Recently, I visited Popayán, a charming city nestled in the mountains of southern Colombia where I discovered a fascinating, real-time data exchange – all analog – called La Guerra de Centavos, or “the War of the Coins”. In this post, I’ll explain La Guerra, why it’s the optimal solution for the market, and what happens when the status quo changes. Don’t worry – FARC isn’t involved.

Each day, men station position themselves along bus routes with a notebook in hand, often by a major intersection. Each time a bus passes by, men note the current time and the line number. They then share this data with bus drivers, whom are often stopped at the intersection waiting for the lights to change. In exchange for this information, bus drivers gives a small tip of a couple of pesos (“centavos”, the smallest denomination in Colombia). Despite the tips being so small, data collection is the livelihood for many men. But why is this data valuable enough to pay money for? And why do they call it a war? To answer these questions, we need to take a closer look at the state of public transit in Colombia.

In Popayán, like in many places in South America, public transportation is public as in accessible to all, not public as in government-run. Instead, several private bus companies operate buses on several routes throughout the city. However, these private bus companies operate like taxi companies do here in the United States: the bus companies lease vehicles to drivers for a daily fee and a percentage of fares. Thus, drivers are heavily incentivized (pun intended) to get as many fares as possible. One interesting fact of this company-driver relationship, or lack thereof, is that the drivers have total independence to choose their routes. That’s right, there are no formal bus lines. In theory, a driver with perfect information about where rider pickup and dropoff locations are could customize an always-fluid route to pick up as many passengers as possible, weaving into neighborhoods to pick customers up at their doorstep (this is essentially the idea behind Uber Pool is, but with much smaller buses). Of course, the drivers don’t have this information. Even if they did, how would they communicate that to riders? Once nice thing about a route is that the certainty allows riders to know exactly where their destination is – a particular bus stop along the route. Over time, a solution developed at a local maxima of solutions: all bus drivers adhere to one of a handful of routes. This solution came about for several reasons:

  • consistent routes give riders certainty about a bus coming to pick them up and certainty around being able to get off reasonably close to their intended destination
  • bus drivers know that customers will be concentrated along certain corridors – going elsewhere to find fares would be a fruitless exercise
  • the city grid of Popayán has a handful of major avenues on which the majority of traffic travels

The result of this arrangement is that there are very few domains on which to compete. You can’t compete on effeciency for the reasons stated above. You can’t compete on price or quality of service because customers have no way of knowing that a bus coming in 3 minutes will be appreciably cheaper or cleaner. Simply put, the main way to make more money is to pick up more customers on the route. This is where the data exchange comes in.

The men on the street corners are called calibradores, or “calibrators” in English, because they give the bus drivers knowledge about the routes. For example, perhaps a bus driver is only one minute behind another driving on the same route. With this knowledge, he can speed up and overtake the other bus, getting to all the fares further down the line first and capturing all this value. Seriously, watch these guys in action – it’s like the inner city version of Mad Max (do you notice how they steer, shift gears, and make change all at the same time?!?). Similarly, if a driver learns from a calibrador that there are 5 buses running their same route, but only 1 other bus running a different route, the driver may opt to switch routes to one with less competition. And if there are passengers currently on the bus…too bad!

So what happens when the factors that caused this equilibrium change? Lucky for us, we can look at a natural experiment of sorts. This is a short documentary about La Guerra in Bogotá, a city of ~8 million people and the capital of Colombia. What they are discussing is the creation of TransMilenio, a government-run bus rapid transit system. This completely destroyed La Guerra in the city. TransMilenio buses more modern and had dedicated lanes, greatly decreasing travel times. As more and more routes were added to TransMilenio, there were fewer and fewer routes left for freelancers, all with significantly less traffic. Now, the minibuses are nowhere to be found on the streets of Bogotá, and the calibradores have disappeared with them.

If you liked this post and can speak Spanish, you might enjoy this documentary. I haven’t watched the whole thing, but the comments are pretty positive overall.