If you drive a taxi, it makes financial sense to overcharge customers
Here are some of the ways taxi drivers have tried to overcharge me over the years.
In china, a taxi driver had a meter that was rigged to make sudden jumps: 8.40, 8.50, 8.60, 9.20, 9.30, 10.50
In sydney I’ve had cabs set the meter to the night rate (+20%) in broad daylight.
I’ve had people charge fictitious tolls, drive round in circles, round up the fare by the odd $10 at the end and ask for a flat fare up front.
The thing is, moral scruples aside, from a purely economic perspective there is lots of upside for these drivers and minimal downside.
The worst case scenario is that someone notices, has a bit of a go at you, you protest “I’m a new driver” and you get the same fare you would have got honestly. Zero downside, apart from a bit if embarrassment. Highly unlikely that someone will report you to the authorities.
So it makes economic sense to cheat.
What about the rest of us? Well a series of studies by Dan Ariely looked at how many people cheat in exams if they are given the opportunity. He found that the majority of people cheat a little bit if the conditions are right and it’s very unlikely you’ll get caught. He thought he’d find a group of people who cheated a lot and a group of people who didn’t cheat at all, but no, most of us give into temptation.
In fact if you’ve ever taken a bit of stationery home from work, or been given too much change in a restaurant and not handed it back, or used someone else’s butter in the work fridge, or ever found $5 in the street and not taken it to the police then some people would questions those morals.
So what shall I do about the cab driver who tried to overcharge me on the way to the airport this morning? Shall I try to change his incentives by taking the time to report him to the cab authorities? Or shall I say, well he’s only human and its not like I’ve never ever cheated in my whole life?
Please let me know: what you would do?
Posted by Rob Pyne