The Economics Of Stealing Bikes

Sep 7, 2012
Originally published on September 7, 2012 4:18 pm

The normal bike market is pretty straightforward — supplier, middleman and buyer. The market for stolen bikes has the same roles, but different players. Here's a quick look at how it works.

The Supplier

The supplier, instead of Schwinn or Cannondale, is the bike thief.

Hal Ruzzal, a bike mechanic at Bicycle Habitat in Manhattan, describes two types of thieves.

Thief Type 1: "Your standard drug addict."

For a heroin addict, Ruzzal says, a "front wheel is one hit, rear wheel is two hits, and a leather seat is three to four hits."

Thief Type 2: The professional

This is the guy who "comes around in a van with an angle grinder and he steals a bike by walking up to the bike wearing a bicycle helmet and a messenger bag and he actually looks like he owns the bike."

The Middle Man

The bike thieves, or suppliers, then need to sell to the stolen bike to a middleman — the stolen bike salesman.

In the Tenderloin district in San Francisco, stolen bike salesmen walk around with spare bike parts tied to shopping carts and ride around on bikes they're trying to sell.

The Customer

In the Tenderloin, sellers sometimes go door-to-door looking for buyers.

In New York, restaurant delivery guys are a big market. You need a bike to be a delivery guy, and stolen bikes are cheap — sometimes $10 or $20, fully loaded.

This brings up a fundamental question: If stolen bikes are so cheap, is it even worth it for thieves to rip them off?

"The juice is okay," said Rohin Dhar, founder of the company Priceonomics, who recently wrote about stolen bikes on his blog.But the squeeze — the effort you have to put in, and the risk of getting caught — is zero."

The key, he says: "There's just no risk to the crime."

Joe McCloskey, a police sergeant in the Tenderloin who set up stings to catch bike thieves in the act, agrees.

"Nobody went to jail," McCloskey says. "It's not a high-priority crime."

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This is ALL THINGS CONSIDERED, from NPR News. I'm Melissa Block.


And I'm Robert Siegel. It's been a great year for biking. Memphis, Chicago and other cities are adding bike lanes. New York is planning a bike sharing program; Washington D.C. is expanding the one it already has. Call it a biking boom. But, with more bikes comes more bike theft. Caitlin Kenney of our Planet Money team has this story about the bizarre economics of the stolen bike market.

CAITLIN KENNEY, BYLINE: If you buy a new bike, the market is pretty straightforward. There's the supplier, people who make the bike, Schwinn or Cannondale. There's the seller, that's the bike shop. And there's the customer, that's you. When your bike is stolen though, it enters a strange underground economy. There is a market, but all the players are different. Let's start with the suppliers. Who supplies a stolen bike? A bike thief. And who are these bike thieves?

HAL RUZAL: You have your standard drug addict. A junkie will steal anything because he's a junkie.

KENNEY: Hal Ruzal is a bike mechanic in Soho who's worked at this bike shop, Bicycle Habitat, more than 30 years. He says, drug addicts will also trade bike parts for drugs. But Hal says, it's not all drug addicts of course. Some people are full-time bike thieves.

RUZAL: And then you have your professional thief who comes around in a van with an angle grinder and he steals a bike by walking up to the bike wearing a bicycle helmet and a messenger bag and actually looks like he owns the bike.

KENNEY: Hal says a professional can steal a bike, even a well-locked bike, in just a couple of minutes. Which brings us to the next part of the underground market. Once you've stolen the bike, where do you sell it?

HATCHETT POP: That is the best way to get rid of a quick, hot bike is take it to where the guy's going to give you straight cash for it and off they go.

KENNEY: I met Hatchett Pop near 7th and Market in downtown San Francisco. This neighborhood, the Tenderloin, is one of the most dangerous in the city and it's a major marketplace for stolen bikes. Hatchett Pop says the bikes down here sell for cheap. Like say you have a bike that, you know, maybe retails for like a $1,000 dollars. How much could you get for it on the street?

POP: About a hundred bucks.

KENNEY: A hundred bucks. That little?

POP: Yeah, that little. Mainly because, believe it or not, the competition's pretty heavy.

KENNEY: In other words, there are a lot of stolen bikes out here; the more supply, the cheaper the price. You'll sometimes see the final participant in this underground economy, the customer, here at 7th and Market. But sometimes, in search of customers, the sellers have to go door to door.

JOSE MARMALEJO: The drug addict users, they do come with little - the lights that you use at night. All they do is knock on the window and show you the bikes, like say, oh, five dollars, four dollars.

KENNEY: Jose Marmalejo works at Puebla Food and Coffee Shop on First Avenue in Manhattan. He says, a lot of people come in hoping he'll buy a bike for the delivery guys. Delivery is huge in New York. Ask a delivery guy where he got his bike? He might say...

VICTOR SANDOVAL: (Foreign language spoken)

KENNEY: In the street, says Victor Sandoval, who works at a place just down the block, the only qualification to be a delivery guy in this city is to have a bike. That's a built in demand for cheap bicycles. And you can buy them for pennies on the dollar; 10, 20 bucks for a fully loaded bicycle. Which brings up a question in this underground economy: If the bikes are so cheap, can you actually make a profit? Rohin Dhar is founder of a company called Pricenomics. He recently wrote about stolen bikes.

ROHIN DHAR: You know, is the juice worth the squeeze? Is it, you know, worthwhile? All this effort?

KENNEY: This was his question. Is it worth it to smash a bike lock, to snip it with bolt cutters, to saw through it with an angle grinder? Just to steal something that could retail for 10 or 20 bucks?

DHAR: And what I think we found with stolen bicycles is, the juice is OK. Like you can make money stealing bikes. But the squeeze, the effort you need to put in, and the risk of getting caught is zero. And that's probably what explains why bike theft is so prevalent. There's just no risk to the crime.

KENNEY: I talked to a police sergeant here in the Tenderloin in San Francisco, Joe McCloskey. He sets up stings to catch bike thieves in the act. Even so, after he arrests them...

SERGEANT JOE MCCLOSKEY: Nobody went to jail. They were on probation. Got the probation modified. It's not a high priority crime.

KENNEY: Sergeant McCloskey doesn't see that changing any time soon. So for now, the stolen bike economy will continue to thrive - just out of sight. Caitlin Kenney, NPR News, San Francisco.

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