Wednesday, April 20, 2005

levitt on bagels and honesty


steven levitt is a crazy guy: an economist that studies random shit like the effects of distinctively african american names on earning potential ( the long term), correlations between abortion and crime rates (inverse), and now: bagel thievery (via kottke's interview):

In 1984, when [paul f.'s] research institute fell under new management, he took a look at his career and grimaced. ''I was sick of every aspect of the whole thing,'' he says. ''I was discouraged. I was tired of chasing contracts. So I said to management: 'I'm getting out of this. I'm going to sell bagels [on the honor system].'''
He had also -- quite without meaning to -- designed a beautiful economic experiment. By measuring the money collected against the bagels taken, he could tell, down to the penny, just how honest his customers were. Did they steal from him? If so, what were the characteristics of a company that stole versus a company that did not? Under what circumstances did people tend to steal more, or less?
...he will say that telecom companies have robbed him blind, and another bagel-delivery man found that law firms aren't worth the trouble. He also says he believes that employees further up the corporate ladder cheat more than those down below. He reached this conclusion in part after delivering for years to one company spread out over three floors -- an executive floor on top and two lower floors with sales, service and administrative employees. Maybe, he says, the executives stole bagels out of a sense of entitlement. (Or maybe cheating is how they got to be executives.) His biggest surprise? ''I had idly assumed that in places where security clearance was required for an individual to have a job, the employees would be more honest than elsewhere. That hasn't turned out to be true.''
He has identified two great overriding predictors of a company's honesty: morale and size. Paul F. has noted a strong correlation between high payment rates and an office where people seem to like their boss and their work. (This is one of his intuitive conclusions.) He also gleans a higher payment rate from smaller offices. (This one is firmly supported by the data.) An office with a few dozen employees generally outpays by 3 percent to 5 percent an office with a few hundred employees. This may seem counterintuitive: in a bigger office, a bigger crowd is bound to convene around the bagel table -- providing more witnesses to make sure you drop your money in the box.
The bagel data also show a correlation between payment rate and the local rate of unemployment. Intuition might have argued that these two factors would be negatively correlated -- that is, when unemployment is low (and the economy is good), people would tend to be freer with their cash. ''But I found that as the unemployment rate goes down, dishonesty goes up,'' Paul F. says. ''My guess is that a low rate of unemployment means that companies are having to hire a lower class of employee.'' The data also show that the payment rate does not change when he raises bagel prices, though volume may temporarily fall.

If the payment tendencies that Paul F. has noted so far might be called macro trends, it is the micro trends -- those reflecting personal mood -- that are perhaps most compelling. Weather, for instance, has a major effect on the payment rate. Unseasonably pleasant weather inspires people to pay a significantly higher rate. Unseasonably cold weather, meanwhile, makes people cheat prolifically; so does heavy rain and wind. But worst are the holidays. The week of Christmas produces a 2 percent drop in payment rates -- again, a 15 percent increase in theft, an effect on the same order, in reverse, as 9/11. Thanksgiving is nearly as bad; the week of Valentine's Day is also lousy, as is the week straddling April 15. There are, however, a few good holidays: July 4, Labor Day and Columbus Day. The difference in the two sets of holidays? The low-cheating holidays represent little more than an extra day off from work. The high-cheating holidays are freighted with miscellaneous anxieties and the high expectations of loved ones.

he's got a book out now too.

(stencil of woman's face in profile is around 20th and chestnut i think...)

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At 8:12 AM, Anonymous Anonymous said...

on the topic...


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