Yesterday saw the publication of the excellent Behavioural Economics Guide, 2024, and the first three articles I came upon seemed to have one word running through them like a stick of Blackpool Rock, ‘Fairness.’ Not as a judgemental term, but as an important component of human behaviour, and worthy of a chapter in the playbook of any organisation seriously seeking to succeed in The Business of Pleasure.
The first piece dealt with experiments showing how output is reduced if a workforce believe that the management are either treating them unfairly, or, perhaps more surprisingly, treating other colleagues within the organisation unfairly.
The second article looked at the political arena, and the ‘submerged workings’ which can lead to both unfair expectations of the electoral system (magnified by the media and social media when things inevitably go wrong) and unfair, knee-jerk, appraisals of those holding different political views to ourselves (leading to ill-informed judgements and polarisation).
The third piece looked at how consumers respond emotionally (rather than intellectually) to price rises, and the impact of pricing perceived to be unfair. Something we’ve heard a lot about recently in The Business of Pleasure. The article lists consequences of this perceived unfairness as follows:
Perceived fairness affects repurchasing i.e. exploitative pricing drives churn;
Unfair pricing erodes trust and thereby longer-term enterprise value -beyond the direct sales impact, there’s always additional collateral damage.
The public’s poor opinion can cause industry-wide problems such as more legislation, an upset regulator, and so on.
This autumn the UK government will launch a consultation on consumer protection measures around the resale of tickets and dynamic pricing. If the findings result in recommendations for the enhanced oversight and enforcement of the ticket resale market, the question will then be how they plan to budget for the policing of this multi-national enterprise at a time when the national welfare provision is being cut dramatically. One possibility is that they may revisit the CMA’s suggestion that an Industry Levy be charged to pay for the enhanced oversight and enforcement, similar to that imposed on the UK Betting Industry. Which, in pursuit of fairness, may have the unintended consequence of persuading the less-scrupulous players in the market to charge even higher prices to the consumer to cover the additional costs involved in circumventing any additional legislation.
But then again, fairness is never as straight forward as it seems.
A recent Korean study (published 9 Sep 2024) examined how unfair treatment can spread to others through a phenomenon known as pay-it forward (PIF) reciprocity. This originally described the spread of benevolence, where someone’s act of kindness can lead to acts of goodwill in the recipient and thence forward in a chain to others. However, recent studies have expanded this concept to fairness-related behaviours, both positive and negative.
In Korea, the term “Taeoom,” literally translates to ‘burn to ashes,’ and relates to the ‘physical and psychological bullying of newly employed nurses by senior nurses.’ And
it is apparently a big issue over there. The main aim of this latest study was to determine if the degree of unfairness was influenced by hierarchical status. The results revealed that participants were inclined to act more generously towards those of a higher status, despite prior instances of unfair treatment, whereas a tendency towards harsher treatment was directed to those of a lower status. Not very fair, but is it really that surprising?
On a more positive note…
A Chinese study, published last month, looked at how a sense of fairness is positively developed through physical exercise. Past studies have shown that perceived social support contributes to the development of a sense of fairness, and physical exercise can be a crucial means of enhancing social support through increased interpersonal relations and interactions… ‘which in turn allow access to greater social and emotional resource.’
Figures published in June 2024 showed that there were 10.7 million gym members in the UK, a 41% increase in people taking up membership since 2023. Currently, 15.9% of the UK population are gym members, and whether intentionally seeking social support, or merely fab abs and biceps, it is intriguing to think that we might be becoming a fairer nation, as well as a fitter one, with all those hours spent straining muscles and sweat glands on the country’s treadmills. Perhaps that was what the visionary William Blake had in mind when he wrote:
“And was Jerusalem builded here. Among these dark satanic mills.’
Copyright David Thomas 2024
ALL RIGHTS RESERVED
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