Thursday, October 8, 2015

Broken promises

An economist once explained the disconnect between longer jail sentences and criminal thinking.  He contended that criminals are not deterred by stiff jail sentences because they suffer from "faulty" thinking, that they are not capable of properly integrating the "discounted" values of potential, future events.  The implication is that criminals are irrational and have defective thinking.

I want to float an alternative idea.  I think "criminal thinking" is a natural and logical strategy (heuristic) when one grows up in an environment where promises are not kept.

Examples

I want to give you some quick sketches of some of my children's friends.

The summer "M" was 14 years old, she was promised $100 a month if she watched her younger sister.  "M"'s younger sister is an absolute pistol.  "M" could not have friends over while watching her sister for 10 hours a day.  At the end of the summer "M" and her mom when shopping for back to school clothes.  When the pile of clothes totted up to $300 "M"'s mother shut the checkbook and said, "There...you are paid."  The mom did not pay another dime for clothing.

"S"'s mom receives a monthly check to support "S".  She promised "S" a new phone when the check came in.  "S"'s mom likes to party.  She made that promise every month for the last six months.  "S" still does not have his phone.

Prospect Theory tells us that we are three times more sensitive to "losses" than to "gains".  Our agony is three times more intense over a loss than the joy we feel at an equivalent sized gain.
Maturity is marked by the ability to delay gratification.  It becomes "rational" to not delay gratification when there there is a measurable chance that a promise will be broken.

Sidebar: When I worked in a large corporation, every division was given a different ROI hurdle.  The cynics laughingly called it "the liars premium".  Divisions that exercised less optimism in their economic projections had lower RIO hurdles than divisions that cooked their business plans.  The irony is that very few projects were unfunded.  Each division cooked the business case just enough to meet the hurdle.  Over time, that resulted in a glacial creeping of the RIO hurdles to the point where they bore no connection to the commercial rate of borrowing money.

The answer would have been to not promote any of the executives until their project had actually delivered the promised RIO for eight quarters in a row.  That would have caused much back peddling.

The broken promises start from the highest levels.  "If you like your health insurance, you can keep your health insurance."  There is not much I can do about the people at that level.  But I can be careful with my promises.  I can promise less and deliver more.  Especially to my children.

3 comments:

  1. Your first mistake is trying to understand the criminal mind. They do not think like we do, and don't respond to stimuli like we do. Sometimes the best we can hope from a prison is to warehouse people who are dangerous to society.

    There is a huge difference between a normal person who makes a criminal mistake and a stone-criminal. The first can be rehabilitated, the second must be warehoused. It's our job to try to differentiate between the two types.

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    Replies
    1. You are much closer to this than I am.

      Can you hazard a rough guess as to the percentage of people in jail or prison that fall into each category?

      Delete
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