Writer Stephen J. Dubner and researcher
Steven Levitt of the University of Chicago - who are collaborating on a book about the economics of baby names, cheating, crack dealing and real estate - have an article in the
New York Times [reg. req.] called "
What the Bagel Man Saw," which tells the true story of an economist-turned-bagel-dealer who studied the results of his own business's honor system to produce one of the first documented analyses of small-scale white collar crime. Yes, according to Dubner and Levitt, stealing a bagel is "Enron in miniature." So what factors seem to influence garden-variety "white collar crime" and cheating?
[Bagel man "Paul F."] 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...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. But in the big-office/small-office comparison, bagel crime seems to mirror street crime. There is far less crime per capita in rural areas than in cities, in large part because a rural criminal is more likely to be known (and therefore caught). Also, a rural community tends to exert greater social incentives against crime, the main one being shame.
...Weather, for instance, [also] 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.
The article also relates an interesting account of the honor system during a British strike:
One man cites a story he heard about a toll-collector strike in England. During the strike, drivers were asked simply to put their money into a box. As it turned out, the government collected more toll money during the strike -- which suggests that the drivers were at least fairly honest, but also that the toll collectors had been skimming like mad.
Levitt himself takes economic theory to interesting real-world applications: on
his recent publications page, he has manuscripts on corruption in Sumo wrestling, cheating teachers, the correlation between legalized abortion and crime rates, the economics of inner-city gang drug trade, and many others. He's definitely a researcher to watch in the near future.