Priceless

 

Ain't Got You

I got a house full of Rembrandt and priceless art    
And all the little girls they want to tear me apart   
When I walk down the street people stop and stare
Well you'd think I might be thrilled but baby I don't care   
'Cause I got more good luck honey than old King Farouk    
But the only thing I ain't got baby I ain't got you

What do you do when things are priceless?

“There are some things that money can’t buy, For everything else there is MasterCard.” So went an advertising campaign in the late 1990s. Economics is about allocating scarce resources.  The most familiar, but not the only way, of allocating resources is setting a price.  So what do you do about setting a price for something that is priceless?  There is also the problem that what is priceless to me, might not be priceless to you. To me, being able to attend the Red Sox 2004 Duck Boat Parade, priceless. To my brother, who is not a Red Sox fan, worthless. There is also the recent brouhaha about $5000 tickets to Bruce Springsteen concerts. ( and the lyrics listed above are from a Bruce Springsteen song). Fortunately, the Boss is not charging $5000 a ticket or the anger would be directed at him.  Instead the ire is directed at Ticketmaster. Their defense is that they are merely charging surge pricing, the same as airlines and hotels.

This assumes that pricing is the only way that a scare resource can be allocated.  It is not. My wife is a runner, I am a sitter, but an example from the running world is instructive.  Marathon bibs are a scarce resource. More people want those scarce bibs than there are bibs available.  The bibs could be auctioned, but that would incur ill will from those runners who can’t afford the price.  Most marathon organizers do not even want the money that could potentially be raised from an auction ( it is not that they want no money, it is just that they don’t want that much money).  Additionally if bibs were offered only to the highest bidders, eventually the losers would eventually not even bother to bid on the bibs and at some point in the future, there might not even be enough runners to keep the race going.  Also some of the runners are so desirable (elite) they should get bibs, even if they do not can’t afford/won’t pay that auction price.  But awarding the bibs on merit, say a qualifying time, is hard to manage and is also discouraging to those who can’t make the time but are willing to bid high on the price.  The bibs could be  awarded randomly ( and this is not a technological challenge.  When I went to a Rolling Stones concert in 1972 at the old Boston Garden, yes THAT concert, the tickets were allocated by a mail-in lottery. )

The most successful marathons allocate bibs on a combination of all of these approaches:

·       Auction ( where the bibs are actually awarded to charities who manage and get the proceeds from any auction);

·       Merit ( which does not have to be say qualifying times to get the elite runners.  It can also be volunteering at events, or as Pearl Jam offers tickets, membership in its fan club) ; and

·       Random  ( and by that, I mean truly random, and not the rope drop, or line sitter, or online multi-screen hacking and bot infected  “lotteries”)

Then you can allocate the scarce resources without having to set a price on something that to someone is priceless.