A year ago, the city of Tallinn, Estonia, situated a short hop across the Baltic Sea from Finland, made public transportation free to its residents. The capital city of roughly 430,000 people embarked on the largest experiment so far in the fare-free public transportation movement, which proponents claim increases ridership, gets cars off the road, and decreases congestion all while making the city more accessible to low-income residents.
As a study from the Royal Institute of Technology in Sweden found, Tallinn's fare-free transit, which applies to buses, trams and trolleys, didn't bring new riders in droves as city officials expected. The researchers, who presented at the annual meeting of the Transportation Research Board in Washington, D.C. this January, found that dropping fares only accounted for a 1.2% increase in demand for the service.
Eliminating fares should, in theory, make public transportation a more attractive prospect, encouraging people to shift from driving to riding transit. In turn, a greater demand for transit caused by all those people parking their cars and hopping on a bus or train should allow the city to prioritize public transit, improving service and shortening wait times.
That's not exactly what happened in Tallinn. Turns out, it can be difficult convincing people to dump their convenient car ride for a cold wait at a bus stop. The highest increase in passenger demand (10%) came from the district of Lasnamäe, a dense, populous neighborhood with higher unemployment rates than the rest of the city, but the overall data suggests that instead of people switching from cars to public transit, the fare-less system mostly encouraged people to walk less. This might be attributed to the fact that the city already had a fairly high rate of transit use, (40%, versus 26% car use).
Based on this case study, it seems that in a relatively large city where public transportation already sees high use and is relatively cheap, the fare-free system may not be the most effective way to get people out of their cars and onto the bus.