Tuesday, 9 November 2010

The economics of getting off a train

A surprising article on the BBC today, explaining How to get off a busy train. I guess the BBC does have an educational mission.

But however obvious getting off a train might be, reading the article prompted a few ideas. The article is mainly about how passengers should behave, but acknowledges the role of the train's design in influencing that behaviour. And some of those design choices are very reminiscent of the "choice architecture" discipline we know from books like Nudge.

But this is a problem we wouldn't normally associate with economics at all. It's a product design - or even an architecture - question. So is the domain of Nudge really economics? Or is it in fact design, ergonomics or something else?

The stuff of economics is normally about how we allocate our wealth and material resources; about how we respond to incentives; how we trade and deploy limited amounts of capital and labour to produce maximum utility.

Design problems, on the other hand, are about how we allocate our thinking time; how we respond to the tools and interfaces offered to us; and how we choose, arrange and structure limited physical resources to solve a problem.

Hmm...maybe not so different after all. Cognitive effort is a resource just the same as labour, iron or land. Designing a choice architecture to minimise thinking and bring about a desired result is not dissimilar from setting the right prices to reduce carbon usage. And trading goods to increase utility has a lot in common with how our attention is pulled between competing attractions.

So we can apply economic thinking to the problem of getting off a train (for that matter, maybe we can also apply design thinking to increasing small business lending - but not today).

The BBC's train-exiting experts recommend three tactics:

  • Keep moving steadily: speed is the desired outcome here, but comes at the cost of additional thinking to keep physically coordinated. As with any economic supply curve, there is an increasing marginal cost: each bit more speed brings a higher and higher extra cost of coordination.
  • Get off before getting on: of course this is obvious...to you, I hope, my reader. But not to every user of London Underground, it seems. How could we solve this problem with economics? Assuming the transaction costs of paying people to get off the train are too high, perhaps we can create a cognitive incentive. There are two at play here. Passengers have been trained to apply a social pressure to each other...anyone trying to get on before others have got off will pay the cost of many stares and tuts from other travellers. And the thinking cost of getting onto the train is higher if you don't wait for it to empty first. Why then do some people jump on first? Because of their fear of the failure of the third tactic...
  • Spread out evenly: A version of a well-known economic trap applies to trains too. Hotelling's Law shows that two suppliers competing in a market (archetypically, ice cream stalls on a beach) will not move to the optimal position for customers, but to the best position for competitive defence against each other - right next to each other, with no differentiation. And when passengers are standing in a train carriage, the optimal social solution is for them to space themselves evenly [at least, if we assume declining marginal utility of space]. But the selfish choice for at least two of them is not to move right down the carriage, but to leave extra breathing space while blocking other passengers nearer to the doors. This benefits those two a little at, a high cost for the rest. We therefore have a strong incentive to become one of those two people, which in turn results in the problem of people rushing to get onto the train first - if necessary, before disembarking passengers have had a chance to get off.

    The solution here? Apart from social pressure again, we can use the useful economic tool of arbitrage. If two people are standing apart in the middle of a carriage, they are creating a space which someone crushed into the door would be happy to use. So we should allow - indeed, encourage - those at the door to move past everyone else and take the space. A notice on the door instructing people to do so would be sufficient. What's more, in most markets the threat of arbitrage is sufficient to stop most arbitrage from actually happening. And this case is no different: once passengers come to expect the annoyance of people pushing past and standing on their toes, they will pre-empt it by moving down the carriage and using up the space themselves. Thus neatly resulting in a socially optimal solution at minimal cognitive cost.
An excessively complex analysis of a simple problem? Certainly (though in my defence, the BBC started it). Then again, that's what economists do. Enough practice at modelling the simple problems means the answers to complex ones start to come naturally.

The broader lesson: cognition is an economic resource, and information changes cognitive incentives. Adding these two insights into the standard theory creates a powerful extension to economic thought - potentially a whole new discipline - cognitive economics.

1 comment:

Min said...

Don't we have a problem of flow? People moving in the same space in opposite directions?

Now, both the people inside the train wanting out and the people outside the train wanting in want want the people inside the train to get out. One possible solution -- shall we call it the gov't solution? -- is to let the people inside the train out first, and then let the people outside the train in last. As we have seen, that idea has not worked too well.

However, this is a problem that we have already solved -- on the roads. Roads have lanes for traffic going in opposite directions. Now, unlike elevators, most train cars that I am familiar with have more than one door. Let, say, the forward door or doors be the exits and the rear door or doors be the entrances. That would give a natural flow within the cars from back to front. People would be moving in the same direction instead of against each other. (These could vary according to time and station, like rush hour traffic regulations on the highways.) :)