Tag Archives: experiments

Fine or No Fine

While the Rhubarb Upside-Down Cake is baking in the oven, I’m finally writing this long-due post. A good friend of mine was visiting San Francisco back in Feb and I thought about writing this post, but one thing led to another and my well-planned “so-my-friend-visited-from-Israel-last-week” intro was no longer appropriate. That is, until he surprise visited last week again! So here we go again…taking action before it’s too late this time, because its a very fitting introduction to the study I want to talk about which was done in Haifa, the city where he’s from.

I’ve read this research a while back. It’s a great example of how the traditional economic incentives of giving people money or making people pay for something not leading to the action/behavior you want.

So, here’s the problem. Parents are often late to pick up their child or children from daycare in Israel. It’s not really a problem that my friends and I have to think about at our stage in life, but walk with me. Parents are supposed to pick up their kid from daycare at 4pm, but probably because of work and other commitments (or because they’re Israelis?…they can be late sometimes), they’re often running late. They came up with a solution: lets add a small fine to nudge parents to be on time. The fine will be 10 Israeli Shekel, which is around $3 USD, if the parents are more than 10 minutes late.

They ran an experiment with 10 daycare centers around Haifa – 6 of them were randomized to introduce the fine, the rest were not to introduce the fine. And then the researchers observed for 10 weeks – what happened?

There were more parents who came late after the introduction of the fine, than at daycares without the introduction of the fine.

What? The fine was supposed to reduce the number of lateness, but it surprisingly went the other way and increased it.

Alright, well, that’s not great. Lets reverse it then. We don’t want to increase lateness, so lets put it back to normal. On the 17th week of the experiment, they removed the fines so that all the 10 daycares had no fine again. They found that the effects persisted – meaning that parents who were late with the fines remained late after the fines were removed! There were more parents arriving late to the daycares that previously had the fines even after the fine period was over…ahhhh!

 

Why did this happen?

The researchers hypothesize that it’s because parents and the daycare had an “incomplete contract” when it came to being late for pick-ups. This means that the exact consequences of arriving late were not specified. Without an explicit rule, some parents might feel that they shouldn’t be late too many times, and they’re not sure how the school will handle these situations. However, with the introduction of the fine, parents are now thinking “I’m paying for it, so its okay I’m a few minutes late! They’re taking care of my child.”

That’s just one possible explanation. In reality, the researchers were so surprised by the results that they wrote, “the possibility of an increase in the behavior being punished was not even considered” in the existing literature. And thus lies the importance of running experiments and testing whether your hypotheses are right or wrong, because we could sometimes surprise ourselves.

Much of this could be culture specific (having worked with an Israeli, I can attest to significant cross-cultural (uh, hiccups?) differences) or it could be because the punishment is not severe enough. Either way, this study humbles us to be fascinated by behavioral research because you can implement some change, hoping for one result and have it go completely the opposite way! Maybe similar to me putting rhubarb, sugar, butter, flour, into the oven hoping for a rhubarb cake and then have it turn out…hm. I guess someone might hope for chocolate cake instead.

See you again soon my friend!

Love,
Steph

follow me on instagram (@brainandthewind) to see the pictures of the rhubarb upside-down cake!

Source for study: Gneezy, Uri, and Aldo Rustichini. “A fine is a price.” The Journal of Legal Studies 29.1 (2000): 1-17.

Here’s the graph with the main result: fine is a price graph

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(Dis)Honest: Do you Lie?

Of course you do. Everyone lies. Everyone openly admits to lying. Yet, we still think of ourselves as perfectly good, lovely people. Hm. This topic has intrigued Dan Ariely, a behavioral economists and psychologist to study it in depth and to subsequently write a book, direct a documentary, and create an online project about it.

The book, called Dishonesty: The (Honest) Truth about Dishonesty attempts to explain how people cheat. One of the main findings is that few people in society cheat a lot (think: WSJ front page), but a lot of people cheat a little (think: you, me, him, her, etc). The economic cost of everyone cheating a little bit actually adds up to be so much greater than the cost of those few individuals who make it to jail cheating a lot at once.

In his studies, Dan Ariely and his team at Duke’s Center for Advanced Insights tried many different ways to get people to cheat. For example, they asked people to solve a set of math questions and told them that they would be paid for how many questions they got correct. After time is up, subjects were instructed to count how many questions they got right, walk to the front of the room, SHRED their answer sheet, and then verbally report how many they got correct. The researchers did not and will not know what their real score was – did they cheat?

What they found was that 90% of people cheated. 90%!!! Almost everyone was okay with cheating on that math test. I’m sure if you and I were in that experiment, we would have cheated too. They tested this effect across gender, cultures, age, and found universally the same result.

There are many other interesting things that Dan Ariely has done and I’ll outline a few here:

  • The documentary with the same title as his book. I personally really liked it. It’s a little long (~1 hour 45 mins), but it was filled with story after story of interesting people who started a small lie, and then it over time snowballed into these HUGE lies that went out of control. They ended up going to jail and/or losing everything. If anything, it served to scare me about the consequences of lying.IMG_4353
  • He spoke at several Ted Talks (this link is for the dishonesty one) that you might want to check out. I’ve had the fortune of listening to Dan speak several times now, including last week at Harvard Kennedy School of Public Policy and he’s a great speaker. He has a knack for holding his audiences’ attention through his stories and jokes, and engaging his audience while revealing stunning facts (e.g. the one about 90% people lying). Highly recommend it!
  • Irrational Card Game is on Kickstarter now. His lab is full of creative people and this is one of the products they came up with. It’ll be a fun way to learn about behavioral economics in general and looks super fun! pb ordered me a set and I cannot wait to play it! 🙂
  • Phone apps to help you. This is news to me as I was researching about this blog post. They made several phone apps with fun surveys like “what is the best pick up line you know”; there’s another one that looks like it targets procrastinators. Excited to check these out!

I’ll be in Chicago next weekend for Halloween 🙂 and move-out 😦

Have a great week ahead,

xx Steph