Walking along 56th Street in NYC, maybe a half block before 5th Avenue, I always see people on line. (New Yorkers say on line. Almost everyone else says in line.) They are waiting to enter Abercrombie & Fitch.
Usually we associate an economic cost with a line. Time wasted. Irritation. Inadequate customer service. For Abercrombie, though, it might be a benefit.
Researchers from the University of Chicago Business School concluded that total queue length conveys the value of a product. The longer the line, the better it must be. In addition, they found that the number of people behind you is crucial. If we are ahead of many others, feeling a sense of accomplishment, we attribute more value to our goal. In one example, the researchers actually found that when there are many people behind us, we also tend to spend more.
Amazing. A long line snaking for blocks at an Apple store. And most of us think about the value of the product rather than the long wait.
Our Bottom Line: Queues are all about cost and benefit. If the vendor enables us to perceive a benefit, then a line like the one at Abercrombie can become a competitive strategy.
If you just want to enjoy hearing about lines, this 99% invisible podcast is a pleasure. For a more serious read, here is the U. of Chicago paper.
And a final thought… wasn’t it the lines that brought down communism? But that is a different story.
Done with grocery shopping, you scan the registers and select the shortest line. Standing there for 2 minutes, your time flies. Another minute? Okay. But then, according to research, when the time hits 4 minutes, you believe you have been there for 6 and 5 minutes feel like 10.
In one unscientific study, a reporter compared wait times at 5 NYC supermarkets. He concluded that a central line that directed people to one of 30 registers moved people along quickly. By contrast, with a slow checker or a problem buyer delaying customers, the slowest system was the traditional line at each register. (Studies have confirmed his conclusions.)
Random line facts:
- To choose a quicker line, a researcher says to divide the number standing in line by the number of customers that join the line each minute. (But, how much time will that use up??)
- Waiting in line, men typically become impatient at 2 minutes and women at 3.
- Some suggest avoiding lines with people who tend not to rush like the elderly.
- Lines surely sped the demise of the former Soviet Union. Employed by the state, sellers cared little about customer service. Consequently, hours of standing in line eliminated massive amounts of productive activity.
Discussing the merits of the reverse pyramid and back to front, econlife looked at airplane boarding lines here.
The Economic Lesson
A line represents a transaction cost. Defined economically, cost means sacrifice. Standing in line, we are sacrificing what we otherwise might have been doing and thereby adding to the cost of the purchase. During the business day, the transaction cost of a line can be high. During a summer vacation, the cost of standing in line for ice cream can be minimal.
An Economic Question: Using the economic definition of cost, explain why certain people might not mind standing in line while others avoid the experience.
Closely connected to an airline’s bottom line, speedy boarding means more efficiency. Here you can see the following alternative boarding strategies in action.
Front to back:
- Least popular.
- Early boarders block those who follow them.
Back to Front
- Very popular.
- Used by Continental, Alaska Airlines and others.
- Check-in time is one way to decide boarding sequence.
- Preferred by academics as one of the fastest approaches.
- Used by Southwest, American Airlines and others.
- American Airlines’ flight attendants say it creates confusion.
- Alternating back and front for contiguous groups of seats.
- Air Tran uses it.
- Back-to-front with outside-in.
Flying Carpet (really?)
- Designed by an Australian mechanical engineer.
- On a carpet with the seats drawn, a passenger stands on his/her own seat. After 20-30 people position themselves on the carpet, that group boards. Because there is no room for seatmates to stand next to each other, boarders automatically are dispersed for optimal boarding.
According to the LA Times, United Airlines believes in “outside-in” while Continental boards “back to front.” Now that they have merged, will they choose one or compromise with a reverse pyramid?
The Economic Lesson
When an airline boards people more rapidly, it is utilizing land, labor and capital more efficiently. Best illustrated by Southwest Airlines, a fast turnaround means fewer airplanes are needed because more flights can be scheduled using the same equipment. Then, the land, labor and capital that might have been used inefficiently can be allocated elsewhere.
An Economic Question: Referring to cost (defined as sacrifice), explain why faster lines benefit buyers and sellers.
During August evenings in Nantucket, the lines are long at the Juice Bar. Outside each of two doors is a line stretching along the sidewalk. Once you enter the doors into the shop, you can select among (sort of) 6 lines to get to the counter and order your ice cream.
Analyzing the experience, journalist Anand Giridharas says that forming orderly lines had been equated with “middle class behavior”. In India, traditional lines looked like trees with branches as mini lines sprouted next to the trunk and others cut in. Then, though, with the emergence of a middle class, the acceptance of branches and those who cut in was replaced with orderly single file lines. Similarly, when McDonald’s arrived in Hong Kong, they “introduced queue monitors” to replace the traditional chaos around registers.
Perhaps we can view lines as reflections of democracy and the market. Democracy dictates that we are all equal with the same opportunity cost for our time. The market, instead, implies that those who can pay deserve to go first. I guess whenever we fly, we are choosing between a democratic experience (coach) and the market (first class).
The Economic Lesson
A line represents a transaction cost. Defined economically, cost means sacrifice. Standing in line, we are sacrificing what we otherwise might have been doing. During the business day, the transaction cost of a line can be high. During a summer vacation, the cost of standing in line at Nantucket’s Juice Bar is minimal.
With lines reflecting the dysfunction of the former Soviet Union, the huge transaction costs helped to speed its demise.