There’s a common problem that arises when there are many more customers than available products. Examples include:
- Event Tickets: Taylor Swift, Comic-con, the Superbowl, etc.
- Government programs: low interest mortgages, below market rate housing, visas, etc.
- Medical care: vaccine appointments
- Limited goods: Furby, Tickle-me Elmo, the latest game console
In practice these goods are all very inefficiently allocated with badly designed systems that frustrate customers and waste people’s time with no benefit to anyone. People constantly refresh websites waiting to get into a queue. Football fans waited overnight in the cold when the Denver Broncos made Superbowl XII in 1977. And vaccines go first (or maybe second) to young, relatively well-to-do, tech-savvy people who have the skills and time to join Facebook groups and use special software to track down vaccine appointments.
For event tickets, there is an obvious solution in standard economics: raise the price to what the market will bear. Artists don’t always like this since they often prefer to have diehard fans in the crowd instead of one-percenter senior citizens who talk over the music instead of dancing, but it does work.
However, for more important goods like visas and medical care, it’s not OK to allocate first to the people most able to pay. (A few Chicago school economists and libertarians will claim that’s exactly what should happen, but they’re bad people and should feel bad.)
Sometimes it is reasonably possible to choose who’s most deserving or needy of the limited good and assign it to them. Artists sometimes allocate tickets to their fan club first. During Covid, vaccines went first to medical professionals, then to nursing home residents who were at much higher risk of catching the virus and dying from it, and then to people in different age and risk brackets.
However, that last step didn’t work. Once the vaccines started being administered to the general public, the system broke down. Shots went first to people who could navigate complicated online systems and had a PCP who could quickly write a letter attesting to a pre-existing condition that made them eligible. Or who were young enough, healthy enough, and uninfected enough to wait in line for hours to take the place of people with appointments who didn’t show up. Techies wrote Python scripts that pinged their phones when new appointments became available. Younger, healthier, and richer people dominated the vaccine clinics in the early weeks.
The same pattern repeated a couple of years later with monkeypox. Rich, mostly white, gay men got the vast majority of the early shots, while poorer gay men of color waited weeks for appointments. And that rollout worked as well as it did only because it was almost exclusively gay men who were seeking the vaccine. If the vaccine had been more popular with the general population, the allocation would have been far worse.
Another common solution is first come, first serve. Gen Xers still remember lining up outside Mushroom Records (or the local equivalent) for concert tickets. While most event tickets have migrated online these days, it’s still not uncommon to encounter a line of people camped out in front of a Gamestop or sneaker store to score the latest drop. Shakespeare in the Park still doles out tickets like this. Needless to say, this strategy highly prioritizes young, healthy people who can camp out for many hours or even overnight.
Is there a fair solution that gives everyone equal access regardless of wealth, health, or youth? And doesn’t waste many people’s time on economically unproductive activities like sleeping on the sidewalk or constantly clicking the refresh button in Firefox like a mouse waiting for a food pellet to drop? Yes, and surprisingly it’s one that is sometimes used by government programs and almost no one else, though in many cases bureaucracies do it wrong.
That solution is a lottery.
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