The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life

by Gneezy, Uri

  Using buttons on your keychain, you command the side doors of the van to open and present you with a small lift. After maneuvering your wheelchair onto the lift and into the van, you swivel it into the driver’s spot and insert your key. Taking careful grasp of the hand controls, you maneuver the van out of the parking spot, through the lot, and onto the street.

  After a fifteen-minute drive, you pull into “Guy’s Auto Body,” one of the shops you have found with a designated handicapped parking space. You lower the lift on your van and try to push your way through the uncleared snow and onto the wheelchair ramp. The ice forces you to struggle, but you press on. Eventually you make your way to the top of the ramp and tap on the door of the repair shop.

  If this sequence of events is painstaking to read, think about what it’s like for millions of disabled people who expend much more energy taking care of daily tasks than able-bodied people can possibly imagine.

  Only a handful of studies have looked into discrimination against the disabled—which is a little surprising, given the fact that as the number of elderly people rises around the world, so does the number of people with disabilities. Joe, of course, was our secret agent. For him, every errand is a battle. Even after he struggles to get his van to the repair shop, he faces the challenge of getting a ride home, because many taxis can’t accommodate wheelchairs.

  How many price quotes do you think Joe would get for repairing his car? Would he drive from one shop to another, looking for the best deal? Or would he be forced to settle on the first quote for the sake of much-needed convenience?

  When you go to an auto repair shop, you usually don’t know what the work will cost (unless you’re getting some routine work done, such as an oil change or a smog check). The people at the shop base their estimates on the level of work needed, as well as their own discretion. For this field study, we asked several men between the ages of twenty-nine and forty-five to act as our secret agents. Half of these men were like Joe—they used wheelchairs and drove specially equipped vehicles. We sent all of them to get price quotes to fix different cars. In half the cases, the disabled men drove into the body shop asking for a quote. In the other half, the able-bodied men did the same thing with the exact same vehicles.

  On average, the disabled men received price quotes that were 30 percent higher than the able-bodied men. Ouch. But why?

  For an answer, put yourself in the shoes of the person behind the counter in the mechanic shop. You see Joe wheeling into the office. The dialogue goes something like this:

  YOU: Hello! Cold out there this morning!

  JOE: (grunts) Right. My van needs some work. It’s out there (pointing). Can you give me an estimate?

  YOU: (eyeing Joe) Well, we’re pretty busy, but I’ll ask them to take a look as soon as they can.

  JOE: That’s okay. I’ll wait.

  While Joe rolls his chair into the waiting area, you are making a mental calculation. You feel sorry for him, understanding that it must have taken quite an effort to get to your shop. Joe clearly needs a break. On the other hand, what are the chances Joe would go to all this trouble to drive to another repair shop for an estimate?

  Half an hour later, the repair folks call you with a time and cost estimate about the work. You tell Joe it will cost $1,415. That’s 30 percent more than you would charge an able-bodied person. In fact, doing a similar exercise dozens of times with our testers visiting mechanics reveals the data pattern we discussed above: the disabled, on average, receive price quotes about 30 percent higher than the nondisabled.

  Are you, the mechanic, reacting to incentives, or do you just dislike helping, and serving, disabled people? Our intuition was that the mechanic recognized that he had a captive customer. Joe had to go to a lot of trouble to get his van repaired, so the mechanic decided to charge him more because he assumed that Joe wouldn’t go through the hassle of collecting another price quote. In other words, the mechanic thought he could charge more and get away with it when he was dealing with a disabled person.

  To test our intuition, we sent an entirely new group of testers out for price quotes. This time, we had both the disabled and abled testers mention seven simple words:

  “I am getting three price quotes today.”

  Guess what happened?

  This time around, both the disabled and the abled testers received identical offers. So the case was closed. The mechanics were making a simple economic calculation. By propping up their sales in this way, they were engaging in classic, blatantly unfair, economic discrimination by taking advantage of the customer’s disability. The mechanics were reacting to the incentives they were facing—in this case, the opportunity to make more money.

  As we have tried to show, economic discrimination is based on simple calculations. For various reasons, people and companies may believe that they have incentives to discriminate between individuals. Amazon.com may think that it should increase the fee some customers pay in order to meet shareholders’ profit expectations. Insurance companies may increase premiums for smokers because they view it as fair for people who take health risks to pay for those risks. Mechanics may overcharge disabled drivers to stay afloat. And the reason that Uri’s wife was not hired had nothing to do with dislike of women: it had everything to do with the expectations regarding her on-the-job availability. This type of discrimination is not based on animus. It is based on economic incentives. To combat it, the person who is targeted for unfair treatment needs to signal that he or she is like those people who are not being discriminated against.

  In the next chapter, we’ll dig deeper into the issue of animus and economic discrimination by visiting new markets, and close with some reflections on addressing discrimination as a society.

  CHAPTER SEVEN

  Be Careful What You Choose, It May Be Used Against You!

  The Hidden Motives Behind Discrimination

  When we think of how far Western civilization has come since the early twentieth century, we can’t help but be impressed. If our grandfathers were born today, it’s unlikely that they would have encountered anything like the widespread animus of their youth. It is, indeed, heartening to see animus on the wane. But we are a long, long way from having an equitable society, and the rise of economic discrimination is certainly muddying the waters. In some cases, economic discrimination makes it easier for animus to hide in its folds.

  Why? Because while most of us would agree that animus is bad, we’re likely to disagree about whether some forms of economic discrimination are acceptable. Some kinds of economic discrimination may seem justifiable, others less so. Some types of economic discrimination are offensive; some are not. Some deserve legal censure; others do not. Some are based on incontrovertible facts; some are based on cultural stereotypes and beliefs. And as we have tried to suggest, sorting out what is acceptable from what isn’t is often tricky.

  Let’s return for a moment to our example of a hypothetical roofing contractor from the previous chapter. If he happened to be facing stiff competition in the marketplace, and he was running into severe money problems, he might feel justified in charging his CEO client more for his work. In such a case, we might feel more lenient toward him because, after all, his motive would not be based on simple greed, but on pure survival. But if he charged more because he was saving up for a yacht, we might feel differently.

  Many of us feel that if a person like this roofer discriminates to avoid a financial or other kind of loss, that’s okay. But if the person discriminates just to enhance his bottom line, we think he’s a greedy profiteer. When you sit back and think about it, however, “loss” and “gain” are simply two different ways of framing, as we showed in the education chapters. Any gain can be framed as a loss—and vice versa, if one is creative.

  In other cases, economic discrimination may have to do with the very sensible-seeming motive of reducing risk. One might think that charging smokers more for their health insurance makes sense,1 and that it also makes sense to charge men mo
re for auto insurance, or that rental car companies have every right not to rent cars to drivers under twenty-five years of age. Though such blanket policies may seem unfair to safe male drivers and excellent younger ones, the insurance company argues that they are necessary in order to control costs. Likewise, obese people whose employers cover insurance may have to pay higher health insurance premiums than other employees. And some airlines, such as Air France and Southwest Airlines, charge for two seats rather than one if the passenger in question is too big to get into a seat with the armrests down.

  For an obese person, it could be humiliating to have to be confronted with this situation at the ticket counter. When Kenlie Tiggeman tried to buy a ticket at a Southwest Airlines counter, she was asked several questions: “I was asked what size clothes, and how much I weigh. I gave answers in front of a gate full of people, some of whom were snickering,” Tiggeman said.2 While Southwest’s policy may make economic sense from the company’s standpoint, an obese person could easily view it as animus-based.

  Let’s say you are a hiring manager at a construction company, and you’re looking for a foreman. Does it make sense for you to refuse to interview women for the job on the basis of your belief that a man would be more qualified?3 After all, limiting the candidate field to those who have a good chance of fitting in with the rest of your crew saves you and such applicants time, effort, and money. That’s a perfectly good argument for economic discrimination, but it’s also blatantly sexist. Would you simply decline to interview female applicants, just as employers ignored John when he went on the academic job market in 1995?

  Consider another kind of discrimination—that against gays. Although this issue has become more topical as American society has evolved, anti-gay discrimination has a long and storied history. Societies have criminalized homosexuality for centuries, as Leonardo da Vinci found out when he was arrested for sleeping with a male prostitute. The Nazis rounded up gays, castrated them, and used them as slave laborers and as fodder for Dr. Mengele’s nefarious medical experiments. Between 1933 and 1945, German police arrested approximately 100,000 men just for being homosexual.4

  Today, despite the persistence of angry screeds against gays by a shrinking minority, and though many states have made it illegal for homosexuals to marry, homosexuality is no longer considered a crime in the United States. But which kind of discrimination against gay people is more prevalent in markets: Is it the animus-based kind that drives hate crimes and social isolation? Or is it the economic kind? Or some combination of these?

  In our continuing quest to get to the bottom of discrimination, we decided to look at the behavior of people in a benign, neutral, everyday kind of market environment—a car sales lot. Car sales are some of the most common and important transactions in the economy for most individuals, as roughly sixteen million cars are sold annually in the United States. In addition, the stakes are high, but the transactions are relatively short, making them the perfect place to run field experiments in which the participants don’t know that they are being observed.

  Would You Sell a Car to Those Guys?

  Compare the following scenarios:

  Scenario A:

  It’s a sunny autumn morning at a Toyota dealership in Chicago, and the new Corollas are just in. Bernard, the salesman, looks forward to earning some handsome commissions that day.

  Around 10 A.M., two young men walk in. They head straight to the shiny, dark-blue Corolla CE sedan in the center of the floor. “Tom,” says one to the other, “didn’t I tell you? Isn’t this car just the most beautiful thing? Check out that color!”

  “You’re right, Joe,” says Tom, peering in the window at the grey leather seats and taking note of the sunroof. “I think this will be perfect.”

  As the two men investigate the car, Bernard approaches them. “You guys like that car, I see,” he says. “Check this out.” He shows them the heated seats and other features, and then invites them to enjoy a cup of coffee while they discuss the virtues of the car.

  Scenario B:

  On the same spring morning, Jerry and Jim walk into the Honda dealership down the street. As they enter the dealership, they hold hands in an open display of affection. They walk over to the new Honda Civic CE in the center of the floor.

  “You know, Jer,” says Jim, inspecting the sticker listing the car’s facts, figures, and price. “This is really just the right car for us. It’s compact, it gets great mileage, and these things run forever.”

  “No kidding,” says his partner, opening the passenger side door and sniffing happily. “And don’t you just love that new car smell?”

  The dealer, George, watches the couple purr over the car for a minute, picks up a brochure, and then approaches them. “Looks like you really like this car,” he says coolly. “It’s brand new on the market. It’s a pretty good deal at that price. Here’s a brochure. I’ll be right back.”

  In this experiment, we worked with our colleague Michael Price in assigning pairs of men to pose as our secret agents: straight men acting as friends, straight men playing loving partners, gay men acting as friends, and gay men portraying partners. Each of these pairs visited various car dealerships to negotiate the purchase of a new car. Every “couple” bargained at different randomly determined dealerships, and every dealership was approached twice. We observed not only what kinds of offers the various “couples” received, but also how often they were offered niceties like a test drive and a cup of coffee.

  Our results showed that the people acting as gay partners got shabbier treatment. Many dealerships rejected offers from buyers they perceived as gay, while accepting identical offers from our straight buyers. More than 75 percent of the time, dealers quoted the gay couples higher initial prices; when the gay couples extended counter offers, they were much more likely to be rejected and the salespeople ended the negotiations.

  Still, these results weren’t consistent across the board. In some dealerships, the gay couples received the same polite treatment as the straight couples. They were offered cups of coffee, test drives, and other amenities.

  As it turned out, treatment of the gay couples depended heavily on the race of the salesperson. We found that minority salespeople (either African American or Hispanic) were much more likely to discriminate against the gay couple than their majority (white) colleagues. When a gay couple inquired, minority salespeople made initial offers that were about $1,233 higher on average than majority salespeople made. In fact, minority salespeople seemed to want to limit their contact with the gay customers, not offering test drives or the opportunity to purchase a less expensive car—implying they were so put off by the couples that they were willing to forgo a nice commission in exchange for not having to deal with them. (This does not mean that all minority salespeople acted in this way; just that a majority did.)

  One would perhaps think minorities might be more tolerant of differences among people, but we found the opposite held true. They were more likely to forgo the incentives to sell the car when the buyers were posing as partners. One possibility for this finding is that minorities are more likely to self-identify as religious, and many religions view homosexuality as wrong. Religious people, according to some research evidence, are more likely to believe that sexual orientation is a choice rather than genetically determined. According to a 2007 survey conducted by the Pew Research Center’s Forum on Religion and Public Life, black Americans “are markedly more religious on a variety of measures than the U.S. population as a whole.”5 (This suggestion is related to a line of research, including our own, showing that individuals hold more prejudice toward those who they feel have a “choice” in conditions such as obesity and homosexuality—conditions the prejudiced people believe are controllable.)

  Would we discover the same sort of discrimination when it came to race—something that is clearly not a person’s choice?

  Let’s Make a Deal

  Once again, we sent several men out shopping for cars, but this time they
weren’t posing as friends or partners; they were operating on their own with instructions from us. All were middle-aged; half were black and half were white. To get an idea of the settings, compare the following two scenarios, taking note of the differences:

  With a base price of $55,000, the 2012 BMW 335i is expensive, but it is a beauty. A gorgeous burgundy-red convertible with alloy double-spoke wheels and black leather seats, it is a real work of automotive art.

  The salesman, an athletic-looking young man named Richard, smiles at Jim. “Pretty little thing, isn’t it? Care to take it for a drive?”

  “Sure,” says Jim coolly, trying to hide his excitement. This is going to be fun.

  While Richard fetches the key, Jim thinks about the bells and whistles that would add to the price tag—heated seats, active steering, alloy wheels, maybe high-end headlights, which his wife would appreciate on those dark, rainy winter nights.

  Richard comes back with the key, and Jim takes the wheel. As the convertible pulls out of the parking lot and heads toward the highway, Richard takes the measure of his customer. A white man in his late forties, Jim wears khakis and a green parka over a plaid woolen shirt.

  “How long have you been looking around for a car?” Richard asks.

  “For a while now,” Jim says, grinning. “I’ve been thinking about an anniversary present for my wife. She always dreamed of one of these.”

  “I can just imagine her face when she comes out the door and sees this in your driveway,” says Richard. As they drive, Richard asks Jim some polite questions about his wife and family.