Readers with long memories may recall the brief, inglorious UK fuel shortage of a few weeks ago, which was mostly caused by the rush to refuel for fear the pumps would run dry. Some petrol stations imposed a limit on how much you could buy — say, £25 of fuel and no more. It seems sensible enough, but a friend of mine (an economist) suggested this was the opposite of what was really needed. A maximum purchase encouraged more visits and more queues. Instead, petrol stations should’ve imposed a minimum purchase: nobody was allowed to buy fuel if their tank was more than a quarter full. One can imagine snags and problems with implementing this rule, but the principle is delightfully elegant. Queues would disappear, as only people who actually needed fuel would be allowed to
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Readers with long memories may recall the brief, inglorious UK fuel shortage of a few weeks ago, which was mostly caused by the rush to refuel for fear the pumps would run dry. Some petrol stations imposed a limit on how much you could buy — say, £25 of fuel and no more. It seems sensible enough, but a friend of mine (an economist) suggested this was the opposite of what was really needed. A maximum purchase encouraged more visits and more queues. Instead, petrol stations should’ve imposed a minimum purchase: nobody was allowed to buy fuel if their tank was more than a quarter full.
One can imagine snags and problems with implementing this rule, but the principle is delightfully elegant. Queues would disappear, as only people who actually needed fuel would be allowed to buy it. The self-fulfilling shortage would disappear. The solution is not to demand that drivers buy less fuel, but to insist they buy more.
All this set me wondering about other problems we could fix by reversing the usual logic and doing the exact opposite of what one might expect. Here’s a thought: environmentalists should fight climate change by buying coal mines. Coal is the most carbon-intensive of all mainstream fuel sources, so any response to climate change is going to involve closing coal mines. An environmentalist organisation could do this by buying them and shuttering them.
This idea was proposed in 2012 by the economist Bård Harstad. Another economist, Alex Tabarrok, recently pointed to a coal mine for sale for less than $8m in West Virginia. It had 8 million tons of coal reserves, capable of producing about 20 million tons of carbon dioxide. Preventing the emission of several tons of CO2 per dollar spent is an insanely good deal. The idea only works if people don’t open new coal mines in response to the demand, but why would they? Coal mining is a dying industry. If you can mothball a mine for a few years, the chances are it will stay closed for ever.
During the switchover to electric vehicles, a similar logic applies to old cars. If you drive, but only a little, there is something to be said for buying an ageing gas-guzzler. Better for a thirsty old car to do 1,000 miles a year in your hands than 10,000 miles a year in someone else’s. Yes, an electric car would be better, but until the electric car industry is fully scaled up, let that Tesla go to someone who will use it every day.
If you want to take reverse logic still further, let’s talk about queues. The problem with queues is obvious: they waste time. Less obvious is that each queuer is getting in the way of everyone behind them. If someone gives up and walks away, everyone behind them benefits. Imagine a line of Christmas market stalls serving hot chocolate, mulled wine, mince pies and other seasonal comestibles. People stroll along the row of stalls, keen to enjoy a warming treat on a winter’s day.
The problem is that every stall has a queue. One person a minute is served, and people are willing to wait for up to 10 minutes. If there are already 10 people in line, they keep walking. This common-sense way of queueing is a disaster. Each queue will be near the maximum length, otherwise people would quickly join it. Each stall operates at capacity, but nobody gets their mulled wine without waiting around until the very limits of their patience.
What does reverse logic tell us about this problem? Steven Landsburg, the author of the classic The Armchair Economist, proposes an alternative rule: those that are last shall be first. Each new person who joins a queue goes to the front, standing immediately behind the person being served. This is, of course, an outrage against reason, intuition and natural justice. It is also highly efficient. If you’re next in line to be served, but someone shows up and shoehorns herself into position in front of you, you walk away. The line is only going to get longer, and you’re always going to be at the back.
Under the Landsburg system, the stalls still serve one seasonal treat a minute, but the queues are short. Alas, the Landsburg rule can only be imposed in controlled environments such as a theme park, perhaps. But you might consider applying a dose of Landsburg’s logic to your own “to do” list: don’t add a new item to the list unless you’re willing to do it immediately. A little impractical, yes, but also bracingly realistic. If it’s not important enough even to be the top priority right now, maybe it will never be the top priority, and it shouldn’t be sitting on your “to do” list at all.
Is there something about economists that makes them particularly attracted to reverse logic? Perhaps. Two classic ideas in economics are Frédéric Bastiat’s “things seen and things not seen” and Adam Smith’s “invisible hand”. These ideas point to the way in which economists think: obvious and direct changes unleash indirect and less-than-obvious consequences. Let the psychologists keep their reverse psychology; we’ll enjoy our reverse logic.
Written for and first published in the Financial Times on 26 November 2021.
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