If there’s a queue for something then that means that – let’s just say something that’s not time dependent, shall we? – the thing is being sold too cheaply. Because if we had supply and demand perfectly in balance that would mean the price was where there were only as many buyers as there were things for sale – no queue.
We can run this the other way around of course. If we set the price too low then we’ll generate queues. This is why it’s tough to get a doctors appointment in the UK, it’s free at the point of use.
So, what’s our analysis here?
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Mums sleep in cars for DAYS to be first in line to buy bargain £160k three-bed homes on Waterloo Road estate[/perfectpullquote]We’ve days long queues. The price is too low, isn’t it?
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]’I might have to sit here for six weeks’: Mad scramble as desperate would-be homebuyers sleep in their cars and queue for days to get their hands on £100,000 two-bedroom new-build properties[/perfectpullquote]This is all the result of the government’s help to buy scheme.
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Kitted out with sleeping bags and hot water bottles, the prospective home owners have been ‘camping’ outside the Gleeson Homes sales office near the Kirkholt estate for almost two weeks, with some told they could be waiting for up to six weeks more.[/perfectpullquote]That scheme obviously making these houses in Rochdale too cheap – as if that were possible, given Rochdale – and our proof of this is that the prices are generating queues.
So, stop the help to buy scheme as it’s too much subsidy. QED.
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160k for houses that look like that in Rochdale. Not my idea of a bargain. But each to his own.
They'd need to pay £160k to make me want to live in Rochdale. I used to work there but fortunately it was close to the M62 so you barely had to be exposed to the worst of the place.
Home of Cyril Smith. 'Nuff said.
Must be the place than encourages the kiddie fiddling - it's not a cultural thing...
The thing about the doctor's appointment is I already paid. I don't go for fun or to get more of a free good. The outfit I pay doesn't provide enough resource, so there is a queue of sick people who are not there for fun but to get the service they are paying for and are tied to. The outfit even encourages their staff to retire early with perverse incentives. There is no parallel with housing, where a customer may buy, or not buy, according to his own circumstances.
Maybe that's what they are really worth?
New house price premium and all...
I'm sure readers will recall the great C Northcote Parkinson handling the same issue in his book 'Parkinson's Law'. There he comments that, ideally, adverts for positions to be filled should ideally be crafted, not to gather the most candidates, but to cut the applicants down to the single one best suited to the position. Thus, a requirement for a Prime Minister (a most topical requirement) is handled as follows:
.....The first step in the process is to decide on the qualities a Prime Minister ought to have. These need not be the same in all circumstances, but they need to be listed and agreed upon. Let us suppose that the qualities deemed essential are (1) Energy, (2) Courage, (3) Patriotism, (4) Experience, (5) Popularity, and (6) Eloquence. Now, it will be observed that all these are general qualities which all possible applicants would believe themselves to possess. The field could readily, of course, be narrowed by stipulating (4) Experience of lion-taming, or (6) Eloquence in Mandarin. But that is not the way in which we want to narrow the field. We do not want to stipulate a quality in a special form; rather, each quality in an exceptional degree. In other words, the successful candidate must be the most energetic, courageous, patriotic, experienced, popular, and eloquent man in the country. Only one man can answer to that description and his is the only application we want. The terms of the appointment must thus be phrased so as to exclude everyone else. We should therefore word the advertisement in some such way as follows:
Wanted—Prime Minister of Ruritania. Hours of work: 4 A.M. to 11.59 P.M. Candidates must be prepared to fight three rounds with the current heavyweight champion (regulation gloves to be worn). Candidates will die for their country, by painless means, on reaching the age of retirement (65). They will have to pass an examination in parliamentary procedure and will be liquidated should fail to obtain 95% marks. They will also be liquidated if they fail to gain 75% votes in a popularity poll held under the Gallup Rules. They will finally be invited to try their eloquence on a Baptist Congress, the object being to induce those present to rock and roll. Those who fail will be liquidated. All candidates should present themselves at the Sporting Club (side entrance) at 11.15 A.M. on the morning of September 19. Gloves will be provided, but they should bring their own rubber-soles shoes, singlet, and shorts.
Observe that this advertisement saves all trouble about application forms, testimonials, photographs, references, and short lists. If the advertisement has been correctly worded, there will be only one applicant, and he can take office immediately...
Note that the point was "free at the point of use" and any such system will lead to increased usage. Granted nobody goes to the doctor's office out of boredom, but when it's "free at the point of use" more people will show up for questionable or trivial issues - "It's probably just a cold, but I'll pop in and have them check it out" - this will happen more often when there's no cost "at the point of use".
As Saint Milton pointed out, people spend someone else's money a bit freer than their own. And a meaningful portion of healthcare spending is discretionary, at least with regard to timing.
There is solid data and analysis that backs this up (high deductible health plans change behavior for one example).