Tuesday, January 13, 2009

War on Recession's First Casualty

Now that the holiday season has passed, spare a thought for the one casualty of the “War on Recession”: Jdimytai Damour of Jamaica, Queens, New York a guard on duty at the Long Island Wal-Mart store on Black Friday, the day after Thanksgiving when limited stocks go on sale.

He was trampled on by impatient hordes of shoppers who were awaiting the 5 a.m. opening of the store He died of a heart attack as a consequence.

Some of the items on sale at the Wal-Mart store included a $798 Samsung 50-inch Plasma HDTV, a Bissel Compact Upright Vacuum for $28 and Men's Wrangler Tough Jeans for $8. Apart from causing the death of this 34 year old, the 2,000 strong crowd caused injuries to four other people including a lady eight month's pregnant.

This picture from NY Daily News shows the chaos of the stampede that erupted shortly after the shoppers had smashed through the front windows of the store. Even with the suspension of store operations, the arrival of paramedics and the announcement of the store employee’s death on the scene, shoppers were reportedly indifferent to the tragedy, stating that they had waited in line since the early morning of Friday.

This incident highlights the severe impact of employing non-market devices for rationing goods. Economic theory states that aside from the price mechanism, other institutional arrangements may be employed to allow the distribution and allocation of goods to buyers, when say price controls are in place.

One such device is a queue where customers are served on a first-come, first-served basis. Those with a lower opportunity cost of time can afford to spend it waiting in line. Another device is the use of coupons which restores some form of price system, as those in possession of these coupons can trade them with other who might value them more. With excess demand building up whenever price ceilings are imposed, black markets eventually arise to correct for such imbalances.

The Black Friday tradition is I am told a long-standing institution, coming at the heels of Thanksgiving, which is a uniquely American tradition itself. It appears however that with the death of this innocent store employee that the maintenance of such a tradition might be deemed too costly to continue.

At junctures such as these, the community through new policies or store operators themselves may choose to revise such traditions in order to improve safety and avoid the savage herd mentality that it seems to engender among buyers. Behavioral science tells us that human nature causes us to respond to peer pressure in ways that seem irrational: it can cause us to be courteous and civic minded to strangers in certain instances, and it can facilitate such cruel activity as the Black Friday stampede.

One simple way to counteract this and avoid a repeat of this undesirable outcome would be for the store to issue a fixed number of coupons per individual arriving at the front steps of the mall before it opens on a first come, first served basis. This would eliminate the need for shoppers to jostle and physically outmaneuvering each other at the gate.

What other solutions can you think of?

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