Freakonomics Radio - 256. What Are You Waiting For?

Episode Date: August 11, 2016

Standing in line represents a particularly sloppy - and frustrating - way for supply and demand to meet. Why haven't we found a better way to get what we want? Is it possible that we secretly enjoy waiting in line? And might it even be (gulp) good for us?

There are a lot of good ideas that people hate when you tell them about it. That is Steve Landsberg. I teach economics at the University of Rochester. I write books about economics. Books that apply an economic treatment to topics that don't usually get the economic treatment. For instance, in his book, More Sex is Safer Sex, Landsberg argues that people who are free of sexually transmitted diseases, or STDs, should be having a lot more sex,

since their participation in the sex pool would diminish the overall risk of disease. The main theme of the book is that things work out badly when people do not feel the full consequences of their actions. And things work out better when people do feel the full consequences of their actions. And things work out better when people do feel the full consequences of their actions. People who do have STDs, Landsberg argues, don't feel the full consequences of their actions. And so people are not fully accounting for the damage that they're doing to other people when they make decisions. And likewise, when you get into a line. When you get into a line, Like a line at a restaurant?

At a bank? What kind of damage am I doing in a line? When you get into a line, you're not fully accounting for the fact that you are slowing down everybody who arrives after you. Once again, you're taking an action that does not account for the costs you're imposing on other people. Okay. It is not as exciting as talking about sex, but today on Freakonomics Radio, let's talk about lines. It's hot. I could keel over right now. How long ago did you get here? About, say, three days ago. What are lines for, anyway, from an economic perspective? We use queues as a way to deal with short-term fluctuations in demand.

Can anything good come from all that waiting? Being patient is basically more important than having a high IQ for being successful in life. And is there a better way to get what we want? Instead of sending people to the back of the line, we send people to the front of the line. From WNYC Studios, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner.

I am not the kind of person who enjoys standing in lines. Maybe you are. I'm not. I'll do just about anything I can to avoid a line. There's one movie theater near where I live that lets you buy specific seats online so that you don't have to show up 45 minutes early to get a line. There's one movie theater near where I live that lets you buy specific seats online so that you don't have to show up 45 minutes early to get a seat. If I feel like going to the movies, I will generally go see whatever that theater is showing rather than fight the long lines at another theater. I will always pay extra within reason to buy back the time that a line would steal from me. There are, of course, different kinds of lines, some less avoidable than others.

If I don't want to stand in a long line at a restaurant, I can go eat somewhere else. But if I've already bought an airline ticket and need to get through security, I can't just give up. Each line comes with its own set of circumstances and stakes. I am certainly not the kind of person who would stand in line for 45 minutes in the hot sun for a slice of pizza. For a slice of pizza. Two slices. Dan, for the amount of time that my buddy and I have been waiting on this freaking line, I'm telling you. Since I don't have the patience for that kind of line, we sent this guy. Hey, I'm Dan Pashman, and I host this podcast called The Sporkful, where I talk about eating and people and people eating.

But not eating of people, or have you? Have you done cannibalism? Not yet. Not yet. We're waiting for my next contract from WNYC. Pashman is a man of relatively simple food pleasures. And I'm not someone who is easily taken by trends, food trends. Like, I'm not the guy that feels the need to run out and get the cronut when everyone's going crazy for it. So I have very little patience for that. But I do, once in a while, a place will capture my imagination. And often it's a place with a history or a story behind it.

A place like DeFara. It's a famous old school pizzeria in Brooklyn. It's been open for over 50 years. It's been run for that entire time basically by one man, Dom DeMarco, who came over from Italy and opened this pizzeria. And up until old age slowed him down a little bit, he made every single pizza that came out of that place. He's still at age 79 right now today makes 90 percent or so of the pizza that comes out of there. And anytime you see a ranking of the top pizzerias in New York, DeFarra is always towards the top. Everyone talks about how slow it is, how hard it is to get the pizza there. And I just sort of didn't want to be hassled. You and I were talking about this issue

of waiting and waiting. And I said, maybe this is the time for me to give it a shot. So basically, the reason you hadn't gone to DeFara in the past was because there's a long line. And the reason you went to DeFara finally is because there is a long line. That's true. Yes, exactly. And so Dan Pashman went to DeFara to get some pizza for himself and to talk to the other customers waiting online. It was a weekday afternoon, 90-something degrees and humid in New York City. And I should say, the neighborhood of Brooklyn this is in is in a pretty residential area. No skyscrapers, no big office buildings, not a big lunch rush like you might find in the city center in a lot of cities.

The place opens at noon. By 1130, 1145 there were maybe 10 or 12 people in line. And I'm hungry and I have a feeling it's gonna be a long time before I eat. And at noon the window opens, they start taking orders. They weren't letting anyone in because it was so hot and their air conditioning wasn't working right. So everyone had to stand outside to wait. Three slices for Ali? It's not a pleasant day to be waiting outside. No, it's not.

Starting to wonder if this was a good idea? Yeah. Definitely. The first thing that struck me was, you know, everyone talks about the wait at Tafara. I always assumed that there would be a crazy long line. But that's actually not what causes the long wait. You will wait in line maybe for a few minutes, five or ten minutes. Then you place your order.

The wait, the holdup is with the actual making of the pizza. And it just moves at a snail's pace. Like it is painstaking to just, I mean like the place had been open for 20 or 25 minutes and I don't think 10 slices of pizza had come out of the window yet. And that's because this one 79-year-old guy, Dom DeMarco, is the one guy primarily making the pizzas. That's why it's so slow? Right. Every slice of pizza, a pie comes out of the oven, he removes one slice, he puts it on the plate, he takes that handful of basil,

he chops the basil by hand onto each slice individually. He grates the Grana Padano cheese onto the slice individually. And on one hand, I'm so enamored with this sort of painstaking work, you know, and the craftsmanship of it. On the other hand, I'm like, come on, get a guy to chop all the basil first thing in the morning and just move this thing along a little bit, you know? So that was the struggle for me when I was waiting. Cash? It's cash only, sorry. It's getting close to one o'clock.

I have not eaten a single bite of food yet. I would normally be like on the ground unconscious right now. Talk to me about the other people in line and their view of the wait. Well, that was one of the things that I wanted to find out. This is already a $5 slice of pizza, which even in New York City is a lot. I'm pretty sure it's the most expensive slice in the city. And on top of that, there's a million slice places in New York, maybe not quite as good as DeFara, but you could walk into almost any of them and get a good slice of pizza for $2. So I wanted to know how much more people would pay to not have to wait. And I started cornering people after they had been waiting for like 20 minutes already in the heat when they were at their most desperate and maybe they were already feeling a bit of a sunk cost situation.

And every person I talked to said they would pay more than $5 if they could have had the pizza immediately. Seven bucks, yeah. Okay. What would you say if I told you you could pay $10 for a slice of DeFara's pizza, but there'd be no wait at all? I might potentially be tricked into doing it once just to have the experience, but there'd be no repeat business, that's for sure. I see. What about $12 a slice? I think once you get double digits, it's the cutoff.

If I told you you could pay $12 for a slice and you'd get it right now, would you do it? This establishment? In a heartbeat. Yes. $15 a slice. $15. I would do it. No.

Alden says no. $10 for the most. Mom? No, I would do it. $20. I would do it. I would do it for $20. $25?

I don't know about $25, $20. I mean, we've already invested quite a bit just to get here. So that would be a nice convenience. They ought to open up a chain. I'd be up to $25. So do you really think that someone who claimed that they would spend $25 for one slice of pizza to not wait for it actually would? Or was that just their radio talk talking? Yeah, I think that was a lot of big talk. I think

you're right. But but but I do think that the people who said seven or eight dollars, I think that was legit, especially, you know, you're asking them at that moment. They've already waited 20 minutes. They got another 20 or 30 minutes ahead of them. It's 90 something degrees out and they've already paid for their pizza. So if you said to them, like, give me three more dollars right now and I'll give you your pizza immediately, I think those people are telling the truth that they would. How long you are willing to wait in a given line depends on a lot of things. How badly you want the thing at the end of the line, whether the thing you're waiting for is rare, perhaps even unique, and what you'd be doing with your time otherwise.

But even if you are willing to wait, you'll have to admit, at least if you think like an economist, that a line represents a certain kind of failure, a failure of supply to seamlessly meet demand. There's somewhere a scarcity. Whenever you see a line, the first thing to ask is, what's the scarcity? That's Felix Oberholzer-G. He's an economist at Harvard Business School.

As a consumer in a market economy, you should expect that everything happens for you instantaneously all the time. And then when that's not true, you need to ask, what's the constraint? And the constraint is sometimes cost, is sometimes availability of skilled personnel, sometimes availability of space. But there's got to be some constraint, otherwise we wouldn't see a line. To an economist, the way to handle this constraint is to raise prices. But every now and then, for both for practical but also for moral reasons, we decide that,

no, the price system, just jacking up prices until supply equals demand is actually not the right thing to do. And that's why he got interested in doing some research about line standing. So the line research

was a typical example where as an economist, you look at lines and you have a sense of how it should be done. And then almost always you see that, nah, sort of right, but not quite. One problem with lines is that they're inefficient, in part because the order that you stand in line doesn't necessarily reflect how badly you want what's at the end of the line or how much you'd be willing to pay for it. This led Oberholzer G. to wonder why more people don't pay to cut in line. Is it that you could go to the person in front and you could offer money, but no one would ever let you in? Is it because there are moral

qualms to do this, because there's something that's perceived to be particularly fair about lines and it's not something you do? Is it that people would not let you in? Because obviously if you let someone cut in, you create a negative externality on everyone else in the line because now they have to wait longer. To find answers to these questions, Oberholzer G. designed an experiment. Ten researchers, including himself, approached hundreds of people on lines in four locations in Philadelphia. He was teaching at the University of Pennsylvania at the time.

They went to a cafeteria at Penn. They went to the Amtrak station, a food court, and the Department of Motor Vehicles. So the experiment is really simple. We pick a line, so for instance, in a cafeteria, and the experimenter would walk up to a person who's in front of the line, say position number two or the third or

fourth person in the line, and the experimenter would ask, can I cut in? If the person asks why, which sometimes happens, the experimenter would say, I would like to pay faster. So there's no long story about, I don't know, my mother and I have to get to her. And so there's as little information as possible. That was one iteration of the experiment. In another, the researcher offered to pay. The amount varied between zero and $10. And then we just see what happens.

So what happens? One of the interesting things is that actually people are quite nice. In about half of the cases, even if you don't offer money at all, people are willing to let someone cut in. And I think it's a sense that probably you wouldn't do this all the time. Probably it must be that you're in a particular rush, that you need to be somewhere. So all in all, even though there's the strong norm to not cut in line, if you ask nicely, most people are willing to do it. Okay, a couple of things to say about that.

When Oberholzer G says there's a strong norm to not cut in line, that is true in the U.S. and in other places, including Canada and the U.K. The Brits, in fact, think of themselves as the originators of the cueing concept. Proper cue behavior is considered such an essential part of Britishness that a few years back, questions about queue behavior were nearly added to the UK's citizenship application. In any case, line standing is not a universal behavior. India, for instance, has been described as more familiar with the scrum than the line. The same goes for China and many other countries. Of course,

you have to remember that lines represent more than culture. They represent supply and demand. And if you live in a place with too much demand or too little supply, the value of maintaining a proper queue would seem to be secondary at best. But if you know your weight will be rewarded, and if you are accustomed to waiting in a line, it wouldn't seem to be that big a deal to allow someone to cut in at least once in a while. And that's what Felix Oberholzer-G found in his experiment, even when he offered no money. About 45% of the people will let you cut in. And what about with the cash offer. You see that the likelihood of being able to cut in increases from about 45% or so to 75% with $5 or $10. Okay, that makes sense. But... The most surprising thing, which really is both interesting practically but theoretically speaking,

is that while people are much more likely to let you cut in if you offer money, few people actually accept the monetary compensation. Did you catch that? Most people don't accept the money. So the typical conversation would be, can I cut in? Here's $5. You say, yes, of course, I'll let you cut in. But I'm not going to take your money.

To an economist, this does not seem like rational behavior. Because we typically think that the price system, that the market works well for two reasons. One is prices indicate scarcity. If I offer $10, it must mean, wow, boy, I'm really in a rush. If I offer just a dollar, yeah, I don't know, I might want to be a little faster, but it's probably not that valuable to me. And so that part of the price system actually worked beautifully. But what's also true about the price system is that the person who gives up something that is really valuable to someone else is supposed to be compensated. That's the whole theory of trades make both parties better off. I get something that is very valuable to me,

and in exchange, I pay $5, $10. But that exchange doesn't happen. So why didn't that exchange happen? When line cutters offered money, why did the line cutties refuse to take it? I think that's the sense in which lines are systems that we often use when auctioning off goods or services to those who have the highest willingness to pay seems inappropriate for moral reasons. do it repeatedly. Oberholzer G. decided to go back the next day and ask the same people if he could cut in line again for the same amount of money. People were not so friendly this time.

It's sort of the way they tell you that not again, don't think you can come here every day, these kinds of comments. Which suggests perhaps that one of the social norms around line standing is that it's not cool to refuse someone who wants to cut in line until it becomes a regular thing. Because then the transaction moves from the moral realm to the financial realm. You are stealing time from me. A couple months ago, I took a trip to France with my son for the European Championship soccer tournament. 24 European teams playing for the title.

Since the fans of these teams identify themselves so plainly with jerseys and hats, it's a great chance to watch different nationalities' cueing behavior and drinking behavior and fighting behavior and so on, but those are topics for another day. The first game my son and I went to was Germany against Poland at the Stade de France in Paris. Given the recent terrorist attacks, there was a ton of security to get in, three or four different checkpoints before you even got to your gate to enter the stadium. And then at our gate, there was a massive line, 100 yards long, maybe 200.

So we went to the back. We are good, obedient Americans after all. And after 15 minutes, we hadn't moved at all. And how could that be? People were getting into the stadium from our line. You could see that. But the line wasn't getting any shorter. Why? Because it was getting wider. Polish fans were walking up to the line in groups of two or three or four, and just attaching themselves to the side of the line like happy little barnacles. Toward the front of the line, of course, not the back. They didn't look at the strangers they were joining in line. They would just look straight ahead calmly as if they'd been standing there for an hour, had to admire their sense of cool. The German fans, meanwhile, went to the back of the line like us. Suckers. Because the line kept getting wider and wider and wider as more and more poles kept stealing

more and more time from the Germans and us. Now, we had gone to this match as neutrals. We were just there to see the footy. We did not have a rooting interest between these two teams. But by the time we finally got inside, just before kickoff, believe me, we were firmly with the German supporters. As it turns out, it didn't matter. It was a nil-nil draw. But when Poland was finally eliminated from the tournament by Portugal, the eventual champion, we celebrated hard, even though Portugal was literally the last team we wanted to win the Euros. That is what a bad line standing experience can do to a person. Because as inefficient as a line may be, it at least nods toward a sense of fairness. Everyone waits. Coming up on Freakonomics Radio, what do your taste buds think of waiting in line?

When other people were joining the line, then people reported that the smoothie tastes better. And what's wrong with eliminating lines by just putting a price on everything? That's not a decision that we feel comfortable with. Standing in a line isn't so bad if the line isn't too long, if it moves along, if there's not a lot of uncertainty, and if it seems relatively fair to everyone who's waiting. How often are all those criteria met in the real world? Not often enough. The science of queue management has certainly gotten better.

You know that if you've ever been to a Whole Foods store in New York City, where the lines are divided by color, by how much you're buying, and then the open registers are called out like bingo numbers. The gamification of line waiting, as mild as it may be, makes line waiting more bearable. But the real beauty of a Whole Foods line, at least, is that the wait simply isn't very long, in part because they spend a lot of money on cashiers. But what if there was another, totally different, maybe cheaper way to organize lines so that when you really want something, you wouldn't have to wait at all? You remember Steve Landsberg? I teach economics at the University of Rochester. I write books about economics.

In his book, More Sex is Safer Sex, Landsberg describes a line-standing solution first proposed by an Israeli economist named Rafael Hassan. Professor Hassan's wonderful idea is that instead of sending people to the back of the line, we send people to the front of the line. Each newcomer comes to the front of the line and pushes everyone else backward. Rather than the standard first-come, first-served model, this system is called last-come first-served.. This system is called last-come, first-served. Yes, I know, doesn't seem to make any sense at first, but bear with me. Imagine there is a water fountain and you want a drink. Each newcomer comes to the front of the line and pushes everyone else backward. Okay, that's good for you, the newcomer, but what about everyone waiting on line? What that

means is that if you're more than three or four places back, you have no hope of ever getting a drink because newcomers are going to arrive at some rate. There's going to be some point in the line where it's hopeless to wait for your drink. And therefore, those people will give up. And that's a good thing. That's a good thing. How? It means the line will never be more than a few people long. The fountain still gets used because the stream of newcomers assures that. And the few people who are willing to wait in line assure that the fountain will be used even at the moments when no newcomer has just arrived. But not many people will be willing to wait in a line like that. And we want people giving up because we don't want them wasting their time in lines. Okay. Doesn't that just seem unfair somehow?

Well, you say it's not fair, but the number of people who get served is the same number that would have gotten served under any other system. But it's a different set of people who get served. And, you know, you might think, well, this way some people never get served at all. That's true. But under the current system, some people never get served at all, namely the ones who are not willing to wait an hour. The same number of people are being denied service either way. The question is, how long are people waiting in line along the way? If we can minimize that, that would be great. Landsberg admits that as appealing as this idea may be in theory, there are a lot of problems in practice. And the biggest one is that if we were to implement this system, you would have to have a way of preventing people from leaving the line and then reentering at the front. It's got to be only the genuine newcomer who gets the drink, not the person who was waiting in line and got out and ran up to the front. Enforcing that, I think, would be a nightmare.

And it would be a worse nightmare if the stakes were higher than just a drink of water. There's another problem. With last come, first served, you could wait forever, which is bad news if you're really, really thirsty. Under first come, first served, everyone eventually gets to the front of the line. Making people wait does select for people who need the help more desperately. And that is a good thing about making people wait. But you still wouldn't want to make them wait in line because there's a better way to deal with it. And the better way to deal with it

is to let them pay a little extra to go into a premium queue. Landsberg acknowledges that a lot of people hate the idea of getting to pay your way out of waiting. There are a lot of good ideas that people hate when you tell them about it. So I think partly people just don't realize how well markets work in many cases. And as a result of that, they're hostile to things that they end up not being hostile to once they've seen them.

Things like secondary markets. That's right. Felix Oberholzer-G again. The role of the secondary markets is to go from the inefficient allocation to something that looks a little more efficient than what we had in the first place. Like ticket resellers, like professional line standers who will do the waiting for you. But what feels socially acceptable changes over time and varies by place. And different people have different views of what's fair. And I think that the deeper question here is,

what's the line that describes when we feel uncomfortable using the price system? So take organs, right? We have a line for scarce organs. And at least in the United States, we don't feel comfortable saying, well, why do we have this line? Shouldn't we just auction off a liver becomes available? That's not a decision that we feel comfortable with. People prefer a system in which there is a queue. That's Ayelet Fishback. Everybody is being served based on the amount of time that they invested, then a system of auction, a system where people are getting products or services based on how much money they have. Fishback is a professor of behavioral science and marketing

at the Booth School of Business at the University of Chicago. I study many aspects of motivation. Among them is how to get people to be more patient, how to get them to value what they're waiting for, questions about self-control, about goal pursuit, and so on. So Fischbach designed some waiting experiments. In one, she wanted to know how people's value of something they get in line is affected by how many other people are waiting behind them. So she and her

colleagues set up an on-campus smoothie sample tasting study. For half the participants, two researchers stood in line behind the participant to make it seem like others were waiting. For the other half, no one stood behind the smoothie taster. When other people were joining the line, then people reported that the smoothie tastes better. Which, to Fischbach, showed that a line can signal value. In other words, once we wait for something, we value it more than if it was effortless, than if we never had to wait. She realizes this notion runs contrary to the economist's notion that lines are inefficient and undesirable. Well, yes, people don't mind standing in lines. Unless, of course, you're waiting not for an optional item like a smoothie, but for necessities like medicine or food or water,

the way thousands of Venezuelans are currently doing. We have to separate products for which the need is increasing from products where the need is quite stable. So if we are talking about someone that needs to get medical care where long line is not good because they might get more sick. However, waiting for six months or so for a new iPhone might actually be a good idea for Apple because really the need for an iPhone does not increase over time. And for those things we don't urgently need, it may be that lines aren't just acceptable,

they may be desirable. Moreover, Fischbeck argues, waiting can have a positive effect on our lives. Yes, you're absolutely correct. So there is a ton of evidence connecting low patients with negative outcomes, which could be career, academic, health, financial, and so on. But there is relatively less on how to do that, how to make people more patient

and getting people to pause and wait and not act on their immediate desire is actually one way in which we can get them to be more patient in the long run. And lines might happen to do that, even though they are rarely intended to help people develop character. Or actually, they are never intended to help people develop their ability to wait longer. A high level of patience is linked to so many successful outcomes that Fishback has a hard time thinking of all of them. Let me think of where I begin. Kids that are more patient, have more friends, get better grades, get better SAT scores.

When they grow up, people that are more patient are able to study to advance their career. They are able to maintain their marriage. There are several studies that show that many problems in life, addiction, not being able to keep a job, are associated with low self-control. Certainly, drinking, smoking are associated with low self-control. Basically, the person needs some immediate gratification and is unwilling to wait for the larger later reward, which is to be healthy in the long run. So I'm not saying that standing in lines is going to be the only way or the main way to improve people's patience.

But certainly being patient is a key to being successful. There was a lot of research on that. The research on self-control and how that basically more important than having a high IQ for being successful in life. And that is bad news for someone like me, since I am so impatient, since I get so irritated by Polish soccer fans cutting in line, and since I would never, ever wait in a long line in the hot summer sun

just to get a slice of Brooklyn pizza like Dan Pashman would. Anytime you see a ranking of the top pizzerias in New York, DeFarra's always towards the top. I always felt like that was something that I wanted to experience. So you got there a half hour before it opened. The window opens at noon. You place your order, you said, within 10 or 15 minutes. And then you finally ate at about, what, 12.45 or so?

Yeah, I would say it was a 45-minute wait for our pizza. I'll tell you what I would have done. Here's how you and I are different. I never would have gone to a place with a line. I respect what you do. I respect it. Don't get me wrong. I just couldn't have done it. So I really, I respect your patience, but

tell me this, was it worth it? I gotta say, the regular slice is very good, but it's actually the square slice, the Sicilian slice, that is completely rocking my world. And you just, just listen to what it sounds like when you bite into this pizza. That crunch of the crust, holy cow.

I'm glad I did it. The pizza was really delicious. I would go again, but I wouldn't go 25 more times. And I would only go with the right expectations. Coming up next week on Freakonomics Radio. From the archives, but not too far back, it's an episode called Aziz Ansari Needs Another Toothbrush. I read the internet so much, I feel like I'm like on page a million of the worst book ever. He talks about his book, Modern Romance. To me, the craziest statistic in the book is in 1967, there was a study they did where they found

76% of women said they would marry someone that they are not romantically in love with. He tells us why he doesn't take pictures with fans. So you can either do that, or you can have this real moment with a person where you say, hey, how are you? What's your name? And we get to the toothbrush problem. That's next time on Freakonomics Radio. Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Caitlin Pierce. Our staff also includes Irva Gunja, Jay Cowett, Merit Jacob, Christopher Wirth,

Greg Rosalski, Alison Hockenberry, Emma Morgenstern, and Jolenta Greenberg. Harry Huggins is our intern. Thanks to Dan Pashman of the Sporkful podcast and his producer, Anne Sani, for bringing this idea to us and for waiting on the DeFara pizza line. The Sporkful's latest episode, by the way, looks at how a long line at a restaurant affects your enjoyment of the food. You can subscribe to Freakonomics Radio and The Sporkful on iTunes or wherever you get your podcasts. And if you just can't stand to wait for our next episode, come visit us at Freakonomics.com where you will find our entire archive of podcasts as well as a complete transcript

of every episode ever made, along with music credits and much more. Thanks for listening.