Scare the rich

Why does air travel keep getting worse? Here's a 19th century theory. Also, 7 other things worth knowing today.

Air travel. It used to be a magical and wondrous experience (so we're told). Now, it can sometimes be …. er, less so. With each viral outrage, Facebook and Twitter erupt: When will things get better?

Actually, a 19th century French economist had a theory—long before social media, shrinking legroom, or even the Wright Brothers.

Meet Jules Dupuit, a civil engineer and scholar who was the first to explain the concept of price discrimination.

‘Barbarity’

Railroads were the state-of-the-art mode of travel in Dupuit's time. And whatever people’s complaints might be about air travel now, rail back then sounds pretty rough.

Dupuit described the experience himself:

"Barbarity. ... [T]raveling without a roof over the carriage, on poorly upholstered seats."

But, he opined, the railroads’ motivation for providing such lousy accommodations (even when it would cost very little to improve them) wasn't to spite its economy passengers.

Instead, it was to incentivize anyone who could afford to pay for a higher class of service to darn well do so. Here's a slightly longer version of his explanation, translated, which makes the point clearly:

"It is not because of the several thousand francs which they would have to spend to cover the third class wagons or to upholster the benches. ... [I]t would happily sacrifice this [expense] for the sake of its popularity.

Its goal is to stop the traveler who can pay for the second class trip from going third class. It hurts the poor not because it wants them to personally suffer, but to scare the rich."

Price discrimination

Why scare the rich? Here's where we get into economic theory. Setting prices is always challenging.

• Do you set them low, expecting more volume but less profit per customer?

• Or do you charge more, anticipating lower volume but more profit per customer?

To overcome that conundrum, companies would love to employ total price discrimination—meaning they'd change their prices constantly, always charging every customer the maximum he or she would be willing to spend.

There are several different price discrimination strategies available, and frankly it’s about a zillion times more effective today, but the one that Dupuit described back then is referred to as "self-incrimination."

So, take an airline, offering basically the same service to every passenger. They'll catapult you through the sky in a pressurized metal tube, quickly going from Point A to Point B.

How would you get passengers to "self-incriminate" in that kind of environment?

Dupuit would say that you’d offer several classes of service on the same flight. You’d make sure that the lowest class is never so comfortable that people who can pay the price for the higher class won’t do so.

And, you’d make sure that each type of passenger can see how the other ones are living. (Not hard in a modern media and social media era.)

So, first class means "first class"

For those of us who normally fly economy, there's a limited amount of profit-squeezing to be done there. The much larger apportioned share of airline revenue has traditionally come from people paying more, and riding in first class, business class, and even economy-plus.

Often, this is because those front-of-the-plane passengers aren’t paying for their tickets themselves; their companies are picking up the bill. Before the pandemic, one estimate showed that on the most popular U.S. route, 13 percent of seats made up 40 percent of revenue.

Now, there might be an asterisk to this theory that didn’t apply a few years ago, and that Dupuit never could have imagined, which is that airlines are apparenly seeing a rise in a new kind of traveler—remote employees and business owners who are free to work from anywhere.

Imagine a new, significant demographic of flyers: the kind of people who—

• fly Wednesday evening from New Jersey to Colorado

• spend Thursday and Friday working remotely from an AirBnb

• spend Saturday and Sunday rock climbing, and then work again from the airport or a coffee shop on Monday, and then

• fly back Monday evening.

They’re hybrid passengers whose employers aren’t going to pay for their travel (and who might not even know about it), but who might have the means to pay for a more comfortable class than traditional economy.

This one is going to be interesting to watch. Regadless, it's economic forces at work.

As uncomfortable as coach class can sometimes be, it's nothing personal. Pilots, flight attendants, and gate agents are people, too, and most would prefer to treat all passengers how they themselves would want to be treated.

But sometimes, economic forces win out.

Thanks where due

I have to give credit for some of the ideas today to two people.

The first is to a reader who commented on LinkedIn about a column I'd written about passengers complaining about their flights on social media, and who asked saying something like, "Hasn't this guy Murphy ever heard of Jules Dupuit?"

Um … maybe? I might have heard of him, back when I took economics in college—but I can't say I remembered his story, or the open-roofed railroads, or the degree to which 19th century railroads and 21st century airlines have a lot in common.

(Not only that, but I'm embarrassed to say I can no longer find this reader’s post—but if you're the reader, contact me and I'll update this to give you credit.)

The second bit of credit is to Tim Harford, who writes the Undercover Economist column for The Financial Times, and who did a great job of explaining Dupuit and some of his concepts in greater detail.

What do you think? Has air travel gotten worse? Are you part of this new class of “remote worker travelers?” And just to put things in perspective, even if economy class can sometimes be a bit rough, have we lost sight of the big picture? The fact that you can eat breakfast on the East Coast and dinner on the West Coast is still pretty cool.

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7 other things worth knowing today

• The highest court in Massachusetts ruled that people have a "right to be rude," in a case challenging a town government's rules that "all remarks and dialogue in public meetings must be respectful and courteous, free of rude, personal or slanderous remarks," and prohibiting "inappropriate language and/or shouting." Nope, people can do that, the court said. (WBUR)

• The untold stories of the women who led slave revolts: "their inspiring acts of resistance were ignored or erased for centuries—until now." (Atlas Obscura)

• The former Florida lawmaker who sponsored the controversial law that critics call “Don’t Say Gay” (although the word “gay” isn’t actually in the law) pleaded guilty Tuesday to committing $150,000 in COVID-19 relief fraud. Joseph Harding, 35, pleaded guilty to wire fraud, money laundering, and making false statements. He theoretically faces up to 35 years in prison. (AP, Fox News)

• My daughter and I play a lot of chess these days. Here's how to get better at it. (The Guardian)

• I don't plan to include links to every small increment of the story on whether former President Trump will be arrested or not. If it happens I’ll deal with it then. But, I was intrigued by the debate about whether he should insist on being handcuffed and doing a "perp walk" if he is charged, on the theory it would make him more of a martyr. (The Guardian)

• Fed up with her town's recycling, an English woman collected two tons of trash on her own, setting up bins on her driveway and began spreading the word to neighbors and friends, letting them know they could drop off certain waste items, like baby food pouches, dental products, chip bags, bread bags, Pringles tubes and cookie wrappers. "I thought, that's the sort of thing I could do here because I have the space to do it." (Washington Post)

• Don't miss the planet parade taking place at the end of March. Jupiter, Mercury, Venus, Uranus, and Mars are set to align in an arc formation on the nights of March 25 through 30, alongside the Moon. If you want to spot all five planets in one night, timing, dark skies, and a clear view of the horizon are key. (ScienceAlert)

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Thanks for reading. Photo by Reza Aulia on Unsplash. I wrote about some of this before at Inc.com. See you in the comments.