The Economics of Time
The Economics of Queues
Why queues form when prices are below market levels, how waiting acts as a hidden price, and how systems like tokens and online booking change the cost of waiting.
Queues are common in India: at ration shops, railway counters, hospitals and temples.
Why queues form
When a good is priced below what people are willing to pay and supply is limited, demand exceeds supply. Waiting becomes a way to ration it.
Waiting as a price
Time spent in a queue is a hidden price. People whose time is less valuable are more willing to wait.
Who gains, who loses
- People with low time costs gain access.
- People with high time costs may pay others to wait, or pay bribes to skip.
- Waiting time is wasted; unlike money, it isn’t transferred to anyone.
Examples
- Railway tatkal tickets: fast-selling online, a digital queue.
- Government hospitals: long waits for free care.
- Temples: paid “special darshan” tickets let people skip queues.
Better systems
- Online booking and token systems reduce physical waiting.
- Appointment systems in hospitals.
- Dynamic pricing in some cases, though controversial for essential goods.
At a famous temple, the free queue takes six hours, while a paid ticket takes one hour. Devotees choose based on how they value their time.
Queues impose a hidden price in time.
- Queues form when prices are below market levels.
- Waiting is a hidden price that wastes time.
- People with lower time costs are more willing to wait.
- Online booking and tokens reduce waiting costs.
No recording for this one yet - EconReader can read it aloud for you.