Surge Pricing and Social Norms

Recently, my co-blogger John McGinnis had a great post on surge pricing.  His basic point was that surge pricing has both static and dynamic benefits – allocating cabs to those who most need them and increasing the supply of cabbies willing to work at needed times.  John also notes that these benefits are missed by most people because of political ignorance.

I agree with all of this, but I want to add a couple of things.  Part of the problem with surge pricing is that it conflicts with a social or economic norm that is (partially) accepted in our society.  The idea is that prices should be set and should not be adjusted to take advantage of people’s situations.  Stores do not increase the price of umbrellas in the rain and people expect that and criticize departures from the norm.  Restaurants do not generally charge more to eat at 7:00 than to eat at 5 (except for the rare early bird specials or for lunch menus, which often have smaller portions).

Yet, in other ways surge pricing is permitted.  Certainly airplanes adjust the prices based on when they are purchased, as do many other services.  So what is going on?

It is not entirely clear, but my guess is that people are simply reacting to norms that they are used to.  Some years ago, everyone in the airplane had paid the same price for a coach seat – not so these days.  (It helps that not everyone knows what others paid for their seat.)  People get used to it.  It used to be the case in law firms that people were paid based on seniority – not so these days.  Many people did not initially like the changes, but they got used to them.

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Social Media Complement Social Life

In an era of technological acceleration, gauging the effect of new technology on our lives is ever more important. Thus, I welcome Justin Buckley Dyer’s skeptical take on the influence of social media on social life, even if I am largely skeptical of his skepticism and even in greater disagreement with his views on technological progress in general.

Dyer suggests that social media will distract people from making the real connections with others essential to human flourishing. My first reason for doubt is the lack of data. Do people have fewer real friendships because they have more “friends” on Facebook? To be sure, Dyer is not at fault for not supplying a quantitative analysis. Even though our computational age is more amenable than ever to empiricism, we do not have the data to answer that question. Moreover, to answer it, we would have to quantify true friendship—a process that Dyer might well think would defeat the entire enterprise.

But even in the absence of complete information, we can see that social media can be a complement to rather than a substitute for conventional friendship.

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Top Posts of 2014

1.  Telling the Truth about Aleksandr Solzhenitsyn: A Conversation with Dan Mahoney 2.  The Post-Constitutional Presidency Turns Inward--Greg Weiner 3.  Injustice by the Numbers--Ken Masugi 4.  Victim of a Practice Audit--Philip Hamburger 5.  Now for a Really Destructive Innovation: A Europe-wide State--Theodore Dalrymple 6.  Prescription for a Banana Republic--Michael Greve 7.  How to Secure America's Peace--Angelo Codevilla 8.  The Constitution's Structural Limitations on Power Should be the Focus of the Bill of Rights--Patrick Garry 9.  On "Payback"--Angelo Codevilla 10.  What Tocqueville Can Teach Us about the Culture War--Richard Samuelson

People Against the American Way

We have only begun to digest the full implication of the assault on Sony pictures.   Assuming it indeed was perpetrated by North Korea, (and evidence is building that it may have been, at least partly, an inside job) in order to block a movie it does not like, the hack, and the extortion of a private corporation is an assault on the very idea of civil society that we Americans cherish. 

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The Data Driven Life

Social Media Success

A couple of years ago, Sprint rolled out a new advertising campaign touting the company’s unlimited data plan for the iPhone 5. The campaign, no doubt, reflected a well-researched judgment about what would resonate with Apple’s technology-savvy consumers. And what would resonate, apparently, was the desire (or temptation) to live one’s entire life online.

One particularly striking television commercial from that campaign begins with flashes of beauty—a leaf, a neuron, a cityscape, a boy greeting his mother in a scenic mountain setting—as the narrator explains that “the miraculous is everywhere: in our homes, our minds.” Yet simply appreciating and living with this pervading beauty is not enough: “We can share every second in data dressed in pixels.” Private life and private pursuits are things of the past.

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In Defense of Surge Pricing

As 2014 ends, prognosticators are busy making predictions for 2015. Perhaps the earliest controversy of the new year will concern Uber’s surge pricing on New Year’s Eve. Politicians use such occasions to call for laws to ban the practice of charging higher fares at times of peak demand. But surge pricing confers many benefits for reasons that provide a refresher in how basic economics should make us suspicious of political intervention in markets.

First, surge pricing is more likely to match scarce Uber drivers with riders who value their services most highly. At lower prices, the number of riders would exceed the number of drivers, and some people would be left without a ride, even if they were willing to pay a higher fare.

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Banished from the City

Hands of the prisoner

The relation between morality and law is (or ought to be) complex and subtle: the two are neither identical nor entirely separate. Once upon a time everyone seemed to understand this, as if by instinct; but the instinct, if it ever existed, has been lost. When someone says, by way of excuse for his bad behavior, that “There’s no law against it,” he implies that what is not legally forbidden is permissible in every other sense.

No one, incidentally, ever explained his good behavior by reference to this legal/illegal boundary. The misunderstanding is a motivated one.

A misunderstanding of the morality of punishment and its justification in law will not always be grounded in self-interest, however. We can see this from a brief column recently published in the Guardian by the philosopher Nigel Warburton. Warburton considered the case of a man called John Paul Burrows, a multimillionaire who worked in the City of London as the director of a very large investment company.

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Solving the Government Shutdown Problem

John McGinnis and I have an op ed on government shutdowns in today’s Wall Street Journal.  We note that government shutdowns typically have involved Democratic Presidents and Republican Congresses, and that Republican Congresses have usually both lost the fight and borne the brunt of the blame.  We note that “President Clinton faced off against House Speaker Newt Gingrich in 1995, and Mr. Clinton won.  President Obama dueled with the Republican House in 2013 and Mr. Obama won.”

While politicians and the media have recognized that the Republicans generally lose these fights, what is not generally appreciated is that it is the current legal regime that has largely allowed the Democrats to win.  At present, when there is a spending dispute and spending authority terminates, most government spending (with the exception of entitlement programs and essential services) ceases.  As a result the public bears serious inconveniences, which are easily blamed on the Republicans, since their “smaller-government message” can be “portrayed as aiming to deprive the public of government services.”

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Newtown Suit Proceeds under False Pretences

Automatic Pistol Bullets Isolated on White Wide Angle View

Some of the families who survived the horror of the Newtown shooting are suing Bushmaster, the manufacturer of the AR-15 rifle that was used by the deranged gunman who murdered 20 children and six adults at Sandy Hook Elementary School.

The complaint actually reads more like an attempt at healing than a serious legal claim. To that extent, I am sympathetic. But the strictly legal issues and theory of recovery to be gleaned from it deserve comment.

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Reducing Violence through Technology and the Rule of Law

The great social scientist Stephen Pinker has observed a long-term secular decline in violence, despite the relentless media attention given to killings at home and abroad. Domestically, our state and local governments can drive down the number of murders and assaults even more, if they will take further advantage of technology and strengthen the adherence to the rule of law. We need to continue to innovate but also protect our greatest legal inheritance.

Technology has already contributed significantly to the decline in violence in our cities. CompStat, a management system for police developed in New York City, deploys police officers at the optimal places and times to cut down on crime. This largely computerized service is now used by police departments around the country. And it will improve with ever better data and algorithms.

Surveillance cameras in public spaces not only help solve crimes but also help deter them because people know they are being watched.

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