The Economics of Cheating
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My latest column on Money & Your Mind over at SmartMoney.com. In this week’s column, I look at cheating cabbies in New York:
In recent weeks, New Yorkers have been shocked, shocked to find out that taxi drivers have been taking them for a ride in both the literal and figurative sense. Using GPS technology installed in cabs a couple years ago, New York City’s Taxi and Limousine Commission discovered nearly two million trips over a 26-month period where passengers were illegally charged a higher out-of-city rate (80 cents per fifth of a mile as opposed to 40 cents per fifth of a mile) for trips within the five boroughs. The overcharges totaled more than $8 million, averaging out to $4.45 per trip.
As shocking as some people find this taxi gouging, however, the real surprise is just how little cabbies were cheating. Those two million overcharged trips made up just 0.5% of the 361 million taxi trips during that time period. With cheating as easy as flipping a switch on their meters, the real question is why cabbies weren’t doing it all the time.
We’re all presented with countless opportunities to screw over our fellow human beings. How easy would it be to shoplift? How easy would it be to dine-and-dash at a restaurant you’ll never visit again? How many office supplies could you theoretically fit in your bag?
Given that, why don’t people cheat far more than they do? While a traditional model of cheating would say that people should be expected to cheat as much as is rational — assessing the chances of getting caught, multiplying them by the penalty for getting caught, and then weighing this against what can be gained by breaking the rules — the truth is that’s not how we work. Instead, research in psychology, neuroeconomics, and behavioral economics has shown that two factors other than fear of getting caught seem to restrain our behavior: our desire to adhere to social norms and our desire to see ourselves as good people.
We like to cheat. We don’t like to think of ourselves as cheaters.
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[...] The Economics of Cheating – via True Slant – In recent weeks, New Yorkers have been shocked, shocked to find out that taxi drivers have been taking them for a ride in both the literal and figurative sense. Using GPS technology installed in cabs a couple years ago, New York City’s Taxi and Limousine Commission discovered nearly two million trips over a 26-month period where passengers were illegally charged a higher out-of-city rate (80 cents per fifth of a mile as opposed to 40 cents per fifth of a mile) for trips within the five boroughs. The overcharges totaled more than $8 million, averaging out to $4.45 per trip. [...]
[...] The Economics of Cheating – via True Slant – In recent weeks, New Yorkers have been shocked, shocked to find out that taxi drivers have been taking them for a ride in both the literal and figurative sense. Using GPS technology installed in cabs a couple years ago, New York City’s Taxi and Limousine Commission discovered nearly two million trips over a 26-month period where passengers were illegally charged a higher out-of-city rate (80 cents per fifth of a mile as opposed to 40 cents per fifth of a mile) for trips within the five boroughs. The overcharges totaled more than $8 million, averaging out to $4.45 per trip. [...]
[...] Friday, I pointed you to my latest column over at SmartMoney, on the reasons we cheat. The hook for the column was the [...]