I realise that it’s pretty far down the long list of Things That Are Wrong With The World, but I am increasingly vexed by the potential inefficiency of seat allocation on buses. It is almost certainly the economist in me bridling at the casual violation of the Pareto Criterion – itching to realise the economist’s dream of making an arrangement better, and leaving nobody any worse.
Essentially, for our purposes here, there are two types of people who take the bus. There are those with companions, who want to sit with those companions. And there are those who are alone, who would rather have the space of two seats to themselves than be pressed up against a stranger. I set aside the question of why people seem to be so socially retarded and jealous of their privacy that they find the idea of approaching a stranger terrifying rather than the prelude to a new friendship. If people were more open, the problem would soon disappear. Suffice to say, this cultural foible has been discussed at length elsewhere.
If the bus is not too crowded, there is ample opportunity for both types to get their wish. People can choose to sit next to the people they want to or to opt for isolation. The trouble begins when the number of free seats dips below twice the number of people who want to sit alone. That is, when there are no longer any free pairs of seats.
Suppose there are no free pairs of seats available then, and a couple – Alice and Bob – get onto the bus. They cannot sit together, and so have to sit next to other people. Alice sits next to Craig, and Bob next to Davina. Thus not only must Alice and Bob do without the pleasure of each other’s company, but Craig and Davina have to sit next to strangers. Yet if Craig and Davina must sit next to people they don’t know anyway, wouldn’t it make sense for them to sit next to one another, and so allow Alice and Bob to sit together? Alice and Bob would be better off, Craig and Davina no worse off, and Pareto can settle down in his grave. But this doesn’t happen, and all the real-life Alice and Bobs must suffer in silence.
What can be done about it all? With my neo-Stalinist tendencies, I’m inclined towards a bureaucratic statist solution. Everybody must register for their bus trip 24 hours in advance, and inform the Central Bureau of Seat Allocation who they want to sit next to. But even I have to concede that this is a bit of an overreaction. It probably isn’t cost-effective to open a whole government department to deal with the problem. One of the great virtues of buses is their relative flexibility – how many people know 24 hours in advance exactly which bus they want to take and when? Liberty, as ever, upsets patterns.
If the state fails, the obvious response is to turn to the market for a solution. Maybe Alice and Bob can pay Craig and Davina for their seats. This idea has the merit of identifying the pair who are least bothered about relinquishing their space – if Craig and Davina put too high a premium on it, they can be undercut by others who will sell for less because they care less about being alone.
However, the seat market appears to be prone to a major market failure: its transaction costs are too high. People are unlikely to go through the effort of setting up the mechanism of the market for so little reward. In any case, by the time the deals are struck, the chances are that it will be time for one of the parties to disembark, making bargaining somewhat impractical.
The best and most obvious option is what might be called the ‘ethical libertarian’ approach Here, we just rely on people to use their initiative to escape these sub-optimal arrangements. We expect Craig or Davina to offer their seats, and hope Alice and Bob are not too bashful to ask for them.
The trouble with ethical libertarianism, both here and in general, is that it expects a lot of people in terms of good sense and altruism. Perhaps I’m too much of an economist to share their faith.
 I assume here that seating is arranged in pairs, as on Aberdeen buses, but the idea is easily applied to other arrangements.
 I’ve just made up the name ‘ethical libertarianism’. I’m not sure if it’s any good. In any case, I take it to mean the position that we have extensive moral duties to other human beings, but that the government ought to execute relatively few of them