David R. Henderson  

Who Owns the "Right to Recline?" The Airline

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Look-Alikes Don't Look Like Id... Intellectual decay...
I wrote an article to that effect in 2011, noting that airline seats are an excellent case study for the Coase Theorem. This is an economic theory holding that it doesn't matter very much who is initially given a property right; so long as you clearly define it and transaction costs are low, people will trade the right so that it ends up in the hands of whoever values it most. That is, I own the right to recline, and if my reclining bothers you, you can pay me to stop. We could (but don't) have an alternative system in which the passenger sitting behind me owns the reclining rights. In that circumstance, if I really care about being allowed to recline, I could pay him to let me.
So writes Josh Barro in "Don't Want Me to Recline My Airline Seat? You Can Pay Me," New York Times, August 27.

His economic analysis is fine.

But the ultimate owner of the right to recline is the airline, not the passenger. It happens to be the case that the airline assigns the right to the passenger. But one could imagine the airline acting differently if enough passengers were upset.

As I'm writing this, I'm starting to think that I'm quibbling. After all, if the airline has assigned the right to the passenger, then Josh is correct in saying that he owns the right.

But I think it's more than a quibble, because Josh's way of putting it ignores the fact that the airline owns the whole airplane and gets to decide how to allocate the space. He might not be misled and probably would agree with my claim about the ultimate owner. But I think some of Josh's readers would be misled.

Why do I think that? Because look at the discussion over smoking in restaurants back in the 1990s when various state governments started to ban it. There was a huge discussion about externalities that smokers imposed on non-smokers. But that discussion ignored the fact that the restaurant owner has well-defined rights and, therefore, there is no externality. The Coase Theorem does not need to be invoked. The restaurant internalizes all costs and benefits. I've written about that in "Smoking in Restaurants: Who Best to Set the House Rules," Econ Journal Watch, 2007, Vol. 4, Issue 3 and in "How Property Rights Solve Problems," Econlib, April 2, 2012.

Barro challenges Donald Marron, former director of the Congressional Budget Office. Barro writes:

Mr. Marron says we ought to allocate the initial property right to the person likely to care most about reclining, in order to reduce the number of transactions that are necessary. He further argues that it's probably the person sitting behind, as evidenced by the fact people routinely pay for extra-legroom seats.

Barro responds to Marron as follows:
Mr. Marron is wrong about this last point. I understand people don't like negotiating with strangers, but in hundreds of flights I have taken, I have rarely had anyone complain to me about my seat recline, and nobody has ever offered me money, or anything else of value, in exchange for sitting upright.

But there's an even better response.

First, notice that Marron talks about how "we" ought to allocate the initial property right as if "we" should have any say about it. So Marron at least doesn't seem to get that it's the airline's property right. Even if Barro is not misled, Marron is. And notice that Barro didn't challenge Marron, which suggests that maybe Barro is misled about who has the right. (Notice that my own worry above about whether I'm quibbling now seems less justified.)

Barro doesn't quote Marron correctly, but he comes close enough. Marron actually writes:

I'd bet on the "reclinee" not the recliner. Which might explain why more airlines now offer the ability to pay extra for more legroom.

Here's my second response to Marron:

It is true that airlines offer the ability to pay extra for legroom. Even I, by the way, a man who is only 5'5" tall, sometimes pay for this legroom, especially if I'm planning to work and I don't want the recliner in front of me to prevent me from having my computer on the tray table. But that they offer extra legroom and get takers says nothing about which people value the space more. Remember that the problem occurs when someone reclines into an area where the person suffering from the recline has not paid extra for legroom. The fact is that the majority of people on the airplane are not willing to pay for that extra legroom. So the evidence that some are willing to pay what the airline charges is not nearly enough evidence to address the issue at hand.

BTW, after starting to write this, I noticed that Megan McArdle has weighed in and, as usual, gives a lot of insight in a short space.


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CATEGORIES: Property Rights



COMMENTS (24 to date)
Daniel Kuehn writes:

Could you explain what you mean by this a little more: "But that discussion ignored the fact that the restaurant owner has well-defined rights and, therefore, there is no externality."

Well defined property rights might clarify how the costs and benefits are arbitrated but I don't get how it implies that there are no external costs and benefits. Are you thinking along the lines of "the restaurant patron was purchasing a restaurant experience, whatever that entailed". If that's what you mean then I agree, but the point is still that "whatever that entailed" is a function of other transactions to which the patron is a third party, which is all anyone means when they talk about an externality.

Daniel Kuehn writes:

re: "First, notice that Marron talks about how "we" ought to allocate the initial property right as if "we" should have any say about it. So Marron at least doesn't seem to get that it's the airline's property right."

Hmmm... not sure I agree. Property rights of any sort are a social fiction. "We" might want stable institutional frameworks so they don't change a lot, but it's not like the airline was born with a property right the way that I was born with my left arm. These things are always socially contingent, and I don't agree that Marron is confused.

(This point actually comes back to Pete Boettke's Keynes quote the other day about how there is nothing natural about property rights).

Jody writes:

Here's my personal favorite Coase bargaining story (which will relate to the post at the end).

Beginning of my sophomore year, move in weekend. A guy down the hall walks into my room to introduce himself on his way to the shower.

Coincidentally, he had a habit of going to the shower wearing nothing but a towel. Over his shoulder.

Immediately after he introduced himself, I offered him $5.00 to never expose his junk to me again.

I had no further incidents. But the others on the hall did. Responding to inquiries as to why I wasn't being subjected to the shower sausage show, I told the other guys on the floor that I had simply bought him off for $5.00, but no one else was willing to make a similar offer. And they weren't strangers after a week or so.

Bringing it back on point with the post - if you're willing to do it, there's a lot of benefit from bargaining away negative externalities. But even when presented with evidence of its efficacy, lots of people seem unwilling to do it independent of being strangers or friends.

I don't why that is, but I suspect the reluctance to individually bargain is a big factor as to why people responding to the reclining issue are looking for a collective action solution.

Phil writes:

I would argue that the right to recline is more important to the recliner, by the evidence that the airline chose to assign it that way by default.

It's like how they assign you the right to use the space under the seat in front of you, not the space under the seat three rows up.

Phil writes:

Jody/3: Perhaps people intuit that if they pay the guy the $5, others will start doing the same thing in order to profit. Moreover, for those who don't pay, this one guy will start dangling his junk even more often, in order to bring the annoyance level to the $5 threshold for them, too.

Then, they start doing annoying things to him, to get their $5 back, and life turns into a continuous blackmail spree.

Theodore Sternberg writes:

In noting that people pay extra for seats with more legroom, you seemed to overlook that some people pay -- and pay far more -- for the right to recline. Those are the business- and first-class passengers. Speaking just for myself here, 1% of the benefit of flying first class is in the drinks, better food, cloth napkins, wider seats and lower passenger/steward ratio, 99% of it in the possibility of stretching out for quality sleep.

So your guess about to which party it would be most efficient to allocate the property right would seem wrong.

vikingvista writes:

Regardless of right, there is a civil courtesy to at least warn someone of an impending recline so that he can take measures to avoid his laptop display being cracked, his coffee spilling on his lap, his head being pile driven into his shoulders, his knee caps suffering minor trauma, or his nostrils taking in his neighbor's dandruff.

I travel a great deal. Unless I manage to get into the usually full business class section, I never recline, because I possess within me at least a tiny shred of human decency.

vikingvista writes:

"Property rights of any sort are a social fiction. ... it's not like the airline was born with a property right the way that I was born with my left arm."

If property rights of "any" sort is social fiction, then what difference does being born with an arm make--you don't have a property right to your arm, unless you believe fiction and nonfiction are the same thing. So, the analogy is meaningless. A great many individuals historically did not think that another person had any natural right to his body, so at least your first belief--that any property rights are social fiction--is not uncommon.

Socially established property rights can be contradictory, but they don't emerge direct from the chaos, or off of a random number generator. They tend to emerge ultimately from inescapable biological and physical facts of human interactions--i.e. from natural rights. If there is any natural reason to prefer logical consistency, or morality in human interaction, then higher level natural rights are an unavoidable reality, however elusive their discovery might be.

It doesn't make any logical sense to deny the existence of natural rights while affirming the existence of legal or other social rights. And it denies overwhelming empirical reality to deny the existence of legal or other social rights.

David R. Henderson writes:

@Theodore Sternberg,
So your guess about to which party it would be most efficient to allocate the property right would seem wrong.
I’m not sure whether you’re addressing me, but if you are, you’re wrong. I wasn’t guessing. I was making a clear statement that the airline has the right. Nothing in your apparent counterexample challenges that.

David R. Henderson writes:

@Daniel Kuehn,
Hmmm... not sure I agree. Property rights of any sort are a social fiction. "We" might want stable institutional frameworks so they don't change a lot, but it's not like the airline was born with a property right the way that I was born with my left arm.
Daniel, You weren’t born with the a property right to the pants you are (presumably) now wearing. Does that mean that when I say you have a right to your pants, that’s a “social fiction?"

David R. Henderson writes:

@Daniel Kuehn,
Could you explain what you mean by this a little more: "But that discussion ignored the fact that the restaurant owner has well-defined rights and, therefore, there is no externality."
I could but I won’t. I explain further in the two articles of mine that I link to.

Andrew writes:

I won't speak for Daniel but I think this is what he means by property rights being a sort of social friction.

Property rights are only necessary when multiple people desire the same (insert scarcity here). The scarcity, and the property rights necessary for a civil society cause the "friction".

To use your example. If you also wanted Daniel's pants, and he owns them, this can be called a "social friction".

If I lose an EBay auction, I don't simply tell myself the item wasn't worth the extra bid. Our rational brains see this but our lizard brains take it as an insult that someone else has what we want.

You can see a clear example in vikingvista's response above. The societal norm is that the person in the plane seat gets to recline without regard to the person behind. This is due to the idea that "everyone" should be reclined and therefore no one is bothered. It is the person that doesn't recline that causes the breakdown.

Andrew writes:

Further food for thought. When I attend a concert, am I paying for the opportunity to stand and dance or should I be bartering with the people behind me who would rather sit and watch?

Don Boudreaux writes:

Daniel:

Can you explain what you mean when you say that property rights are a "social fiction"? Surely you don't mean that they are literally fictional - as in, purely imaginary.

If you mean that they do not exist independently of human action and choices and institutions, then you are correct that they don't. But that fact means neither that property rights are fictional nor arbitrary. Nor does it mean that property rights - their existence in general and their detailed features in particular - are alterable at the whim of some social engineer or some majoritarian collective decision.

The fact that all social institutions are the results of human action does not mean that they are the results of human design. Hence, the existence and details of social institutions that emerged over the years are properly regarded as being as natural as the panda's thumb or the height of redwood trees - no more arbitrary or fictional than is man's sex drive or need for food, and no more alterable at will than are these other emergent realities.

vikingvista writes:

Andrew,

Fiction or friction?

john hare writes:

If I have invested the money I have worked for in buying an airplane or just the use of a seat for one flight, that is my property. Calling my property rights fictional may just cause a discussion. Acting as if my property rights are fictional will demonstrate that I am not a pacifist.

I know what I am getting in economy class. A cramped seat for the duration of the flight. The guy in front of me can recline and I accept that. The guy in back of me can complain if I do and likely get some space back. That being said. I rarely recline the seat, and never without checking behind me. I have the right if I choose, but a bit of working together leads to a more relaxed ride.

There is a difference between rights, and self interested courtesy. A demand for everything you can legally get tends to have those you are dealing with do the same, often with unpleasant results.

Theodore Sternberg writes:

@Theodore Sternberg,
So your guess about to which party it would be most efficient to allocate the property right would seem wrong.

@David Henderson
I’m not sure whether you’re addressing me, but if you are, you’re wrong. I wasn’t guessing. I was making a clear statement that the airline has the right. Nothing in your apparent counterexample challenges that.

My mistake, it was Marron, not you, who was guessing that the leg-room party values the contested space more. In fact you disagreed with him, saying that the fact *some* people are willing to pay for leg room doesn't tell us anything about the preferences of the people who *didn't* pay for extra leg room -- who are precisely the people affected by recliners.

So in summary:
1. I was wrong about who said what.
2. You out-and-out forgot that you addressed the who-values-the-space-more issue at all.
3. You made the mistake of thinking that someone who doesn't value space enough to pay the market price, in fact doesn't value the space at all.

Theodore Sternberg writes:

While I'm generally more sympathetic to the want-to-recline party, I will note that just because I have bought something (a seat) that has a certain capability (reclining) does not generally give me a right to use that capability any time I like. My car, for instance, is *able* to drive forward, but I accept that I am not allowed to exercise that capability whenever I like (e.g. when there's a red light in front of me).

Jonathan Rabbitt writes:

Rather than look at this as a "right" and pontificate on who "owns" it, perhaps look at it in the context of, "We hold these truths to be self-evident, that all men are created equal".

Now, with the exception of the emergency exit rows and those seats immediately behind bulkheads, all seats begin their journey in an upright position.

Polite people will, when they desire to recline their seat back, will lean around and inquire whether this indulgence will unduly encroach on the person behind.

Self-important arrogant arseholes will believe that since they have control of the reclining mechanism, they have a "right" to impose themselves on others, regardless of any resulting discomfort others will have to endure. They reason that "it's the way the system works".

The latter tend to become political leaders.

Mark Bahner writes:
...I will note that just because I have bought something (a seat) that has a certain capability (reclining) does not generally give me a right to use that capability any time I like.

In fact, the airlines mean it when they say, "Please return your seats to their full upright and locked position."

This demonstrating that the airline owns the plane, and makes the rules about reclining...or not reclining.

Oliver Sherouse writes:

Since I took some great econ classes from Marron, I feel I should defend him and note that you're actually not correct when you say the he claims "we" should give the rights to one party or the other. In fact he says they "ought to be given," without addressing the question of by whom (which isn't really relevant to his point).

Erich Kirchubel writes:

I agree that it is the right of the person wishing to recline and that this right is basically given by the airline. However, I also feel that the person behind has a right to defend his legroom. As a 6'5" person who flies often enough for it to bother me but not often enough to shell out an extra $100 for 4 more inches, I have begun forcing my knees into the seat on front of me for the first 15 minutes of the flight. This prevents the person in front from reclining without using gadgets like the one in the news recently. Flying as a tall person is already a terrible experience and I wish airlines would take height into consideration when dishing out emergency row seats but I realize that would cut into their profits. Still, I paid for a certain amount of space for my flight, as did the person in front. The difference is that the person in front did not pay for extra room which is essentially what the recline space is. No airline says "economy seating, with 25 inches of legroom, a pulldown tray, basic entertainment... and 5 degrees of recline." Nor does it say "economy seating with 25 inches of legroom... unless the person in front of you wants to recline." At the end of the day, as long as I am using only my body to prevent a recline situation, I feel it is my right as a passenger to defend my legroom, even if it causes me 15 minutes of agony while the person in front tries to bash their seat back for those extra few degrees.

Jim Black writes:

Whether I have the "common decency" to not recline doesn't affect the property rights at issue. I agree that the airline has the initial property right to the "recline space," and they can allocate it as they see fit. The more appropriate question, however, is whether the airline has sold the recline space to one of the passengers with their ticket. It is not really an economics or efficient allocation issue as much as it is a simple contract issue.

To my knowledge, the space is not expressly allocated by the airline, but certain airline behavior implies that the space is part of what is sold to the reclining passenger with their ticket. For example, on seating charts the row in front of the e-exit row and the last row of the plane are often marked "non-reclining" and those seats may sell for less money. Even if not sold for less money, a passenger may make a decision to take a different flight or airline rather than get stuck with the non-reclining seat. Whether I ultimately decide to recline or not, I feel that I bargained (and paid) for that right.

The airline could, of course, make it clear that the right to the recline space is not part of my ticket, but they should then fully disclose that allocation to me before I buy my ticket or I may argue that they have already transferred it to me (don't worry, I wouldn't argue with flight personnel giving me direct instructions, but I might ask the airline for a partial refund).

Eric Hosemanb writes:

I'm tall enough to be affected by someone reclining in the seat in front of me. In fact, I'm tall enough that just sitting behind an upright seat can at times be uncomfortable. Yet I have never sat behind someone who chose to recline so far that I felt put upon or uncomfortable enough to say or do anything about it. In my relatively limited flying experience, I haven't seen many aggressively reclined people, so my thinking about property rights on a plane might start from the position that the amount of reclining is optimal, given that space is scarce and people are in general smart enough to know this.

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