By Steve Kelman

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Returning lost wallets

Lost wallet - shutterstock image number 630865304

Are people more likely to return a wallet they've found if it contains cash or no cash?

I suspect most of our intuitive reactions would be the likelihood of returning the wallet would be higher if it contained no cash than if it did. That intuition grows out of our everyday assumption that if you increase the rewards for bad behavior (in this case not returning the wallet), you will get more of it. It also is in line with the cost-benefit analysis thinking of academic economists and common in lots of public policy discussions. If you want to encourage good behavior, in this view, make it less costly.

In a paper called "Civic Honesty around the Globe," Alain Cohn of the University of Michigan­­­­­­­­­­­­­, Michel André Maréchal and Christian Zünd of the University of Zurich and David Tannenbaum of the University of Utah, did an ingenious field experiment to test this prediction. It was published recently in the prestigious journal Science and written up in a story appearing in the New York Times. If you think about it a bit, this research provides useful advice for public managers.

The researchers brought over 17,000 "lost" wallets to reception desks in post offices, banks, museums and police stations in 25 U.S. cities and over 300 cities outside the U.S. They told the person behind the desk they had found the wallet on the street, adding they were in a hurry and requesting that the person behind the desk "please take care of it." The wallet contained business cards with the owner's name and email address, a key and a handwritten grocery shopping list. Half of the wallets also included somewhat over $13 in cash, half had no cash. The experiment measured how often these people behind the desk emailed the wallet owner about their missing wallet.

What did they find? For 40% of the wallets with no cash, the loss was reported to the owner. (That's a pretty high figure itself in terms of the prevalence of honesty in an environment where dishonesty can't be detected, but it's hard to know whether people with these kind of customer service jobs would be more likely to report than people in general, and the "no cash" condition was just a baseline for the experiment.) What about the wallets with cash? There, actually, more missing wallets were reported – 51%.

The researchers repeated their experiment with a smaller sample but with a larger amount of money in the wallet, about $94. Increasing the amount of money in the wallet raised the percentage reporting the loss to 72%. Lower incentives for honesty produced more honesty.

How was this possible? Why didn't people respond to the incentive of a greater reward for dishonesty with more dishonesty?

Renowned organizational theorists James March and Johan Olsen say it's because people are influenced more by a "logic of appropriateness" than a logic of consequences. The logic of appropriateness guides behavior based on what is seen as being "normal, true, right, or good, without, or in spite of calculation according to a logic of consequences" of what has the highest expected utility.

In deciding what to do, a person following a logic of appropriateness asks, "What kind of a person am I? What does a person such as I do in a situation such as this?" To get better behavior from people, you don't so much manipulate incentives as promote a standard for what behavior is appropriate. In the lost wallet experiment, people were more likely to report the wallet with cash because if they had kept the cash, it would have heightened the feeling that they were stealing, and stealing is inappropriate. With no cash involved, the perception of inappropriateness was lower. Higher incentives for dishonesty, by contrast, reduced dishonesty because they raised perceptions of the inappropriateness of dishonest behavior.

This takes us back to government managers. Again, the normal view is that people respond to incentives, especially material incentives, and if you want good behavior or performance from employees, provide incentives for it. Federal managers are often dismayed that they have fewer rewards and punishments to use with their employees and thus find it harder to get good behavior.

The logic of appropriateness suggests a different approach. You may be able to get better behavior by spreading and promoting the view in your organization that bad behavior is inappropriate -- and that good behavior is appropriate -- than by assuming people have no desire to behave well and punishing or rewarding bad or good behavior. This suggests a different managerial task for those leading workgroups in government.

Posted by Steve Kelman on Jun 24, 2019 at 3:43 PM


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