I recently ran across an intriguing article that focused on the efficiency element of economics that is often overlooked. Efficiency is a critical element in markets and virtually all other economic exchanges. Having a product or a service is the first factor in any exchange, what do you bring to the equation? That question stumps and frustrates many a student.
College students often do not see it as a primary analysis, they are focused on "finishing the degree." Too often, there is the tendency to focus on a specific goal or objective and to lose appreciation for the forest which is a bigger picture. "Getting a job" is a goal, but enjoying it, growing in it, and delivering are important also. How do you bring value to an exchange?
Efficiency is the next consideration. How do you bring that value? There is illustration in the recent pandemic and all that was discussed regarding virtual work. The world of work remains divided on whether in-person or remote work is "the" answer. Employers and employees are persistently studied regarding their perceptions and preferences in how and where value is delivered.
There is a large element of efficiency in that debate. For an employee, there is likely to be more efficiency perceived in remote work. There is less formality, less commute, less distraction. Employers may see more efficiency in-office presence. There is collegiality, collectivity, and simpler management observation and interaction.
Efficiency is an analysis. And perspectives matter. Each party can make absolutes: "no remote work" or "nothing but remote work." In that, the parties are setting parameters, and rules, and solidifying personal perspectives. Such makes no party either "right" or "wrong." They are merely choices.
The recent article was titled The Era of ‘No-Show’ Fees Is Here—and It’s Going to Cost You. Their point is simple, efficiency is important. Time is compensated in a variety of tasks, vocations, and occupations. Time spent waiting to work on the next job is viewed as less productive or efficient. That said, any downtime can be filled with tasks and preparations. There is value in all time, whether a particular moment is being compensated or not.
The point of "no-show fees" is focused on minimizing or eliminating the challenge of downtime. The author explains the growing trend of charging a penalty for tardiness or absence. Businesses have concluded that in their perspective they are not receiving sufficient consideration or respect and their answer is to adjust financially.
Some might perceive a cancellation or no-show fee as the business being compensated for the time it set aside for a particular customer. If you make an appointment to be coiffed at noon on Thursday, the stylist does not schedule anyone else for that time. Thus, when you don't show on Thursday, there is a hole in the stylist's day. He/she might chance into a "walk in," but might spend your alotted time sweeping, sharpening tools, etc. Thus, it might be productive but uncompensated time.
Others might perceive the fee as penalizing the customer. The penalty of the financial loss might encourage the customer to attend as scheduled, or to at least provide warning/cancellation. Notification could be viewed as a simple courtesy, or as an element of the economic exchange, a "value."
The recent article says that such "no-show fees" have long been a fixture of some few high-end providers. But, the trend seems to be encompassing an increasingly mundane population of providers. There is discussion of a barber that charges $50.00 for a haircut, and $100.00 as a penalty if you miss the appointment.
It appears that the real change is in technology. With the advent of the "online" appointment process, there is an ease and simplicity for the "no show fee." The provider requires a credit card to make the reservation and charges the card in the event they are not satisfied. The provider is thus in charge and covered. The provider is exacting a degree of control and convenience as part of the exchange.
This is not limited to the online instance, however. I recently overheard a lamentation of making a dinner reservation by telephone. The conversation involved reciting a card number and a review of multiple rules including: show up late (any of your party), there is a charge, cancel after this time, there is a charge, and the litany went on.
There is so much convenience in this world and every bit that one person has is so much that another cannot. In the haircut or restaurant examples, they are striving to fill their shift/tables with paying customers. They are seeking to avoid downtime. They seek efficiency. Their attainment of efficiency is at the cost of the customer giving up some convenience and efficiency (the ability to simply "no show").
According to the data, there is a notable increase in this new "fee" paradigm. The question is whether the customer will persist. Faced with such a proposal of fines or penalties, some customers will simply defer. Is the barber or restaurant down the street just as appealing and available without the same "no show" risk?
A barber losing $50.00 for a haircut charging $100 for the cancellation? A customer "banned" for cancellations? Will customers accept such rules?
In the end, the article refers to the trend as "the Uber-fication of the world.” The perception is that paying in advance and taking the risk of an unsatisfactory service or product is something to which we will all adapt, which we will accept, and which will become normal.
In the end, the desire for efficiency is admirable. But economic exchanges are in fact exchanges. The consumers who agree to such rules and penalties are doing so voluntarily and should therefore not complain or lament. However, businesses will perhaps struggle with customers who decide that they are not willing to risk their $100 on making such an appointment. Some customers will keep the convenience and simply use other competing providers.
The fact is that economics is an exchange of value. We each decide with whom we will enter such exchanges. Providers and customers are all free to have their own preferences, rules, and even penalties. Time will likely see adaptations, adjustments, and experimentation. The customer who will not agree to a $100 penalty for missing a $50.00 haircut appointment might just agree to a $20.00 penalty.
Some customers will agree to no penalties, others to the 200% penalty that makes an unproductive barber more profitable than one cutting hair. But, each business and consumer will make their own assessments and decisions. The world is changing, consumption is changing, and the rules of exchange are changing.
Value. What is the perceived value? Students would do well to consider that all economics is an exchange of value. As a business or consumer, what value do you bring to the exchange? Are you a commodity faced with many alternatives? Or, are you somehow exemplary or exceptional and able to demand concession and accommodation? It is an exchange, and the "no show" is not really different from the remote work analysis. The point is recognizing, valuing, and choosing value.
Another point might be courtesy. If one is going to be late, or fail to appear completely, would the courtesy of a telephone call really be that much of an imposition in the 21st-century? Not speaking for the masses, I can assure you that doctors, lawyers, judges, and mediators would appreciate the consideration of a quick call.
