Solve the Little Problems First

Fri, 10 Oct 2008 22:12:40 +0000

I wish I had the answer to the big problems we are facing in the financial markets. Since I don't, I'll take aim at a smaller one. With a few months of experience, I think we have enough information to go on to resolve the "should the airlines charge for checked baggage?" argument. (See an earlier installment here.)

The answer: airlines can charge all they want for a checked bag that is too big to carry on. They should not charge to check a bag that is small enough to carry on. This would avoid giving incentives to passengers to carry bags on, where the external costs in terms of delays and crowding are high. These costs were particularly evident on some flights I took a week ago.

That is all. Back to your regularly scheduled financial market meltdown.