Economics is about maximizing happiness. So it's no wonder that we can see a lot of good economics in the happiest place on earth. But even in Disneyland (specifically, Tokyo Disneyland) there is room for improvement.
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Start with the economics that Disneyland gets right.
Disneyland is very good at price discrimination. Price discrimination is when a firm charges different prices to different consumers. Tickets are cheap for kids aged 12 to 17, even cheaper for kids aged four to 11 and free for kids under three. Only adults face the standard price. Tickets are cheaper for people with a disability and tickets are cheaper on weekdays.
Price discrimination sounds bad, but it's good economics. Some people have a lower willingness to pay for tickets to Disneyland, usually because their income is lower. Charging these people standard prices is bad for everyone: it's bad for the people who would like to go to Disneyland but can't afford to, and it's bad for Disneyland since, collectively, these groups are a large market that could be worth lots of money if Disneyland was to be more flexible on prices. By having different prices for different people, happiness is maximised.
Disneyland also price discriminates in the opposite direction. Some of the more popular rides at Disneyland require you to line up for more than two hours. Luckily, Disneyland came up with a solution.
Disneyland lets you pay $15 per person to skip the queue. Again, this is great economics since some people (like me) will be unwilling to line up for that long while others aren't that fussed. It again aligns prices with people's willingness to pay.
But is this ethical? If everyone had the exact same income and some people chose to devote more of that income to skipping queues than others, then most people wouldn't see a problem. But what if the only people who can afford to jump the queue are rich people? Are we comfortable having rich people skipping ahead of poor people?
The first point to make is that, if you're in Disneyland, you are already relatively rich. It's also a slippery slope. By definition, rich people can (and do) consume more than poor people. Should we ban business class on planes? Should we ban luxury cars? Should we have fixed amounts that people are allowed to spend on consumption goods in any given year?
Disneyland has another option for skipping the queue, too: the "single rider line". If you're willing to fill an empty seat on the rollercoaster and ride on your own without your friends, the waiting time drops from hours to minutes.
Again, this is good economics. It lets people design their Disneyland experience around their own cost-benefit analysis. It lets people weigh up the benefits of riding with friends versus their tolerance for standing in queues.
It also allows Disneyland to maximise its efficiency. It's the same reason it offers cheaper prices on weekdays: it wants to spread out demand as much as possible so it can get as many through as possible.
There are lots of other examples of good economics in Disneyland. It has an app that tells you the waiting time for every ride, event and restaurant in the park - great for efficiency by removing information barriers.
It also has separate lines for different Disney characters which, if nothing else, lets you see the relative "price" of each. Turns out, a photo with Minnie Mouse is worth two Donald Ducks and a photo with Mickey Mouse is worth three Donald Ducks.
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But there are areas where Disneyland gets the economics badly wrong, which, for the happiest place on earth, means it is not delivering as much happiness as it could be.
To put it bluntly, the food, drinks and souvenirs in Disneyland are pretty lame. The food options are limited and not great, and you have to line up for it, too. Snacks are expensive and, while there are lots of souvenir stores, they all seem to sell the same limited range of things.
In economics, high prices, limited supply, limited consumer choice and a lack of innovation all point to one thing: a lack of competition. And it's no surprise why this is the case: most of the stores and restaurants in Tokyo Disneyland are owned by the park, with only a handful outsourced to third parties.
When businesses don't face any competition, they do the same thing: they restrict supply, charge higher prices, offer limited choices to consumers and don't innovate.
The contrast could not be starker. Outside the Disneyland gates in Tokyo, you can buy whatever you want, whenever you want. Want cake at 3am? There's a vending machine for that. Inside the Disneyland gates, it's the complete opposite.
Disneyland needs to inject competition into its economy. It should allow any business to open shop within its gates and charge rent for those spaces. Restaurants and shops will come in and compete with each other. The winners will get all the customers and expand their operations. The losers will close-up shop and new competitors will come in, just like what we see in a healthy economy.
As my favourite entrepreneur and motivational speaker - Scrooge McDuck - says: "I made my fortune by being smarter than the smarties and tougher than the toughies". If Disneyland wants to be the happiest place on earth, it best start with more competition.
Adam Triggs is a partner at the economics advisory firm, Mandala, a visiting fellow at the ANU Crawford School and a non-resident fellow at the Brookings Institution.
Adam Triggs is a partner at the economics advisory firm, Mandala, a visiting fellow at the ANU Crawford School and a non-resident fellow at the Brookings Institution.
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