A few days ago on a flight, I faced the risk of being squashed by an enormous man in the seat next to me. (And I mean enormous: an extreme obese.) I deployed the usual defenses to preserve my space, but fat was still overflowing over the armrest. This experience gave me an opportunity to think again about the standard economic theory of externalities and how property rights contribute to minimizing them. Recall that an externality (a negative externality in this case) is a cost that bypasses the market and is imposed on somebody without compensation. The first question is, why didn’t my fat and involuntary travel companion pay for two seats in order not to impose his mass on me? Or he could simply have bought an upgraded seat that offers more room. Would it be
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A few days ago on a flight, I faced the risk of being squashed by an enormous man in the seat next to me. (And I mean enormous: an extreme obese.) I deployed the usual defenses to preserve my space, but fat was still overflowing over the armrest. This experience gave me an opportunity to think again about the standard economic theory of externalities and how property rights contribute to minimizing them. Recall that an externality (a negative externality in this case) is a cost that bypasses the market and is imposed on somebody without compensation.
The first question is, why didn’t my fat and involuntary travel companion pay for two seats in order not to impose his mass on me? Or he could simply have bought an upgraded seat that offers more room.
Would it be illegal discrimination for the airlines to impose such a requirement on the obese? I was surprised to find that it is not, either in the United States or in many other countries (see Elaine Glusac, “F.A.A. Declines to Regulate Airplane Seat Size,” New York Times, July 6, 2018). Smarttravel.com, a travel website, observes:
Airline obesity policies differ in degree and detail, but decree essentially that if you don’t fit in a seat with an extension seatbelt and the armrest down, you will be charged for two seats or removed from the plane.
(In Canada, the principle “One Person One Fare” is enforced by regulation. The image below is borrowed from NBC, which reported on this.)
But here is the catch: I could as well have purchased two seats or an upgraded one, and the problem would also have vanished. By contracting with the airline to buy a narrow seat in economy, my anonymous fat companion was pushing an externality on me. But in buying the same sort of seat, I was similarly creating an externality for any obese person who wanted to travel without arm and foot jostle nor visible annoyance from the next seat.
This is the crucial point: externalities are symmetrical. My fat co-traveler was inconvenienced by me just as I was inconvenienced by him. If either of us had dropped dead just before the flight took off, there would have been no inconvenience. Losses or gains in utility being subjective, there is no scientific way to compare my cost to his cost. An interesting essay titled “What It’s Like to Be that Fat Person Sitting Next to You on the Plane” by an anonymous writer known as “Your Fat Friend” shows that it is not easy to be fat when traveling by air on a single seat in the economy cabin. To be fair to my travel companion, he was obviously trying to minimize his intrusion in my space; but humans, contrary to old stars, cannot collapse into a black hole.
That externalities are symmetrical is an idea that we owe to Ronald Coase, who won the 1991 Nobel Prize in Economic Sciences. The anglers who insist on catching fish in the river are as much an externality to the paper mill as the latter is to the anglers whose fish are killed by chemicals. The problem can be solved by one of the two sides purchasing the right to “pollute” from the other. I explained this Coasian idea in my Regulation obituary, “The Power of Exchange.”
The jostle between the obese and the thin on airliners is symptomatic of the same sort of competition over resources. (I characterize as “thin” anybody who is not obese.) Space on an airliner is a limited resource and, one way or another, it has to be paid for by its occupants or by third parties. Most non-economist writers ignore this elementary point.
The efficient way to minimize a conflict over resources is for the involved persons to exchange among themselves and reach a bargain that each one thinks is better than the starting situation. If I am willing to pay my obese travel companion to voluntary leave me alone more than he is willing to pay me to leave him alone, everybody gains (compared to the starting point). In many cases, though, an ad hoc negotiation is difficult because “transaction costs” (the costs of finding the relevant parties, negotiating an agreement, and enforcing it) are too high. Between boarding and take-off, there is not much time to reach a bargain and disembark if necessary.
A more paralyzing problem occurs when property rights are not clearly defined. My seat does not belong to me nor to my fat co-traveler. It is not “my” space. It does however clearly belong to an airline company, which has the incentive to make as much money as possible from all the seats in the airplane. Because of this incentive, the airline company plays the role of an intermediary in a virtual bargaining. It indirectly allows both obese and thin passengers to bid for seats.
One way the airline company does this is to ask higher prices for wider and more comfortable seats, which either the fat or the thin may purchase depending on how much one is willing to pay to avoid sitting too close to the other. Comfort is available in business or first class or on a private aircraft.
A standard and tired objection is that the rich will be able to rent better seats. Ceteris paribus, that is true—just as the rich buy more BMWs and more rib eye steaks. But note that the non-rich are able to outbid the rich when they think it’s worth it. They regularly do so with large quantities of most goods in services. Finally, if everybody earned the same income, there would be no airline seat nor rib eye steaks to bid for; if they exist, they would go to the equalizing Nomenklatura.
More generally, competition between profit-seeking airlines facilitates the satisfaction and reconciliation of all individual preferences. If the obese or the thin feel they are not well served—that is, if they are not offered the seats they want for a price they are willing to pay—other airlines, whether existing ones or new ones, will be incentivized to cater to the neglected clienteles. That the current rules for obese seating differ slightly among airlines offers a glimpse of the possibilities of this mechanism (see again the smarttravel.com piece).
Other sources report that some airlines are now using wider economy seats as a marketing argument: see Elaine Glusac, “F.A.A. Declines to Regulate Airplane Seat Size,” New York Times, July 6, 2018, and Vikky Ortiz, “As Some Airline Seats Get Bigger, Experts Caution Against ‘Fat Shaming and Bias’,” Chicago Tribune, July 18, 2018. No doubt that we would see more competition if the government-created obstacles to entry in the American airline industry—such as those against foreign competitors—were abolished.
The reader who has followed me until now might be tempted to try a little exercise: Can you make a parallel analysis of smokers and non-smokers in restaurants and other commercial venues? Who is the obese and who is the thin among the two groups? And what is different between the smokers’ and the fats’ predicament on the market?