The owners of Cherry Creek shopping mall recently shifted from social norms to market norms. They may have screwed themselves in the process.
Cherry Creek is a huge shopping mall filled with upscale stores in a trendy neighborhood in Denver. The neighborhood is a traditional shopping district – filled with boutiques, salon, coffee shops, and restaurants — that predated the mall. The neighborhood offers on-street, metered parking. When the mall opened, it offered 5,100 free covered parking spaces.
Being good citizens, we Denverites treated the covered parking spaces as a social good governed by social norms. We knew that the parking spaces were intended for people who were shopping in the mall, not wandering about the neighborhood. I’m sure that some people cheated but, by and large, we honored the social norms.
A few weeks ago, the mall started charging for parking. It now costs about the same to park in the covered lots as it does to park on the street in the neighborhood. There’s one exception: you get the first hour free at the mall.
I used to consider the mall parking a social good. But now that the rules have changed, I consider it a commercial product. We’ve shifted from social norms to market norms. If it’s going to cost about the same to park on the street or in the mall, I think I’ll park in the mall. It’s covered and convenient. And it’s a commercial product, so I won’t have a guilty conscience.
My prediction: the change to market norms will worsen the mall’s parking problems. More non-mall shoppers will feel justified to pay the fee, park in the covered lots, and then wander the neighborhood. They’ve paid for the parking so they can use it any way they want.
In his book, Predictably Irrational, Dan Ariely stresses that people will do more, work harder, and behave better when social norms are in force as compared to market norms. Ariely reports on an experiment performed at St. Thomas University. Researchers asked students to do a rather mind-numbing task on a computer for five minutes. Students were divided into three groups. The first group received a payment of five dollars. The second group got a payment of 50 cents. The students in the third group were asked to perform the task “as a favor” to the researchers.
Who performed best? The students who received five dollars completed 159 transactions. Those who received fifty cents completed 101 transactions. And those who did it for nothing completed 168 transactions. In this example, money decreases performance rather than increasing it. As Ariely notes, “Money, as it turns out, is very often the most expensive way to motivate people. Social norms are not only cheaper, but often more effective as well.”
Ariely also tells the story of a nursery school that wanted to motivate parents to pick up their kids on time. The owners of the school used social norms to enforce the policy. Parents were guided by their conscience; they were ashamed to be late.
Most parents complied, but a few didn’t. The nursery school then shifted to market norms – charging a fine for late pick-ups. What happened? The number of late pick-ups increased sharply. With fines in place, your conscience no longer guides you. Your wallet does. You can literally buy time.
Tellingly, when the nursery school then removed the fine, the parents’ behavior didn’t change much. Ariely draws a larger point from this – once you change form social norms to market norms, you can’t go back. Ariely writes, “Once the bloom is off the rose – once a social norm is trumped by a market norm – it will rarely return.”
What does all this mean for Cherry Creek shopping mall? I suspect that non-compliant parking will increase. People will no longer be guided by their conscience. More prosaic concerns will prevail. People can now buy time, convenience, and space. I suspect the mall managers will reverse their decision at some point. Unfortunately, it won’t matter much.
It’s too bad the mall managers didn’t read Dan Ariely’s book. They could have saved themselves a huge headache. However, if some of my other predictions come true, we won’t need parking lots much longer.