Laissez-faire Beats Central Planning When Boarding an Airplane
People often assume that without top-down control, social processes will descend into chaos. But let a group of people respond to their own individual incentives and information, while enforcing some basic rules, and just the opposite is often true. Without realizing it, air travelers have likely observed this situation when flying Southwest Airlines, which, unlike any other major carrier, does not assign its passengers seats.
On most airlines, people know exactly where they’re going before they get on the plane. On Southwest, instead of a seat assignment, passengers get assigned a place in line to board. Once on the plane, you can sit in any empty seat. There is widespread agreement that Southwest’s process, though less organized, is actually faster. A 2014 episode of the television show “Mythbusters” found that a simulated free boarding process was about 10 minutes faster than the simulation with assigned seats. While this may seem counterintuitive to some people, it resembles the free market at work.
First, free boarding gives passengers incentives to move faster to get more desirable seats. In traditional boarding, the outcome will be the same no matter how one behaves. Even if this effect is small for individuals, these differences can pile up like cars in a traffic jam. Similarly, in a centrally planned economy with fewer direct incentives for hard work, even subtle differences in the way people approach their jobs can pile up in networks of millions of people.
Second, individuals can respond to new and detailed information in real time. In traditional boarding, passengers stuck behind a slow-moving family cannot change their behavior in any way. But in free boarding, these passengers might decide to take seats in front of the family, reducing the number of people in the line. A central planner is not able to account for every contingency and new piece of information on the ground. This information can only be processed by giving the people on the ground freedom to make decisions.
Self-organization is often observed in complex systems, whether in nature or large-scale human interaction. In their book “Complexity and the Art of Public Policy,” David Colander and Ronald Kupers write that many urban planners favor no traffic lights even at busy intersections. The system organizes itself in a more efficient way that, once again counter to intuition, doesn’t sacrifice safety. We tend to think of direct causes and effects, which is likely why systems with top-down planning feel like they should be better organized. But with complex systems, outcomes emerge from the interactions of many peoples’ decisions. A central plan often carries unintended consequences in such a system; giving people the chance to respond to their own incentives and information often yields a superior result.
Max Gulker
Max Gulker is a former Senior Research Fellow at the American Institute for Economic Research. He is currently a Senior Fellow with the Reason Foundation. At AIER his research focused on two main areas: policy and technology. On the policy side, Gulker looked at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker was interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy.
Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxg_econ.
