A Closer Look at the Pay-Me-to-Not-Recline Argument
Peter Dorman at Econospeak describes a common example of thought experiments on markets and externalities, and concludes with “More complex considerations that take into account dynamics, interaction effects and the like never intrude. What you end up with is an ideological truncation of economics, and, as the Great Airplane Debate illustrates, it is largely ideology that frames public discourse.” (Re-posted with permission).
Sometimes I mention to acquaintances that much of what they read that is called economics is NOT ‘economics’, even in general terms, largely because the second or third step in analysis is not taken.
Coase at Cruising Altitude: A Closer Look at the Pay-Me-to-Not-Recline Argument
The recent dust-up over the rights of recliners versus the people behind them who get jammed on crowded airplanes tells us a lot about Coase’s analysis of externalities and the perils of having a simplistic Free Market Roolz understanding of economics.
First, to get a flavor of the two sides, read Josh Barro, followed by Damon Darlin, in theNew York Times. The question is whether passenger A in the row in front has the right to recline into the kneespace of passenger B in the row behind. Barro invokes Coase: the solution is to have a market. Clearly, the would-be recliner has the property rights in this matter, since the seat is built to allow reclining and flight attendants will enforce this right in the event of a dispute. So turn it into a market, says Barro. If you don’t want me to recline, pay me. If you offer me enough money, I’ll take it and you can keep your few precious inches. Darlin doesn’t question this invocation of Coase, but he says that the technology gives an unfair advantage to the recliner. The playing (sitting?) field is leveled, according to him, if passenger B uses a Knee Defender.
First off, it should be clear that Darlin’s argument is muddled. He would use the Knee Defender but then remove it if the passenger in front objects. In other words, he is not really changing the allocation of property rights, just adding an extra step. First Barro would have to say, “stow your Knee Defender, buster.” Then he can add, “And if you want to stop me from reclining, show me the money.” So we are back to square one.
So how well does Coase work here, actually? At first blush, it looks reasonable. The recliner values the opportunity to recline at a certain level, measurable in cash. The reclinee values freedom from being reclined on at some other level, also measurable in cash. If the first value exceeds the second no deal will be made, and reclining will take place. If the second exceeds the first, a payment will be made and no reclining will be the result. Thus the relative advantages and disadvantages will be weighed, even though they happen to different people, and the seat will tilt only if there is a positive net advantage. Score one for Coase.
Ah, you say, this overlooks the transfer of money itself: the outcome is not only whether the reclining option will be used but also whether rear passengers have to shell out to front ones. Isn’t there a social justice problem? Barro’s answer is that the people who are willing to pay the most to avoid being reclined on are likely to be taller, and taller people make more on average than shorties; thus Coasian payments help redress a pre-existing injustice. Perhaps this was a clumsy attempt at humor, but as economic analysis it’s pretty flimsy. Average height-related income differentials are very small, especially relative to overall income inequalities. (We are talking about minute differences in the mean relative to standard deviations.) Income differences between randomly selected pairs of in-front and behind passengers are unlikely to be attributable to how much seat space they need. (I’m over six feet, but my middling academic salary puts me below almost every business traveler onboard, no matter how short.) A better argument would be that each reclinee is also a potential recliner, either on the current flight or a future one. If a system of payments is adopted, transfers should roughly net out.
The real problem with Coase in this context, however, has to do with the incentive to threaten to recline. Suppose I am indifferent between reclining and not; in other words, the value to me of being able to put my seat back is exactly zero. Does this mean I’ll simply keep my seat upright and avoid all hassles? Not if I’m Homo Economicus, I won’t! No, as soon as I hear that reassuring electronic beep that says takeoff restrictions are ended, I’ll push my seat back as far as it can go and wait for you to make an offer. My incentive is to hold out for as much as you are willing to shell out and then take it.
This is a well-known result in economics, of course. In the classic case of pollution, assigning property rights to the polluter results, in dynamic equilibrium, in more entry of potential polluters and greater payments to them by pollutees relative to the static outcome. (Not every introductory textbook mentions this, but the best ones do.)
Barro provides a useful example of someone whose understanding of Coase extends as far as the wonders of Markets in Everything and then simply stops. We see the same phenomenon in just about every aspect of microeconomics, from the virtue of sweatshops (workers voluntarily take those jobs, no?) to the evils of rent control (deadweight loss! black markets!). More complex considerations that take into account dynamics, interaction effects and the like never intrude. What you end up with is an ideological truncation of economics, and, as the Great Airplane Debate illustrates, it is largely ideology that frames public discourse.
Mostly I have been confronted with fellow airplane travelers who are courteous and do not recline into my lap. I also thought when I paid for my seat, I also bought the air-rights above my lap and knees.
There are certainly more subtle ways to get around much of this without throwing water into a fellow traveler’s face. Getting up and getting into these seats takes some dexterity in that the passage way is narrow from fuselage to aisle and between seats in the first place. Most people on the aisle will get up to let a fellow passenger out to the aisle.
Reclining further constricts the passageway between seats and everyone knows there are no overhead grips that drop down in the event of a recliner in which to assist you. This calls for placing a hand on the top of the reclining seat in which to steady one’s self. Apply enough weight to the head rest portion and one can successfully launch the reclining passenger two rows further up the aisle.
Then to there is always the movement of your knees against the back of the recliner’s seat. If the recliner was intending to sleep, getting poked through the back of the seat is certainly enough to disrupt a sleep pattern. I too am tall and my knees are always close to the seat in front of me. Who wants to look at the head of the person in front of you?
If you fly enough you begin to have your pick of the seats like the bulkhead, exit aisles, and the poor man’s business class economy-comfort. Life gets good then or at least till you travel with a youngster who will not sleep.
” I also thought when I paid for my seat, I also bought the air-rights above my lap and knees.”
What you bought was a right to share those commons with the front seat holder. If you want to own those rights then fly with an airline that has no reclining seats — that is a bit of a problem since few airlines have non-relining seats,,,,, EasyJet in England is one.
well, if you thought “ideology” was a self conscious invocation of some deep philosophical commitment, you’d be granting them too much credit.
what they are really working on is some primitive idea they absobed when they were too young to think about it. and after that every “new” idea is accepted or rejected according to how well it supports the primal idea.
i think the “knee protector” was a creative solution. but a better solution for me has been: I don’t fly. if enough of you found a way to do that the airlines would be forced by “free market principles” to put in fewer seats/rows.
it is remarkable, however, how rarely those “free market principles” actually work to the benefit of customers or innocent bystanders.
well, what seems to be wrong with the Coase argument is that only the recliner has any actual rights in the situation. the reclinee should have the option to refuse to remove the knee protector … at any price.
but this kind of one sided “fair market” deal… with the cynical “redresses prior injustices” is rather typical of the “analysis” of economists of both stripes. (all of them one armed to be sure).
Airlines will see they are leaving bucks in their customers pockets and offer true business class with more leg room. This won’t stop flyers from selecting the lowest fares and complaining, but they can be offered the choice even if they find it too expensive (which it is currently with first class, which is where the rich mostly sit)
Lord
all too true. another example of the uneven playing field.
which may be why i spoke confusedly above. i had the mistaken idea that the guy in back had the option of asking the guy in front how much he’d pay for him to remove the knee defender.
i see now that the”market” doesn’t work if both parties have a choice.
I am a little woman, 5′-2′, and when I fly I also do not have enough room for comfort. (By the way, need I mention that “reclining” on airplanes would be better described as “differently vertical?”
How on earth do normal or large people manage? Proportionately, battery egg hens have more space than air passengers.
Unless there is no alternative, I always prefer to spend 12 hours driving than taking the theoretical 2 hour air flight. Even my tiny hatchback, a car you can practically carry under one arm, has room to recline, sleep, transport food and small bottles of wine, and take my pets along without wondering if their freight compartment is still pressurized.
Fly? Not unless there’s a funeral, or an ocean in the way.
Noni
This entire argument about reclining seats seems to be about avoiding the source of the problem. The federal government, which already regulates airlines, should simply regulate seat spacing in aircraft. It’s a real health and public safety issue. Maybe we need a medical diagnosis of airport psychosis or post flight traumatic stress. You’ll notice that you don’t hear about conflicts between smokers and non-smokers on airplanes anymore. That’s because the government regulated smoking on aircraft out of existence. It could solve this problem just as simply.
Fanatical belief in markets seems to be a suckers game.
Noni
god put them oceans there for a reason.
and if you plan to stage a funeral, better give me three days warning or accept my regrets.
kalebefg
fanatical is the operational word. i wonder if the author even noticed he did not “solve the problem” so much as create a profit opportunity for the guilty party. blackmail has always been a good business model.
i do not know it the airlines can afford to operate without packing them in. i suspect they can. but the whole thing reminds me of those slave ships where the options were “dense pack” and “loose pack.” you could fit more in with dense pack, but more of them died, so you ended up just about the same in the end.
Since Dan has taken the post to AB I’ll simply repeat the comment I made to this post at EconoSpeak:
It may be that the scenario is meant for illustrative purpose and reality is irrelevant. However, I’d like to remind you that in almost all cases the recliner is also a reclined upon in an airliner. Also,the airlines have already co-opted the potential extra cash that a reclined upon might be willing to pay for the tad bit of extra comfort. And a tad bit is all you get. The “extra leg room” seats usually command an additional $50 over the cost of coach. Of course if one really wants to be the lord of the coach class there is also coach premium. Not quite business class, by along shot, but about 50% over the standard coach price. I don’t pay any attention to the absurd cost premium of first class or business class so I can’t address the economic and social dynamics of such a choice, though I think a large measure of that huge premium over coach is readily paid by those not wanting to hob nob with the hoi polloi.
But damn Jack, we have no class war here…. : )
But Daniel the war is the middle class against the working class and any other economic or social group that can be identified by the sycophants of the truly rich. As I noted, even the smidgens of extra leg room that can be argued over has already been monetized by the airlines at all of our expense and discomfort. Unfortunately world history points out that we are, and have always been, sheep and easily herded in what ever direction the shepherds want to steer the flock. Even when mayhem breaks loose and the shepherds are upended they are soon replaced by others of that ilk. “The new boss, same as the old boss.” We will be fooled again and again.
Oh I get that Jack. There is not a day in my office I do not have to educate at least one person or remind another that they have to stop looking at the people below them and start looking at the people way above them. I remind them that the other possibility of that hand holding tight on their ankle might just be one looking for help up and not one wanting to pull them down. Duh!
Start asking people younger than 50 years old if they have heard of the labor wars. Hell, I have people my age (58) that have not heard of them.
maybe i am just late stumbling on what has been obvious to everyone (i did not read the original articles).
as a matter of logic, what exactly did the ‘Knee Defender” add to the argument?
If I have to pay you not to recline your seat into my lap, I will charge you to get me to not kick your seat.
Jack:
That would be called a knee massage. Or if they are that far back, your having to leverage yourself on their head rest to extract yourself from your seat. Releasing it would launch them two rolls forward.