Tim Harford The Undercover Economist

Articles published in May, 2012

An education on social mobility by degrees

‘Social mobility is about creating a truly level playing field and a fair race. That is why, for example, the Coalition government is encouraging universities to recruit on the basis of academic potential, on the basis of an ability to excel, not purely on previous attainment.’

Nick Clegg, May 22

Why does Mr Clegg want to lean on Universities?

Because he seems to believe that armed with an expensive enough education, a mediocrity can rise to the very top of British public life.

Nick Clegg should know all about that.

Harsh. It’s not his fault that he was educated at one of the poshest schools in the country.

Fair enough. What do the punters make of the idea?

Curiously enough, the private school sector doesn’t seem to make much of it. Tim Hands, a leading headmaster in the private sector, accused Mr Clegg of using “communist tactics” in trying to rig the market for university education after the event.

Daft to use university admissions to compensate for existing failures in the school system.

I think Nick Clegg and Tim Hands both have a point. It is easy, and lazy, to blame Oxford and Cambridge for society’s ills: David Cameron has done it, Gordon Brown loved to do it, and when an MP such as David Lammy says – as he did in 2010 – that getting a place at Oxford or Cambridge “remains a matter of being white, middle class and southern”, the dons are not terribly deft at defending themselves. It is far riskier to blame schools. Attacking university admissions is just good politics, even if the problems really lie in the school system.

I can see that – but are the attacks justified?

Less than you might think. Mr Lammy’s assault on Oxford was carefully phrased and many people, including Mr Cameron, inferred from his remarks that just a single black student was admitted to Oxford in 2009, which isn’t true. What is true is that not many black students are admitted to Oxford and Cambridge; but it is also true that not many black students get the A-level results that successful applicants usually boast. As far as I have been able to work out there is no serious evidence of discrimination but neither is there any evidence that Oxford has been bending over backwards to admit black applicants.

And this is the kind of thing that Mr Clegg would like to see.

Mr Clegg talked about class, not race. But he said, correctly, that state school applicants tend to over perform once selected for university, relative to public school kids. That implies that if universities lowered the bar for state school applicants and raised it for public school kids, we would expect more first-class degrees in the end.

Communism!

Actually, there is every reason to believe that such a tweak might make the “market” for education work better. Put it this way, if you had to race against Usain Bolt in the 100 metres, neither you nor Usain Bolt are likely to regard it as a serious contest. He wins, you lose, neither of you need put any effort. But if Mr Bolt had to give you a 35 metre start, suddenly there is a real competition and we might expect both of you to run harder. Positive discrimination based on “contextual” variables – probably an applicant’s school, postcode and family circumstances – might well light a fire under everybody.

Don’t universities already do this?

Yes. Mr Clegg wants them to do more, it seems.

But isn’t this undermining the very idea of academic excellence?

It all depends on what you want from your universities. The implicit model of people who complain about Mr Clegg’s proposals seems to be that university is a kind of prize for the best performance so far – along the same theory that the Wimbledon Girls’ title is awarded to the player who beats her opponents, rather than the player regarded as most likely to win the Ladies’ title in future. But that is a little hard to justify. More reasonable alternatives are that university places should go to those most likely to excel in the future, or to those most likely to benefit from the education.

And meanwhile our political masters just need to sort out the school system?

Yes. I’ll give them six months to get that done.

Also published at ft.com.

Congestion tax is the way to go

Subjecting an undertaxed activity to duties might provide a solution to a thorny problem

Imagine yourself to be a key adviser to the chancellor, George Osborne. Clearly, keeping tax revenue buoyant is a thorny problem both in the short term – because the deficit is colossal and the tax base has shrunk – and in the long term, because there will be intense pressures to spend money both on an ageing population and as interest on a growing public debt.

How to do it? Well, here is a thought. There is an economic activity that is currently scarcely taxed. Unlike buying food or burning domestic fuel, this activity consumes proportionately more of the income of the middle class and the rich than of the poor, so taxing it would be progressive. The activity is widespread, meaning that substantial revenues could be raised. Unlike high-frequency trading, or declaring corporate profits, the activity is price inelastic – meaning that when taxed it does not evaporate.

You might think that the case for a tax on this activity is so compelling as to be self-recommending. Let me tilt the scales a little more and point out that the activity generates a vast “negative externality”, which means that it is an activity that imposes a cost on people who get no say in whether the activity happens or not (graffiti spraying is one example of this). Ever since the Cambridge professor Arthur Pigou analysed the problem in 1920, most economists have believed that taxing negative externalities is often an excellent idea.

The activity I have in mind is driving in a congested area. As a driver myself, I know that drivers are subject to hefty taxes: vehicle excise duty, fuel duty and VAT on fuel add up to £38bn, about 7 per cent of all tax revenues. Fuel taxes alone average five or six pence per kilometre driven, according to Fuel for Thought, a recent study conducted by the Institute for Fiscal Studies (IFS) and paid for by the RAC Foundation. But as the IFS goes on to point out, the actual cost imposed (as a total) on all other motorists when a driver thickens the traffic in rush hour approaches £2.50 per kilometre, almost 50 times the fuel tax.

My environmentalist friends tend to dislike cars in general, and big, bulky, dangerous cars in particular. I don’t like lorries dressed up as cars either, but I am forced to acknowledge that the costs we drivers impose on society accrue less from what we drive and far more from when and where we drive it. For example, an SUV driven in rural Wales at 10pm on a Sunday imposes far less social cost than a Prius driven into central London at eight o’clock on a Tuesday morning.

What we drive matters far less than one might think, partly because engines are much cleaner than they used to be and, therefore, emissions of important pollutants (with the key exception of carbon dioxide) have fallen precipitously over the past two decades. No, the real problem with cars is that they get in the way of each other, and a super-efficient car gets in the way of other cars just as much as the most ridiculous Chelsea tractor.

As the IFS research makes clear, the curious upshot of the way that motorists are taxed in the United Kingdom is that we probably pay too little tax in total, despite the fact that half of all miles driven are taxed too much relative to the social costs involved, and another quarter or so are taxed at about the right level. It’s the remaining quarter of miles driven – on the M6 and M25 at rush hour, around the south-east, and in city centres around the country – which are undertaxed, many by a factor of 10 or more.

Fuel duty should be cut from almost 58p a litre to about 20p a litre, and motorists should instead be taxed through a system of congestion charging based on location and time of day. The economic logic is solid; the political calculus, of course, points in another direction.

Also published at ft.com.

A questionable move by Starbucks

Big organisations should test out their new policies whenever they can

An awkward moment recently: I ordered an espresso from Starbucks and the barista, a young fellow with fashionably chaotic blond hair, asked my name. I’d heard that this is the new policy at Starbucks but, not being a regular, I’d forgotten. None of your business, I thought, and fumbling for something to say instead of my name, I said, “I suppose you’re getting annoyed having to ask people their names.”

The young man’s face darkened perceptibly. “A lot of things annoy me,” he said, “but if you don’t want to tell me your name, that’s fine.” His colleague proceeded to pull me a deeply uninspiring espresso, which I felt that I rather deserved.

I took the coffee and sat awkwardly in the corner, avoiding eye contact with the staff and vowing to steer clear of Starbucks in future. One bad espresso just isn’t worth the social discomfort.

If my Starbucks experience is typical, the policy of requesting names is going to prove very ill-judged. But perhaps my Starbucks experience isn’t typical; I’m not a regular customer, after all. Perhaps the regulars love it. Who can say? But it’s worth asking: where does this kind of idea come from in a large organisation? How is it tested? Under what circumstances might it be reversed?

The question of the U-turn is a particularly vexed one. Politicians find it especially painful, perhaps because lazy journalists find U-turns easy to criticise: either the old policy was wrong or the new one is wrong, and either way, the politician can be blamed with no need for further investigation. Just think of the plight of Theresa May, the Home Secretary: she demanded tight border controls, but lacked the personnel to carry out the new regime efficiently. She has painted herself quite methodically into a policy corner.

Any high-profile policy runs a similar risk: if it doesn’t work, it is hard to perform an elegant about-face. This is why I think Starbucks should have conducted a randomised trial to test the question: pick 100 branches, then randomly select half of them to receive instructions and training videos, and see whether there was any effect on staff morale, customer satisfaction or sales.

It wouldn’t have been a perfect double-blind trial, but it would have been revealing. I can confidently assert that if we were talking about Amazon, it would be inconceivable that the company would change how it interacted with a customer without testing the idea with such a trial.

As it happens, Starbucks wasn’t quite as clueless about this as I might have guessed. (I suppose I shouldn’t be surprised that these people know something about selling coffee.) I am told the idea emerged after listening to customers in focus groups, who pointed out that they liked the fact that in their local branch, the staff knew who they were. (I think the Starbucks press officer telling me about the focus groups was about to say that the customers didn’t mention the coffee as a reason to go to Starbucks, but thought better of it. Perhaps I imagined that.)

Next came informal testing: staff at some Starbucks branches – for instance, in Cambridge and in the new Westfield shopping centre in east London – had already been doing this for a few months. An internal “training” video shows these staff enthusing about the idea and entertains no possibility of awkwardness.

Perhaps my cynicism is misplaced. Starbucks is trying to keep regular customers happy; there is no reason to expect sceptics to like it any more than we should expect atheists to be impressed by a religious sermon. Intuition can be misleading in such matters – all the more reason why big organisations should test out their new policies whenever they can.

Also published at ft.com.

The weighty problem of road and fat taxes

‘The UK needs to impose a “fat tax” of at least 20 per cent on unhealthy foods to have any significant impact on rising levels of obesity.’

Financial Times, May 15


I thought it was supposed to  be  a  10  per  cent  fat  tax?

That was the British Journal of Nutrition in December. This is the British Medical Journal, this week. Do try to keep up.

Either way, would it work?

It all depends on what you mean by “work”. Inasmuch as anything can be said to be certain in social science, a tax on some foods would certainly reduce the consumption of those foods, just as surely as cigarette taxes have reduced the consumption of cigarettes. Whether that reduction is desirable is another question.

You’re saying obesity is a good thing?

No, but ice cream is a good thing and obesity is a potential unwanted side-effect of ice cream. If you tax ice cream, people will be less obese, which is good, but they will also be enjoying less ice cream, which is bad.

Which is sophistry.

Not at all. Ice cream versus obesity is the key imponderable about the whole policy. I find there’s a striking contrast with the idea of a congestion-based road tax, as advanced by the Institute for Fiscal Studies this week. The case for the congestion tax is pretty unanswerable: every driver who joins rush-hour traffic is making it worse for every other driver. If we could all get together and agree to drive a bit less, we’d all be better off because when we did drive, our journeys would be quicker and less uncertain. But we can’t enforce that kind of agreement, hence the need for the tax.

It’s all the same: obesity is bad and traffic is bad. I’m not sure why you’re trying to make a distinction.

It’s not the same at all. Each driver causes a problem for others and she can’t be expected to take that into account. But an ice cream lover is causing a problem only for himself. It remains to be demonstrated that he would find an ice cream tax helpful.

What about the cost to the National Health Service?

That is certainly a consideration, although don’t be too quick to assume there is a net cost. It’s fairly clear that smoking should, on this logic, be subsidised because it tends to kill people, often quite quickly, just as they have finished paying their taxes but before they start to draw their pensions. Perhaps obese people are more costly, but this is a double-edged argument. The Department of Health has published medications estimates suggesting that obesity and related conditions cost the NHS an extra £2.2bn, a figure that is rising rapidly. What the impact on pension costs might be is not clear.

Why do we tax cigarettes, then?

Partly because they’re a good revenue source, partly because of passive smoking. But I think a key reason is that because nicotine is so addictive, many smokers ardently want to be non-smokers but find it hard to quit. And surely this is the basic idea behind a “fat tax” as well: it is to help weak-willed people do the right thing. The economists Sendhil Mullainathan and Jonathan Gruber put their finger on the key issue about 10 years ago with a clever research paper titled: “Do cigarette taxes make smokers happier?” Which seems to be an important question.

And the answer?

It seems that cigarette taxes do indeed make smokers happier. More specifically, it seems that the reported happiness of people with a propensity to smoke rises in parallel with increasing state cigarette taxes in the US, but not with increases in other taxes. You need to jump through a lot of statistical hoops to reach this conclusion but the research makes a pretty good case. Presumably this is because smokers often do have self-control problems and the fact that the tax helps some of them to quit outweighs the fact that the tax also makes the non-quitters poorer.

And that’s the case for the fat tax in a nutshell, isn’t it?

It might be, if the research paper had instead been called: “Do fat taxes make fat people happier?” I hope and trust that someone has examined that question but I am not aware of any attempts to do so.

George Osborne is taxing pasties – perhaps he’s ahead of the curve.

I am sure he eagerly awaits his plaudits from the BMJ.

Also published at ft.com.

That’s a lot of Wonga for a business loan!

‘Wonga, the online lender that charges annual interest rates of 4,000 per cent on short-term loans, has launched a service for cash-strapped small businesses that offers to make credit available in as little as 15 minutes.’

Financial Times, May 7

Wow.

The chief executive of Wonga describes it as a “premium service”.

I’ll say. Are they planning to charge 4,000 per cent to small businesses, too?

Apparently not. Their maximum rate is 2 per cent a week, which sounds modest but compounds to about 280 per cent a year. Sharlene Goff, the FT’s retail banking correspondent, reckoned that the largest loan (£10,000) for the longest term (a year) would rack up almost £11,000 in charges. All of this is some way short of 4,000 per cent but it’s not cheap.

How can they possibly get away with that?

You mean, why doesn’t someone put them in prison?

Well – yes, why not?

Because there are no caps on lending rates in the UK. If you treat people fairly and are transparent about your rates, you can charge whatever you like.

That raises another question: how can they possibly find anybody willing to pay that kind of money?

Assuming they do – which remains to be seen – I think there are two possible explanations. The first is that customers are idiots. The second is that some customers badly need the money and have no alternative funders.

Start with hypothesis one.

The thing that makes me nervous here is the fact that the newspaper stories all report that Wonga will release funds in as little as 15 minutes. Surely this is only a selling point for the extremely impulsive or the extremely shortsighted. Most small businesses would be just fine with a lender who took a few days to release funds. We also know, thanks to research from economists such as Annamaria Lusardi and Jonathan Zinman, that a lot of people are financially illiterate and have poor intuitions about the costs of compound interest. You might hope that most company directors would know better, but presumably there will be some exceptions to that rule.

And what about the alternative view: that a loan at an annual interest rate of several hundred per cent or more might be a good business proposition for the borrower?

First, remember that an annual percentage rate might not be the best way to evaluate the cost of a small, short-term loan. If I need to borrow money for a few weeks as a bridging loan, the lender has to bear certain costs and risks – but even a small charge would balloon into a huge annual interest rate because the loan was so brief.

In other words, charges of a few quid might look huge expressed as an APR.

In some circumstances, yes. Remember, if you stumble into an unauthorised overdraft from a high street bank you may end up paying charges of which a payday lender can only dream. I’ve written before about a randomised trial conducted by Dean Karlan, economist, and Mr Zinman on the impacts of loans at 200 per cent APR in South Africa; surprisingly, such loans seem to help borrowers because they allow them to buy work clothes or transport and so actually get or keep a job. It’s not hard to imagine situations where a few grand for a couple of months could keep afloat a fundamentally sound business with cash-flow problems.

Fair enough, but if there are so many fundamentally sound businesses with cash-flow problems, why aren’t banks lending to them?

You’re assuming that they aren’t and I have to say you may be right. The Bank of England’s latest “Trends in Lending” report finds that the stock of lending to small businesses is shrinking fast.

Perhaps because small businesses are paying off their debts and don’t want to borrow?

That’s logically possible, but the cost of borrowing is also rising. I think it’s safe to say that the banks aren’t keen to lend, either because of their own funding costs or because they are nervous about getting paid back.

So Wonga is filling a market niche?

I think Wonga’s main niche is likely to remain cash-strapped, naive consumers, but the publicity this business-lending launch has earned them will do no harm. I can’t get too excited about payday loans for businesses: I am more worried about the fact that they are a symptom of very tough times.

Also published at ft.com.

Leaders do not need to milk price of pint

A few years ago, José Zapatero, then prime minister of Spain, was asked the price of a cup of coffee in a television interview. His answer, a woeful underestimate, became a minor embarrassment. I know all this because shortly afterwards, he appeared at a session of Congress with my book El Economista Camuflado [The Undercover Economist] under his arm – a book that discusses extensively (some say ad nauseam) the price of a cup of coffee. I was suddenly a prop in a surreal political debate.

Thanks to Nadine Dorries the same argument has popped up closer to home: George Osborne and David Cameron are posh boys, she says, who do not know the price of a pint of milk. To accuse them of knowing nothing of lacto-economics seems odd to me. I do not know whether Mr Cameron knows the price of a pint of milk. I do know that he is posh.

I am doubtful about the idea that there is, somewhere, the Platonic ideal of a pint of milk, whose just price is known by all virtuous people but an eternal mystery to the out-of-touch. The reality, of course, is that a pint of organic Jersey milk from a Hampstead deli is likely to cost more than a quarter of a two-quart bottle from Aldi. You will pay more for a pint delivered to your doorstep than if you take the trouble to drive to the supermarket.

Beyond that, you do not need to be a Tory millionaire not to care about the price of milk. I conducted a little survey. Steering clear of soya, rice and goat’s milk, I checked the price of a single pint of ordinary semi-skimmed. It’s 49p a pint in the Marks and Spencer at the local railway station. It is also 49p a pint at the downtown Sainsbury’s. It is 49p a pint in the Tesco next door.

The financial returns to learning about milk prices seem to be limited. There are people who are so strapped for cash – or perhaps, simply curious – that they will keep track. Many others will not, but that should not disqualify them for high office.

The converse also fails to hold: knowing the price of a pint of milk is no mark of a great leader. Before carrying out my survey, I guessed that the price of a pint of milk was 50p. Perhaps Nadine Dorries thinks that I would make a cracking prime minister. I can assure her I would be a profound disappointment.

Also published at ft.com.

Rules of trading in a POW camp

An economist who was taken prisoner during the second world war observed that market institutions were universal and spontaneous

Robert A. Radford had, in some ways, a perfectly conventional career as an economist. He studied the subject at Cambridge in the late 1930s, before war interrupted, and his civilian working life was spent at the International Monetary Fund. But he also spent half the war in a German prison camp, and on his release wrote an article in the LSE journal Economica.

The “Economic Organisation of a P.O.W. Camp” is a remarkable piece of writing, in which Radford analyses the economic institutions that arose in tough circumstances. Students should read it to learn about monetary economics, and their professors should read it to learn how to write. But Radford himself thought his experiences constituted more than a teachable moment: “the principal significance is sociological.”

First, a word about the basic economic building blocks. Prisoners received some rations from the Germans, but were mostly sustained by parcels of food and cigarettes from the Red Cross. The parcels were standardised – everyone got the same. Occasionally the Red Cross received bumper supplies, or ran short; in those instances everybody enjoyed a surplus or a shortage.

Radford’s first sociological observation was that there was no gift economy in the camp. Everybody started with the same, so what was the point? But trading quickly developed, because while prisoners had equal means they did not have identical preferences – the Sikhs sold their beef rations, the French were desperate for coffee. So middlemen who could speak Urdu or bribe a guard to let them visit the French quarters had the chance to make “small fortunes” in biscuits or cigarettes. In rare circumstances, the camp’s economy interacted with the outside world: coffee rations apparently went “over the wire” and traded at high prices in black market cafés in Munich.

Market institutions, Radford concluded, were universal and spontaneous, “a response to immediate needs” rather than an attempt to imitate civilian life. One of the spontaneous developments was the emergence of a currency: the cigarette, which was portable and reasonably homogenous. Not entirely so, though: cigarettes could be “sweated” by rolling them back and forth between the fingers to shake a little tobacco out. Gresham’s Law – “bad money drives out good” – asserted itself, as the plumper cigarettes were reserved for smoking, while those that circulated as money grew thinner. When Red Cross supplies were interrupted, deflation set in, as a cigarette bought ever more goods.

The law of one price also tended to hold: arbitrage meant prices rarely varied much within a permanent camp. The chaos of transit camps, however, created profit opportunities. “Stories circulated of a padre who started off round the camp with a tin of cheese and five cigarettes and returned to his bed with a complete parcel in addition to his original cheese and cigarettes; the market was not yet perfect.”

Relative prices moved in response to broader developments – such as an influx of new, hungry POWs – and from day to day. With bread rations handed out on Monday, on Sunday evening “bread now” traded at a premium to “bread Monday”. And yes, there was a futures market.

All this mattered greatly. “The small scale of the transactions and the simple expression of comfort and wants in terms of cigarettes and jam, razor blades and writing paper, make the urgency of those needs difficult to appreciate, even by an ex-prisoner of some three months’ standing,” wrote Radford. His article was written in summer 1945, looking back at March and April, where market prices twitched wildly amid rumour and scarcity. On April 12, the camp was liberated, and, says Radford, “every want could be satisfied without effort.” It is quite a parting thought.

Also published at ft.com.

Time to bring in the crash investigators

The NTSB is capable of providing a clear and authoritative narrative, explanations and conclusions about the crisis

After a financial train wreck, it’s time to begin to learn lessons from the disaster and prevent its recurrence.

This is not an easy problem: Andrew Lo, a professor of finance at MIT, recently compared the financial crisis to Kurosawa’s Rashomon, a film in which each character has a different story about an alleged rape and murder. We have no agreed narrative about what has happened in the crisis, which makes it hard to figure out how to prevent it happening next time. The details are picked over in the press, by think-tanks, by commissions and, of course, by ideologues of all stripes.

Professor Lo, along with Jian Helen Yang and Eric Fielding, has proposed an alternative approach to the whole affair in the Journal of Investment Management. Lo, Yang and Fielding argue that there is an organisation that specialises in establishing a clear narrative, ruling out alternative explanations, and drawing conclusions which have real authority and influence. It’s not the Securities and Exchange Commission, the Financial Services Authority, or the G20’s Financial Stability Board. It’s the National Transportation Safety Board, the NTSB.

For more than 70 years, the NTSB – or its predecessor, the Civil Aeronautics Board – has investigated plane crashes, bridge collapses and other transport-related accidents in the US. Why do Lo, Yang and Fielding (who is an NTSB official) believe it is worth emulating?

Two attractive attributes stand out. The first seems paradoxical: the NTSB is not a regulator and has no regulatory authority. “At first I thought this undermined its effectiveness,” Lo told me. “But now I see it makes it more effective. If you are a regulator, how can you criticise your own regulations, for instance?” Quite so: in a crisis where much of the debate centres on whether regulations were too lax or perverse, and whether regulatory authorities such as the Federal Reserve and the Bank of England were asleep at the wheel, a non-regulatory investigator has something going for it.

The second admirable feature of the NTSB is its approach to investigations. First, it holds open hearings to establish a set of objective facts. As each party tries to exonerate itself with evidence about what happened, the facts tend to mount up. This initial focus on facts, says Lo, is an important discipline. Then the NTSB goes into a huddle and tries to settle on a consistent, fact-based narrative; its accounts are rarely challenged.

This all sounds very impressive. Will we get a Capital Markets Safety Board? In the US, perhaps we will: the Dodd-Frank Act established an Office of Financial Research, which has a mandate to gather data and produce or enable better analysis of the financial system. It may develop into something like the NTSB.

The other question, of course, is would an NTSB for finance actually help? There are three obvious differences between transport accidents and financial ones. The first is that what constitutes a financial accident is vague: would an NTSB for finance have studied the collapse of Lehman Brothers? The fraud at Enron? Or vaguer topics such as the dotcom bubble or the sub-prime mortgage industry? (For Lo, the answer is clear: it would study collapses of major financial firms.)

The second difference is that a financial accident is more complex than a physical one: there are more actors involved and far more variables. “It would be way too complicated to reconstruct the cockpit Dick Fuld was in,” says Lo, referring to the last boss of Lehman Brothers. True – but still worth a try.

The final difference might cause the biggest headache. Nobody actually wants to cause a plane to crash or a bridge to collapse; different people have different priorities, but nobody profits from a transport accident. When it comes to finance, that simply isn’t true.

Also published at ft.com.

Queues at Heathrow: a numbers game

‘Heathrow passport control misses target’

Financial Times, May 3

How bad are the queues, actually?

Damian Green, the immigration minister, has told parliament that the worst queueing experience was an hour and a half, at Heathrow last week.

Sorry – the worst queue at Heathrow last week was an hour and a half, or Heathrow was the place with the worst queue, ever?

Good question. Meanwhile, Heathrow’s operator, BAA, released data showing the worst queue was three hours.

I’m confused.

The way in which the statistics are gathered and reported doesn’t help either. The Border Force is supposed to ensure that passengers from outside the EU get through immigration checks within 45 minutes 19 times out of 20, while EU-based passengers should get through within 25 minutes, again 19 times out of 20.

They aren’t exactly stretch targets, are they?

No. The Home Office has been proudly pointing to its latest report that shows all these targets have been hit with room to spare.

Hurrah!

Which tells us that things were going smoothly in October to December last year.

Hurroo . . . 

Quite so. And normally we’d just have to wait for the Home Office to get around to publishing data for January to March and finally, in the summer some time, we’d get to hear about what happened in April.

So how come everyone is reporting that the targets were missed in April?

This is unofficial data released by BAA.

Are we comparing apples and oranges, then?

Not really. Both BAA and the Home Office use the same basic methodology. At regular intervals they pick somebody joining the back of the queue and then time how long it takes for that person to clear immigration. There is one difference: BAA picks a person to track every 15 minutes; the Home Office only does it once an hour.

So that might explain why Mr Green and BAA were reporting different numbers.

Yes. Also, the worst cases reported by BAA actually happened shortly after Mr Green had made his statement. Mr Green, incidentally, was trying to have his cake and eat it by using unpublished data to bolster his argument in the House of Commons. His numbers are supposed to be either official statistics or he is supposed to keep them to himself. I suspect the UK’s statistics watchdog will take a dim view of that.

Can we start talking about how to fix the problem now?

Patience. There is one nerdy point about the numbers worth attention. Imagine Heathrow has 10 hours in which 1,000 passengers an hour arrive and walk right through, followed by one hellish hour in which 10,000 passengers arrive and end up camping out half the night.

It’s easy enough to imagine – go on.

Well, in that case half the passengers have had a terrible time. But the way passengers are sampled by both BAA and the Home Office, it was only in one hour out of 11 that things went badly and so only one passenger out of 11 suffered excessive queues. The sampling method they’re using systematically under-samples times when the airport is very busy, which is the very time that queues are longest – Mr Green did, after all, blame “bunching of arrivals” for recent problems.

I get the point. So things may be worse than the official numbers suggest.

Yes. And since the official numbers suggest that almost a quarter of non-EU arrivals at Terminal 5 in April had to wait more than 45 minutes, the baseline is hardly great.

How do we solve the problem?

More staff. As a rough reckoner, if a queue is an hour long and you open up a new desk, every person you pull out of that queue saves an hour of queueing time. If an immigration official can check 60 people an hour then she is saving 60 hours of passenger time for one hour of her time.

But who is going to pay them? The government? The airlines?

The point is, the benefits are greater than the costs, so if the government can’t figure out how to make the queues go away they’re not fit for office.

At least the Border Agency is recruiting, right?

No, they’re going to cut staff by 18 per cent over the next three years.

This is insane! I’m going to complain to the Home Office.

Really? Join the queue.

Also published at ft.com.

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