Have you ever missed the train because of the slow passenger walking in front of you and had to wait another half and hour to catch the next train? Or got late for the morning 8 O’clock lecture because of the person walking in front of you who has lectures at 9 walks slowly in the middle of the path? Or the worst, where your best friend complains about the driving skills of “Mr.Diaper” the lecturer; driving like a grandpa (no offense) leaving hell of a lot of space between the two cars in the busy streets of Borella? If not, you are in luck! Because these are day to day incidents where drivers and pedestrians in Sri Lanka have to face, leaving 30 minutes of time for the delays caused by irresponsible citizens. This is just the case of transportation in Sri Lanka. I pride myself as a person trained to be able to tolerate specifically waiting in lines and long hours of bus rides thanks to the economy of Sri Lanka.
Basically almost everything is subsidized in Sri Lanka, starting from essential services such as health and education to the lunch in the canteen. A long wait in the queue is the price to pay for the subsidies. The rich kids wouldn’t spend hours at the queue where they buy their time with money by spending more than 50% extra just for “lunch”. Today, I’ll be analyzing about the long queues in an economic sense.
In a country where economic disparities have widened over the years it is important to provide the necessities to raise their living standards. When price controls are implemented by the government, it either creates an excess demand or an excess supply, hence creating long queues and inefficiencies throughout the economy. Suppose there’s a “dansala” (free food stalls) or maybe a sale. You could see long queues because the demand is higher as the price is low. People who are willing to spend their time in long queues for a cheap sale would spend the entire day for what it’s worth. Another case is where free goods are provided. I could see people waiting in the queue from 6.30 am for a free health clinic in Kiribathgoda. For them, money is worth more than the time they spend in the queue. So what if you are a super busy person who values time more than money? Well, they have supermarkets, loyalty / premium cards and other marketing tactics used by a market where oligarchy and monopolistic markets are common. For instance you could see a separate counter at “Ho” fashions in Colombo, where they have a separate check in counter for their “loyalty card holders” just for an advance of 1000 rupees or so, to pay as an advance; recognized as “sunk cost”, maybe pre-ordering tickets online in advance to avoid the long queues or one of the most famous examples, where loyal fans of Enrique bought expensive tickets expecting to avoid long queues added with extra benefits, which later made them realize as a total waste of their time, thus an example for market failures.
Since the beginning of the Christmas season, the demand for almost all the goods increased. Although some of the people despise the market mechanism, it makes sure that resources are allocated efficiently. Market mechanism can be seen in practical scenarios, for instance, the queue for the cashier counters in department stores. (Figure 2)
Suppose there are three counters, each queue in each counter relatively shorter than the other. Assuming you are standing in the 1st counter which has the longest queue, you would move to the shortest counter which is number two since you think that would make you better off. Following your lead, people will move from the 1st counter (the longest) to the 2nd counter (the shortest), until the three queues consists of equal number of customers, which is of equal length. Thus, this is how the market mechanism works in a practical sense. So, in general everyone is better off when they think about themselves. Technically, this is correct, but practically there are negative externalities created when you think about yourself. For example if you think of taking your private vehicle to work in the rush hour, hence it will benefit you in the expense of creating traffic by one unit on the road. One of the reasons I’ve observed that creates externalities is the fact that information asymmetry which has not taken into account in most of the economic models. In other words, although you see which queues are the shortest in supermarkets, you are not privileged enough to know about everything in every scenario. For example you might decide to take your the route where there’s a strike on going. So markets won’t always work as they are supposed to which necessitates the government intervention.
In the case of long lines for purchasing I-Phones, to see a movie premiere or to buy the newest edition of the book you love, it is always the utility or the satisfaction you get from consuming the good, the satisfaction you get from reading the novel before others and threatening them for spoilers just for fun.
In the case of transportation and traffic, it is better to provide more comfortable public transportation, which maximizes the cost of taking their own vehicle, encouraging the commuters to use more public transportation. Or to extend the lanes and pavements so that buses, bicycles and people who have are inconsiderate about other people can drive or walk on a separate lane and people who take optimum use of their time can maximize their use of time.
However, when it comes to subsidies, the system is quite inefficient in Sri Lanka where equality is been much more focused rather than creating equity. If the government focuses much more on this factor rather than giving subsidies to people who really deserve it, as Sri Lankans expect the government to provide free goods without being generous enough to pay taxes. Hence this is a system where government could really focus on uplifting the living standards of the poor.
When it comes to queues, it’s always better to be selfish assuming you have all the needful information. But do think about others whether it creates negative externalities for the society. Be economical when you shop and also do walk fast or drive fast or just go along with the grandpas; as everything comes with a price.
Happy holidays and hope you’ll be back!!!