Meet Paul Feldman. He’s a former defense analyst who decided to go into the bagel business. He got the idea after years of providing his co-workers with bagels – see he would go off in the morning, bring bagels and cream cheese into the office and then leave a cash basket for people to pay him back. In 1984, his research institute fell under new management and Paul decided to leave. He then started a new business delivering bagels to offices and instituting the same honor system – this was a great business plan and he was delivering 8,400 bagels a week to 140 different offices. Being an economist and all he kept detailed statistics regarding payment rates and how those differed amongst different types of companies.
Despite all the attention paid to rogue companies such as Enron, academics know very little about the practicalities of white-collar crime. There are no good data. A key fact of white-collar crime is that we hear about only the very slim fraction of people who are caught cheating. Most embezzlers lead quiet and theoretically happy lives; employees who steal company property are rarely detected.
What did Feldman discover? That larger companies have lower payment rates than smaller companies, and that executives steal more than lower level employees. He also discovered that payment rates go down around holiday seasons and go up when the weather is nice. He also noted an increase in payment rates after 9/11.
This was presented in the Sunday Times and is an excerpt from Freaknomics, a book written by economist Steven D. Levitt and journalist Stephen J. Dubner. You’ll hear about this book soon, especially in light of Levitt’s controversial linkage between the legalization of abortion and a reduced crime rate two decades later. However, I figured for now we’ll just talk bagels and white collar crime. That’s Jewlicious enough for me.