Tired of parents picking their children up after hours, a school in Epping, Victoria has introduced a $10 late fee. Makes sense. People hate fees, right?
So why is it more likely to increase lateness than reduce it?
In their seminal study, researchers Gneezy and Rustichini set about studying ‘deterrence theory’ as it related to the late collection of children from daycare.
In theory, a fine should deter lateness. What they found was the opposite.
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Across 10 daycare centres in Israel, Gneezy and Rustichini monitored late collection for four weeks to establish a baseline. They then introduced a fine (about $4.65 at the time) in six of the centres for parents who were more than 10 minutes late.
Over the next 12 weeks, and counter to what deterrence theory suggests, rates of late collection increased.
At first, the number of parents who were late increased sharply, before stabilising at this new higher rate.
The researchers hypothesise the fine changed the relationship between the parents and the staff. When there was no fine, the parents felt guilty for keeping the staff back late and tried hard not to let it happen.
When the fine was introduced, the parents didn’t need to feel guilty because they were paying for it. The relationship between the parties went from being a social contract (‘I don’t want to let you down’) to a commercial one (‘I am entitled to do what I want because I am paying for a service’).
Don’t assume people will behave in a way you expect
The daycare study is a stark reminder that people don’t always act the way we expect. It means you might invest in a strategy to change customer or staff behaviour, only to see it backfire on you.
Some other examples of policies that have resulted in the opposite behaviour include gift cards, shopping bags and annual leave.
Gift card expiry extension
The assumption was longer gift card expiry dates would mean more people redeem them. The NSW government has legislated on this basis, extending the minimum to three years.
In reality, when given three weeks to redeem their cards, 31% of people did so, whereas only 6% who were given eight weeks bothered.
Reusable bag bonus
The assumption was paying people to use reusable shopping bags would decrease the use of plastic.
Unlimited annual leave
The assumption was that giving staff unlimited annual leave would mean they take too much.
However, startup camera business Tiggertrap documented its experience and found staff took less, not more, annual leave because they didn’t want to be seen to take advantage.
There are predictable patterns to behaviour
Assuming you know how people will respond to an initiative is clearly not the best approach, but you can get smarter about anticipating what they’ll do.
People’s patterns are what behavioural economics is all about.
By understanding how we are wired, you can get much better at predicting how to influence outcomes and overcome the risk of your plan backfiring.