Here’s a pair of questions raised by Dan Ariely in his book, Predictably Irrational:
Your school age daughter calls you at work and asks you to bring home a red pencil she needs for her homework.
Q1: You find a red pencil in your company’s supply closet. Would you take it home or would you consider that cheating?
Q2: You can’t find any red pencils in the office but you know you can buy one for a quarter at the office supply store around the corner. You don’t have a quarter but you can find one in the petty cash drawer by the coffee machine. Would you take a quarter and buy your daughter a red pencil or would you consider that cheating?
If you’re like Dan Ariely or me or most people, you think it’s OK to take a pencil from the supply closet but you would never take a quarter from the petty cash drawer.
The value involved is the same in both cases, so why do we think one scenario is OK and the other is not? According to Ariely, it’s about cash. We tend not to cheat when cash is involved. We know it’s wrong to take money. We can’t rationalize the action to ourselves.
The farther we get from cash, however, the easier it is to rationalize cheating. Most of us wouldn’t steal money from a stranger. But we might shade things a bit on our tax returns and we don’t feel too badly about inflating our losses on insurance claims. Ariely concludes that, “When we look at the world around us, much of the dishonesty we see involves cheating that is one step removed from cash.”
So does this mean that corruption is about to skyrocket in Sweden?
For the past several decades, Sweden has been moving toward a cashless society. Banks began charging for checks about 30 years ago. Rather than writing checks, people found it easier and less expensive to transfer money from one account to another, initially by fax, then online, and now by mobile devices like smartphones. ATMs are being phased out. By one estimate, only 900 of the 1,600 branch banks in the country even bother to keep cash on hand.
So how do Swedes pay for things? With blips and chips. You can pay the parking meter with your smart phone. You can transfer money from one account to another with an app called Swish. You can give money to a beggar by swiping a card or tapping a phone. Even Swedish churches use apps instead of collection plates.
The Swedish transition to a cashless society accelerated in September 2009, after the Västberga heist. Thieves in a stolen helicopter smashed through the skylight of a bank-processing center and made off with about $6.5 million in cash. The heist has been romanticized endlessly in Sweden. But its biggest impact was to erode trust in cash. If cash could be stolen so easily – and it was never recovered – why bother with cash? (I happened to walk by the Västberga center, on my way to work, about half an hour before the attack. Yikes!)
In addition to theft, cash is involved with a whole host of nefarious activities – ranging from drugs to weapons to prostitution to payments to illegal aliens. So why not do away with it? Dan Ariely’s data may give us pause – the farther we get from cash, the more likely we are to cheat.
So is Sweden growing more corrupt? At least one estimate suggests, “…cases of electronic fraud have more than doubled in the past decade….” Before giving up cash altogether, the Swedish government should take some baseline measures of corruption and cheating and then monitor them over time. It may turn out that going cashless is much more expensive than the occasional bank heist.
Suellen and I lived in Stockholm for three years and generally loved it. The winters are long and dark but the people are sunny and positive. Taxes are high but services are great. And they write some of the best murder mysteries in the world. Here are some things we’ve found out about Sweden, Scandinavia (Sweden, Denmark, and Norway) and the Nordic countries (Scandinavia plus Iceland and Finland).
They’re innovative — Sweden produces more patents per capita than any other country. Finland is second; Denmark is sixth. The U.S is ninth. In the Bloomberg Survey of Innovative Countries, the U.S. is first. Finland in fourth; Sweden is fifth; Denmark is ninth.
They’re happy — The Danes are the happiest people in the world. Finland is second; Norway is third; Sweden is seventh. The U.S. is 11th.
They’re free (from prison) — Sweden has about 70 people in prison per 100,000 population. The U.S. has 700.
Women are close to equal — Sweden is widely considered the best place in the world for a woman to pursue a career. Iceland usually ranks first in surveys of overall gender equality. Even in the Nordics, however, men still make more money than women.
They’re healthy — On the Bloomberg Survey of the World’s Healthiest Countries, Sweden ranks ninth. Finland is 22nd and Denmark is 26th. The U.S. is 33rd.
They get great vacations — typically six weeks of paid vacation plus various national holidays. If you want to take four weeks in a row, your company is obligated to permit it.
They’re egalitarian — the Nordic countries rank among the most egalitarian in the world in most measures of income distribution.
They’re well governed — according to The Economist‘s ranking of the best governed nations in the world, the top four are: Sweden, Denmark, Finland, and Norway. The U.S. is eighth.
What explains all this? I think some of it is the Swedish concept of lagom. We have no equivalent word in English but lagom is usually translated as “just enough” or “just the right amount, not too much”. Here are two examples:
The Swedish soccer (football) team played another nation and won by a score of 5 to 0. The Swedish coach worried aloud, saying, “I wish we had won by 2 to 0. We humiliated them. It’s not lagom. They’ll be looking for revenge the next time.” Have you ever heard any coach, anywhere in the world wishing they had won by less?
Suellen got into a long conversation with some Swedish friends about public education. Somehow, the subject of special programs for gifted and talented kids in the U.S. came up. The Swedes were dumbfounded. “Why on earth,” they asked, “would you invest extra money to help kids who already have all the advantages? If they’re so gifted and talented, they’ll figure out how to succeed.” The Swedish way would be to invest more in kids who are below the norm to help them come up to the middle. That’s lagom.
Could lagom explain Sweden’s (and the Nordics’) successes? Probably not all of them. But it does provide a sense of balance and fair play that lubricates the country’s society and economy. It also prompts a questioning attitude — Why are we doing what we’re doing? What does it lead to? What do we hope to achieve? The answer is not just more. It’s more balance. Perhaps that’s why this week’s issue of The Economist claims that Sweden is leading a “quiet revolution”, “thinking the unthinkable”, and fundamentally re-inventing capitalism. It’s a great read — just click here.
Some interesting things I spotted this week, whether they were published this week or not.
The Economist asks, will we ever again invent anything that’s as useful as the flush toilet? Is the pace of innovation accelerating or decelerating? And what should we do about it, if anything?
When we think about innovation, we often focus on ideas and creativity. How can we generate more good ideas? But what about the emotional component of innovation? For innovative companies, emotional intelligence may trump technical intelligence. Norbert Alter answers your questions from Paris.
We’re familiar with the platform wars for mobile applications. Will Apple’s iOS become the dominant platform? Or maybe it will be Android from Google? Perhaps it’s some version of Windows? But what if the next great mobile app platform is a Ford or a Chevy? (Click here).
For my friends in Sweden, here’s McKinsey’s take on the future of the Swedish economy. Things are looking up — just don’t rest on your laurels.
Where does America’s R&D money go? Here’s an infographic that shows how the Federal government has invested in research over the past 50 years.
The Greeks had lots of tricks for memorizing things. They could hold huge volumes of information in their heads. But does memory matter anymore? After all, you can always Google it, no? William Klemm writes that there are five reasons why tuning up your memory is still important. And he’s a Texas Aggie so he must be right.