable workforce. Households retain more of their income for other needs. Local spending is sustained. The lesson here is not that subsidies are ineffective. It is that subsidies must be designed with behavior in mind.
This is why the country needs more public officials who think like this.
Effective governance is not only about allocating resources; it is about understanding people. It requires asking how individuals will interpret a policy, how they will respond to it, and how those responses will aggregate across a system. It demands attention to details that may seem small, but that ultimately determine whether a policy succeeds or fails.
The Manila jeepney lease program demonstrates that thoughtful design can turn a crisis response into a responsive solution. It shows that with the right structure, public spending can achieve multiple objectives at once: supporting workers, improving services, conserving resources, and sustaining economic activity.
In a time of rising uncertainty, that kind of thinking is not optional. It is essential.
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J. Miguel A. Fernandez is a corporate lawyer in private practice with FLO Attorneys, where his work includes corporate, regulatory, and policy-related matters. He has a particular interest in economic policy, behavioral economics, and governance.
