Help, please

In the Wall Street Journal, David Laband, chairman of economics at the Georgia Institute of Technology, describes a recent experience of his at the airport as a lesson in economics.

Bad weather had created a bad circumstance for six people. Snow caused them to arrive late at the airport, too late for cabs, in those conditions, to come pick them up. The six passengers faced spending a night at the airport, but another passenger with a car offered to take them to their destination for $25 each. The gladly accepted.

Laband writes:

There are those who argue that this unscrupulous individual took “unfair” advantage of these travelers in distress by charging them at all. Critics would say that he was a heartless “price-gouger.” Really? The fact is, no one was offering to provide private transport for the stranded passengers at no charge. For that matter, the real price-gougers—government-regulated taxi companies—were nowhere in evidence.

I found this article interesting for a few reasons.

First, it describes a topic of conversation I’ve had frequently with friends and family, so it’s familiar territory. Yet, not quite. This is a little different because the conversation is usually about high prices in disaster areas. This wasn’t quite a disaster area, nor were the people unable to pay. Even the fee itself was lower than normal, I imagine. But, I like this particular circumstance because it doesn’t have the typical emotional loading as disaster situations.

Second, I still found myself being uneasy that the ‘savior’, as Laband describes him, took money. Even though it was less than a typical cab fare, even though the six passengers gladly paid him, even though the guy was going out of his way to help and the six passengers certainly faced a rather uncomfortable night.

Why did I feel uneasy about it?  And, if I felt uneasy about it, I can certainly see why the people I’ve discussed such situations do as well.

But, what is it? I can’t quite put my finger on it. Especially considering that Laband correctly describes real price-gougers as the government-regulated taxi companies.

Why I am more willing to accept their price-gouging behavior and less willing to accept this private guy’s actions?

If someone gave me a ride home in a similar situation, I’d want to pay them — at least ‘buy them a nice dinner’, which is about $25.

I don’t think I should be uneasy. I agree with Laband’s logic. All parties came out ahead. It enhanced social welfare.

But what’s the difference between ‘buying them a nice dinner’ and paying $25? Is it that he asked for the money?

Any thoughts?

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3 thoughts on “Help, please

  1. Seth,
    I think your question is so wide open, it would be nearly impossible for another person to answer why you’re feeling a particular way. However, I can explore my own feelings and natural tendency, and maybe that will help you.

    When I tried to picture myself in the scenario as described, I also felt a little uneasy. In my own mind I thought that I would probably be more generous, offering a free ride to those less fortunate than myself. Then if they chose to reimburse me based on their ability to do so, I would graciously accept their offers. When I try to examine my own self-interested motivations, perhaps this makes me more saintly than the person in the scenario and allows me to look down on him for his greed.

    Additionally, it’s easy to say that faceless strangers should fend for themselves or pay their own way, but when we have to confront the suffering of others face-to-face, it becomes harder to bear. There is a natural tendency to think that “something must be done”. So when injecting oneself into this scenario, the strangers are now a stranded family, or maybe a son trying to visit a sick parent, or maybe a father returning from a business trip. While I personally wouldn’t expect a hand-out, it becomes difficult to justify denying simple charity to real people suffering in front of me.

    Finally, I have a tendency to want people to like me and feel bad if I think they might think less of me because of my actions (the way I have already despised the person described in the scenario). Perhaps I think that the strangers, and anyone else I tell the story to, will like me more if I provide the service as charity than if I charge a fee. The person in the scenario has demonstrated by his actions that he has less of that need so maybe I can look down on him for that as well. In conclusion, my motivations/feelings might arise from an aspiration to be more generous than others, to empathize with real people and not see them as merely a source of advantage, and a desire that others will like me. If these are my underlying thoughts, perhaps they make me feel that I am a better person than the one in the scenario and thus allow me to judge him harshly in comparison.

    But, a little bit of disciplined thought reveals the ridiculousness, and possible self-sabotaging nature, of these feelings. What if the person in the scenario handled the situation better than I, and produced better outcomes? It seems clear that his approach has produced a much better outcome for all involved — everybody got what they wanted and nobody ended up the loser. The final outcome was “win-win”, not “win-lose” or “gain-sacrifice”.

    Some final thoughts: I can recognize some evolutionary origins in my emotional tendencies. When most clusters of people were small (families & tribes) and each person depended on exchanges of goodwill with his neighbors, my affiliative behavior would ensure long-term survival. However, when dealing with strangers, where there will never be an opportunity to redeem kindnesses or build long-term trust, there is no moral justification for self-sacrifice in their benefit. In that case, mutual free exchange ensures the best possible outcome for everybody.

    Conversely, we can examine the morality of self-sacrifice…

    • HI Adam – Great remarks. Your 2nd paragraph captures exactly what I felt and why.

      In fact, I have given a stranger a ride home from the airport, for free. But, as I got to thinking about it, Hayek’s lesson of ‘circumstance of time and place’ come to mind. In my circumstance, I bonded with the guy on the airplane. The plane had taken a nose dive in wind shear and we honestly thought we were in trouble. Thankfully, the pilot gained control after about 20 harrowing seconds, we were diverted to another airport until the weather cleared and returned about 3 hours later. One other little aspect of this, the guy was expecting his friend to pick him up, but his friend worked a night shift, so wasn’t able to make since we were delayed so long.

      In other words, that was a special circumstance.

      The circumstance might have been different if I hadn’t seen the people before the taxi curb (indicating they were willing to pay) and they were wearing nice suits and had nice luggage (indicating they had the means) and if there was lots of snow on the ground (meaning that this would be more than a little inconvenience). In those circumstances it might be a lot easier for me to make the monetary offer.

      • In a free market, buyers and sellers exchange things they value less for things they value more. These transactions do not necessarily involve cash.

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