Front of the line passes

Universal Studios sells regular passes and 'front of the line' passes. The front of the line passes allow the passholder to go through a special gate and wait in a special 'front of the line' queue.

Buying a front of the line pass is rational if:

price of front of the line pass - price of regular pass < value of time*time saved.

I did the calculations and bought the passes.

As we were waiting in the (special, short, front of the line queue) we asked: "would it be nice to have a front of the line pass for life in general?" A few thoughts:

- My nephew, who has been working as a solicitor in London, observed that if you work in the City, you do have a front of the line pass for life in general.

- We agreed that however many problems we have with the idea of inequality in general, if some people have front of the line passes and some people don't, we want to be one of the those with front of the line passes.

- The number of front of the line passes sold and the allocation of spaces on rides are crucial. If all front of the line pass holders have access before all ordinary pass holders, and the number of front of the line pass holders is greater than or equal to the number of seats available, ordinary pass holders may find themselves canoeing into the wind, that is, never moving forward.

Next time the Canadian policy debate turns to private funding for health care, I'll think about Universal Studios and the front of the line passes. What have I learned:

- for front of the line passes to have any benefits at all for ordinary pass holders, sufficient revenue generated from front of the line passes must be dedicated to making more spaces available on rides

- If I'm in the ordinary line, I don't want to see the front of the line pass holders. Yes, envy is a sin. I'm a sinner.

Interestingly enough, Disneyland doesn't use front of the line passes. People who buy special super-expensive packages are allowed to enter Disneyland early or late and get extra access this way. But Disneyland's way of minimizing time spent in line is to give people a ticket that guarantees access to, say, the Spinning Teacups at a fixed time. This doesn't reduce the amount of time spent waiting, but greatly reduces the cost of waiting, as uncertainty is minimized, and one can go and have a cup of tea.

We haven't been to Disneyland yet so I don't know how well that pass system works. But right away I can see a couple of issues with applying it to the Canadian health care system:

- waiting for health care is intrinsically costly - the fact that you can spend time shopping instead of standing in line doesn't do much to ease the pain of waiting.

- there's only so many special fast trak tickets available. With front of the line passes, you are guaranteed to see all the shows you want to see; with Disneyland's ticket system, you aren't.

By the way, if you're wondering why I have time to blog while on holiday - right now England is playing Germany, and I'm the only one in the party who's not a fan.

Comments

[Marc]

Such passes only make sense if there is some semblance of equality of wealth and income in society, something that economists routinely look over by assumption. It is one thing for me to choose to pay much more for a pass if others have the same opportunity, but inequality greatly skews the allocation. In its extreme, why should someone born a billionaire be able to have front-of-the-line passes for life, by sheer luck of the draw?

[Nick Rowe]

Why might front of the line passes might be efficient?

1. If different people have different costs of waiting in line, so that those at the front of the line might sometimes want to accept a bribe to swap places with those at the back, a lower price, plus an extra fee for a front of the line pass, might replicate this.

2. If demand varies unpredictably over time, you would want the price to vary according to demand. A lower average price, plus a front of the line pass, might replicate this.

[westslope]

BC Ferries sells reserved places for automobile owners who wish to avoid costly queuing. It makes great sense for time-constrained individuals and suggests that BCers are mostly low productivity workers given the vast majority of folks who prefer to queue.

"- If I'm in the ordinary line, I don't want to see the front of the line pass holders. Yes, envy is a sin. I'm a sinner."

Recognition is important. Sounds like the first step of a 10-step program. -lol- In all seriousness, yes, designing allocation systems to minimize envy friction is probably not a bad idea. Hidden taxes anyone?

[Nick Rowe]

Coincidentally: http://mjperry.blogspot.com/2010/06/markets-in-everything-10-30-to-cut-in.html

[benamery21]

Nick: with Disneyland's system, you can maximize your rides by going around to get your fast-trak passes for multiple rides (instead of having a cuppa), then going around to all the rides again to ride them without waiting. The only cost is a bit of exercise, but it meters people on to the rides for the operators. You end up not doing much waiting at all (just the small overhead of the time spent going from ride to ride the first time, which is typically less than the time to wait for one ride).

[benamery21]

Sorry Frances, the above was for you. Only the part about 'metering' addresses Nick's comment.

[Jon]

If there are queues, something has already gone wrong. That something is a price error (rides are free) or a monopoly privilege (only X may sell tickets).

South of the 49th, people view queuing for critical health-care abhorrent. There is no queuing, so there is no queue to cut-in on, and people cannot, and do not pay more to get priority scheduling.

Its really quite confusing to see all the apologists for rationing people to death by tolerating long queues. Please.

[Patrick]

Jon: There's no point in joining the queue if you can't afford the price of the ticket. That's fine for movies. Not so much for essential health care - at least not in any country I'd want to live in.

Further to Nick's comment: I think the scheme breaks down if the people in the queue have a deadlines, their position in the queue isn't prioritized by deadline (i.e first come first served), and the service time for position X in the queue is less than the deadline, then anyone in position Y that will be serviced by X's deadline and where X's position satisfies Y's deadline. Then Y could extort just about any price from X if X's deadline really is a "dead" line (i.e. health care - how much would you pay not to die?). The problem goes away if people always will be serviced by their deadline, and sorting the queue by deadline would help minimize the cost of meeting everyones deadline.

[Jon]

Patrick: yes, that's a real problem in these pay-extra-to-get-the-care systems such as in England and the Netherlands. The trouble is they have an effect very similar to what happens in places like Romania where you need to pay substantial bribes to get "free" treatment.

Price discrimination is an effective tool for transferring away the consumer-surplus. The custom of charging different people different amounts for the same service is disturbing.

Bryan Caplan made interesting mention of this recently: http://econlog.econlib.org/archives/2010/06/health_pricing.html

In contrast, once there is one price, people need only find a way to pay--which often means turning to their family, friends, community, church, etc.

[Nick Rowe]

Jon: If there's *always* a queue for rides, or healthcare, that suggests the price is too low (or the supply too low).

But if there's only *sometimes* a queue, because demand varies over time, the problem is that the price doesn't vary enough over time. The front of the line pass is a way to get the price to vary.

[Just visiting from Macleans]

Queueing Theory is used extensively in traffic engineering (a form of civil) to manage transportation system (think of coordination of traffic lights, toll roads, changing direction of lanes duting peak periods), telecommunications etc. From wiki:

Queueing theory is the mathematical study of waiting lines, or queues. The theory enables mathematical analysis of several related processes, including arriving at the (back of the) queue, waiting in the queue (essentially a storage process), and being served at the front of the queue. The theory permits the derivation and calculation of several performance measures including the average waiting time in the queue or the system, the expected number waiting or receiving service, and the probability of encountering the system in certain states, such as empty, full, having an available server or having to wait a certain time to be served.

Queueing theory has applications in diverse fields,[1] including telecommunications[2], traffic engineering, computing[3] and the design of factories, shops, offices and hospitals.[4]

[Chris J]

Frances, This is an interesting start but it is too simple. The ideas are right but for a real analogy to health care you need to include

1- multiple rides of the same type (I recently went to a North Bay specialist clinic because the wait in Sudbury was too long.)

2- multiple queues for the same ride, aka triage. A kid who blacked out after falling in playground was treated immediately in emergency while adults with sprained ankles waited. (Kid OK but scary afternoon for parents.)

[Adam P]

Nick: "Jon: If there's *always* a queue for rides, or healthcare, that suggests the price is too low (or the supply too low).

But if there's only *sometimes* a queue, because demand varies over time, the problem is that the price doesn't vary enough over time. The front of the line pass is a way to get the price to vary."

Good point Nick, along those lines I'd imagine you'll be interested in this fantastic paper from one of my favorites:

http://www.minneapolisfed.org/research/sr/sr413.pdf

[westslope]

This blog has me wondering what makes some forms of price discrimination socially acceptable and other forms socially unacceptable.

One could start by noting that price discrimination by private sector providers is usually deemed acceptable. The same does not apply to public sector goods and services but does it? The price discrimination simply takes the form of costly queuing and similar goods-in-kind type costs. Once again price discrimination is acceptable but simply takes a non-monetized form.

One possibility is that most people have been overworked since the Industrial Revolution and lengthy queues give them a chance to relax. Presumably people who sit for traffic for hours at a time on a daily basis inching to work and then inching back home are simply relaxing. Moving to within a 15-25 minute walking distance of work could be traumatic.

So although first-come, first-served allocation system has had a devastating impact on fish and other fauna as well as First Nation communities, perhaps the Universal (sic) health care system has had beneficial effects on Canadian health by allowing people to sit and relax in long waiting lists? If you believe in the wisdom of traditional societies, there is much to be said for doing nothing.

[Mandos]

I don't understand people who claim that there are no waiting lists or delayed care in the United States. There are; I have experienced them in minor ways, and know people who have experienced them for longer and more significant issues. The only difference is that they are better concealed.

[Alex]

I don't know what Jon is talking about - the English NHS is not a "pay-extra-to-get-the-care system".

Just visiting from Macleans is right to bring up Queueing theory. Here's a good post on it which takes in the NHS and hospital beds:

http://www.dcscience.net/?p=2369

[Alex]

Also, on the direct point about front of the line passes, they wouldn't make sense for the NHS. The whole point about having a public health care system is so that access to care is based on need not wealth. Those who are rich and want better can go private if the want. The rich are at the front of queue for private health care, and with passes would be at the front of the queue for the NHS. This would defeat the point of having a public health care system in the first place.

[Frances Woolley]

Alex - yes, front of the line passes=private health care in the NHS context. Canada bans UK type private health care - but I don't know if this approach is sustainable long-term. The Canadian system is working o.k. now in part because there's been a lot of money pumped into the system in the last 5 or so years and in part because the US acts as a safety valve.

benamery21 - thanks for the great tip, will see if it works tomorrow.

Mandos - I think part of the difference is that in the US things are rationed by price, so some people who in Canada might be on a waiting list in the US simply don't get care because they can't afford to pay.

Chris J - interesting point about triage, this is exactly what front of the line passes prevent.

Nick, Westslope, - on the efficiency of there always being a queue - I wonder if there is something to be said for the joys of waiting. I'm thinking of a book called "How to be English" that describes an English-person's holiday as queuing to get on a bus, queuing for an ice-cream cone, etc etc.

[Jon]

Nick writes:

"But if there's only *sometimes* a queue, because demand varies over time, the problem is that the price doesn't vary enough over time."

True. Prices need be variable to match present supply and demand.

The front of the line pass is a way to get the price to vary."

I'm not sure I entirely by into that. I think that's too simplistic. The front-of-line pass has a price to 'clear' the market but the other line does not have a price correspondingly calibrated. Its a classic example of a price-control, and the inefficiency is plain.

[Nick Rowe]

Jon: on thinking it over, I think you have a point. I was thinking that the people in line are just waiting until demand falls and the price drops. But presumably the guy at the front of the line still has a valuable asset that he has invested resources into earning, and yet that investment is a social waste, because all he does is improve his position relative to the guy at the back of the line. He could be off doing something else instead. Those passes only partially solve the problem.

Speaking of England, Frances, and queues, Mother says that the English *did not queue* for buses until the Second World War. Before the war, they all used to push and shove like all the other dreadful foreigners. This astonished me, but Mother was quite convinced on this point. The War created social capital, and trust? Cubans, Americans, and Canadians, are good queuers, from my own experience. European ski resorts, on the other hand, by reports, are barbaric.

[Rachel]

I read that Brian Mulroney used to be a heavy smoker. Now he worries about his lung health and so has MRI's done to check for anything suspicious. These are not "medically necessary" and so are part of private health care. One scan found a spot on his lung that turned out to be benign.
The ability to pay for private diagnostic testing is a way of getting a front of the line pass. If a a serious condition is found, one immediately gets into the faster moving treatment line up.

[westslope]

At some point in life there are diminishing returns to diagnosis and care for both the individual and the family.

See this essay in the NY Times: What Broke My Father’s Heart

[Mandos]

Mandos - I think part of the difference is that in the US things are rationed by price, so some people who in Canada might be on a waiting list in the US simply don't get care because they can't afford to pay.

Yes, but there are even waiting lists in the USA. If you're on an HMO plan, which many people are, you may get stuck on a waiting list not much different from a Canadian one. I've been on one, for a minor condition that went away on its own, when I had HMO insurance.

But point taken: the rationing-by-price is definitely there. Some people are more likely to die earlier and in pain because they didn't win life's lottery. I think a queue is more humane.

[Alex]

"Canada bans UK type private health care"

Are you sure? I found this claim so surprising that I went and googled it, and found this book that seems to disagree:

http://books.google.com/books?id=oUM39nDp2s4C&printsec=frontcover&source=gbs_atb#v=onepage&q=canada&f=false

See page 40 and 41 for instance.

I guess this is hinging on exactly what you mean by "UK type" private health care.

[Nick Rowe]

Alex: It's roughly true. And it is very surprising. It's easier to get private health care in Cuba than in Canada (if you have the money). My (employer provided) private health insurance provides me with dental, drugs, a semi-private room in hospital (2 people rather than 4 in a room, but the same medical services, which are not paid for by the private insurance), all medical expenses while outside Canada, possibly a few other things, but that's it. Some doctors locally have left the public system recently, but it's a very grey area of the law, and last I checked they were keeping their heads very low, by advertising their services to foreign embassy staff etc.

You want private? A quick visit to the US, or Cuba, or somewhere more capitalist.

[Alex]

Wow. I really am shocked.

Now, Frances above seems to be suggesting that that might be a bad thing, but it might not i.e. it's not "obvious" why a country that has a single payer system should also have "UK type" private health care alongside. Though it still could possibly be a good idea.

Couldn't this argument be applied to private schooling also?