Dear Economist: Do loyalty schemes damage the economy?

Frequent-flyer programmes are very popular here in Australia, where people often travel long distances for work and can subsequently be rewarded with large perks by selecting their preferred airline ahead of cheaper offers from other carriers – and to the detriment of their employers.

I am sure the airlines must benefit from all of this, but what about the rest of the economy? Are we encouraging an inefficient market by signing up to loyalty programmes?

Oliver Jones, Perth, Western Australia

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Tim Harford’s blog

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Tim, also known as the Undercover Economist, writes about the economics of everyday life.