Ethics in the Gig Ec?n?my
Intr?ducti?n – “The Gig Ec?n?my”
?ver the c?urse ?f time, w?rk is changing. S?me j?bs are vanishing ?ff the face ?f the earth, s?me are being t?tally ?verhauled and s?me new ?nes are being created.
The “Gig Ec?n?my”, where w?rkers use marketplace platf?rms ?ver the internet t? c?nnect with buyers ?n demand, l??ks like it’s here t? stay. We can see vari?us manifestati?ns ?f it interw?ven with ?ur daily lives, be it the chauffer driven ?n demand cab hailing services like Uber, Lyft ?r the pleth?ra ?f ?n-demand services available ?n fiverr, h?mej?y etc. This trend d?vetails with the percepti?n that the traditi?nal 40-h?ur w?rk week, 9 t? 5 w?rkdays are antiquated and attracts millennial w?rkers wh? find it hard t? res?nate with c?nventi?nal ?ffice envir?nments.
Alth?ugh a few c?nsider the Gig Ec?n?my t? be a relatively new phen?men?n, in a l?t ?f ways it has just been ?ld wine in a new b?ttle. Self-empl?yment and freelance w?rk, f?r instance, has been ar?und f?r decades and was the n?rm in many areas ?f the lab?r market (e.g., freelance ph?t?graphers, artists, musicians, j?urnalists; hairdressers, wh? rent chair space). What is new, h?wever, is h?w swiftly this w?rk has been bec?ming mainstream; a recent publicati?n stated it “c?uld s??n represent as much as 50 percent ?f the U.S. w?rkf?rce” (Kaufman, 2013). This is up fr?m the 10-15% n?ted as recently as 2008 (Hart?g, van Praag, & van der Sluis, 2008). As the Gig Ec?n?my takes h?ld, the raging debate is that wh? benefits m?re and wh? is m?st at risk; the answer isn’t immediately clear and may never be.
It’s the nature ?f the relati?nships between these w?rkers and ?nline platf?rms, that are in a state ?f c?nstant flux as much as the techn?l?gy that enables these relati?nships and raises numer?us questi?ns ?n their implicati?ns fr?m an ethical standp?int.
The first am?ngst a slew ?f pr?blems with this ec?n?my arises fr?m the n?velty ?f the w?rker/ ?nline platf?rm relati?nship. This takes a gargantuan size when empl?yees are rather misclassified as independent c?ntract?rs. At face value, the c?mpelling pr?p?siti?n that w?rkers’ time isn’t c?ntr?lled by an ?verbearing b?ss, rather they can be flexible, picking and ch??sing their ?wn w?rk and the h?urs, they wish t? undertake. Th?ugh this alluring pr?p?siti?n seems t? put p?wer back int? the hands ?f the w?rkf?rce, the self-empl?yed c?ntract?rs this is infact a d?uble-edged sw?rd f?r th?se w?rkers.
The reality, h?wever, is quite stark. ?ften, the gig ec?n?my strips these c?ntract?rs ?f the rights and benefits that c?me al?ng with permanent, full-time w?rk such as paid sick leaves, h?lidays and, as a result, is tarnishing the reputati?n ?f the facilitating c?mpanies and attracting scrutiny fr?m all directi?ns, inclusive ?f regulat?rs, trade uni?ns and the IL?. Acc?rding t? these platf?rm c?mpanies, they are facilitat?rs, simply c?nnecting supply with demand. The wider argument that is brewing ar?und the ethics ?f the gig ec?n?my and the resp?nsibilities that a c?mpany – whatever their r?le ?r purp?se – sh?uld undertake.
A rep?rt published recently by the f?rmer w?rk and pensi?ns c?mmittee chair, Frank Field, disc?vered that with?ut the safety veil ?f benefits and pr?tecti?n ?f permanent empl?yment, s?me gig ec?n?my w?rkers are being paid as paltry as £2.50 an h?ur. The rep?rt suggests the g?vernment t? stage an ’emergency interventi?n’ thus ensuring the fair treatment ?f w?rkers in the new ec?n?my.
New techn?l?gy firms – such as Uber, Deliver??, Amaz?n Mechanical Turk ?r Cr?wdfl?wer – wh?se pr?p?siti?n banks ?n c?nnecting supply with demand are n?w f?rced t? walk a tightr?pe between the financial merit ?f their inn?vative business m?dels laden with n?velty and the reputati?nal and regulat?ry backlash that might ?ccur if the public feel that w?rkers are being expl?ited t? a certain extent. This bec?mes crystal clear when l??king at the risk and reputati?n-f?cused c?ncerns expressed in numer?us ?nline c?nversati?ns.
Data fr?m P?lecat has sh?wn that in the recent m?nths ‘treatment ?f w?rkers’ has been the m?st pr?minent cause f?r c?ncern in the c?ntext ?f the gig ec?n?my with ‘welfare state’ being a recurrent phrase, highlighting the w?rry that the lack ?f empl?yment pr?tecti?n f?r gig ec?n?my w?rkers is simply transferring risk away fr?m business and leaving taxpayers t? f??t the bill.
The disruptive, ‘uberisati?n’ ?f industries has been discussed with a l?t ?f anticipati?n ?ver the recent years, but c?ncerns related t? the casualizati?n and inf?rmalizati?n ?f w?rk are n?w als? increasingly c?ming t? the f?re, with zer?-h?ur c?ntracts als? h?gging the sp?tlight. It all begs the questi?n; h?w sustainable are these business m?dels, sh?uld the regulat?ry envir?nment change and demand adherence t? well established empl?yment law?
The number ?f pe?ple empl?yed in the gig ec?n?my are n?t?ri?usly hard t? estimate f?r ?bvi?us reas?ns – this being a highly distributed and irregular w?rkf?rce that is ?ften extremely hard t? identify. Indeed in certain scenari?s, pr?secut?rs and regulat?rs have leveraged s?cial media t? engage and identify such a w?rkf?rce c?mmunity t? inf?rm investigati?ns. Acc?rding t? the McKinsey Gl?bal Institute, there are five milli?n w?rkers currently within the UK’s gig ec?n?my and that number will c?ntinue t? rise as each new, disruptive tech startup bl??ms.
The Abuse ?f Behavi?ral Ec?n?mics
A recent article in the New Y?rk Times ab?ut h?w Uber has been using vari?us insights fr?m behavi?ral ec?n?mics t? push, ?r nudge, its drivers t? pick up m?re fares, s?metimes with very minimal marginal benefit t? them has generated quite a bit ?f criticism ?f Uber. It’s just ?ne ?f several st?ries ?f late that have cast the c?mpany in a p??r light.
It reminded me ?f a questi?n that executives ?ften p?nder ?ver when thinking ab?ut the benefits ?f behavi?ral ec?n?mics and the use cases ?f h?w they c?uld use it in their ?wn ?rganizati?ns: What if, it will be used with ill intent?
I always th?ught that, like many t??ls, it can be used in g??d and bad ways. We sh?uld dive deeper int? the differences between the tw?.
Acc?rding t? the traditi?nal view in classical ec?n?mics, we are rati?nal agents, well inf?rmed with stable preferences, self-c?ntr?lled, self-interested, and ?ptimizing. The behavi?ral perspective takes issue with this view and suggests that we are characterized by fallible judgment and malleable preferences and behavi?rs, can make mistakes calculating risks, can be impulsive ?r my?pic, and are driven by s?cial desires (e.g., l??king g??d in the eyes ?f ?thers). T? sum it up, we are simply human.
Behavi?ral ec?n?mics starts with this latter assumpti?n as its premise. A multi-faceted discipline that draws and c?mbines insights fr?m vari?us fields like psych?l?gy, ec?n?mics, judgment, decisi?n making, and neur?science namely t? understand, predict, and ultimately influence human behavi?r in ways that are m?re p?werful than any ?ne ?f th?se fields c?uld pr?vide ?n its ?wn. ?ver the last few years, ?rganizati?ns in b?th the private and public sect?rs alike have applied s?me ?f the insights fr?m behavi?ral ec?n?mics t? address a wide range ?f pr?blems — fr?m reducing cheating ?n taxes, w?rk stress, and turn?ver t? enc?uraging healthy habits, increasing savings f?r retirement as well as turning up t? v?te.
Uber has been using similar insights t? influence drivers’ behavi?r all al?ng. As N?am Scheiber writes in the Times article, “Empl?ying hundreds ?f s?cial scientists and data scientists, Uber has experimented with vide? game techniques, graphics and n?ncash rewards ?f little value that can pr?d drivers int? w?rking l?nger and harder — and s?metimes at ung?dly h?urs and l?cati?ns that are less lucrative f?r them.”
?ne such appr?ach, acc?rdingly reinf?rces drivers t?ward c?llecting m?re fares based ?n the insights fr?m behavi?ral sciences that pe?ple are extremely influenced by g?als and gamificati?n. Acc?rding t? the article, Uber sends regular alerts t? the drivers that they are very cl?se t? attaining a certain target when they try l?gging ?ut. And it als? sends drivers their next fare ?pp?rtunity bef?re their current ride is ?ver.
N?w let’s revisit the questi?n ?f when are nudges c?nsidered t? be g??d and when are they c?nsidered t? be bad. ?ne ?f my fav?rites examples is the use ?f checklists in surgery t? reduce patient c?mplicati?ns. Checklists elucidate several standard critical pr?cesses ?f care that many ?perating r??ms typically implement fr?m mem?ry. In a paper published in 2009, Alex Haynes and c?lleagues ?bserved the usage and effectiveness ?f checklists in eight h?spitals in eight cities in the Unites States. They f?und the m?rtality rate f?r patients underg?ing surgery fell fr?m 1.6% t? 0.8% p?st the intr?ducti?n ?f checklists. Inpatient c?mplicati?ns als? fell fr?m 11% t? 7%.
In a related paper published in 2013, Alexander Arriaga and c?lleagues had 17 ?perating-r??m teams participate in 106 simulated surgical-crisis scenari?s. Each team was rand?mly assigned t? w?rk with ?r with?ut a checklist and instructed t? implement the critical pr?cesses ?f care.
The results were striking: Checklists reduced missed steps in the pr?cesses ?f care fr?m 23% t? 6%. Every team perf?rmed better when checklists were available. Remarkably, 97% ?f th?se wh? participated in the study rep?rted that if ?ne ?f these crises ?ccurred while they were underg?ing an ?perati?n, they w?uld want the checklist used.
An?ther example, c?ncerns the use ?f fuel- and carb?n-efficient flight practices in the airline industry. In a paper published recently, using data fr?m m?re than 40,000 unique flights, J?hn List and his c?lleagues f?und that a significant savings in carb?n emissi?ns and m?netary c?sts ?ccured when airline captains received tail?red m?nthly inf?rmati?n ?n fuel efficiency, al?ng with targets and individualized feedback. In the field study, captains were rand?mly assigned t? ?ne ?f f?ur gr?ups, including ?ne “business as usual” c?ntr?l gr?up and three interventi?n gr?ups, and were pr?vided with m?nthly letters fr?m February 2014 thr?ugh September 2014. The letters included ?ne ?r m?re ?f the f?ll?wing: pers?nalized feedback ?n the previ?us m?nth’s fuel-efficiency practices; targets and feedback ?n fuel efficiency in the upc?ming m?nth; and a £10 d?nati?n t? a charity ?f the captain’s ch??sing f?r each ?f three behavi?r targets met.
The result was that all the f?ur gr?ups enhanced their implementati?n ?f fuel-efficient behavi?rs. Thus, inf?rming captains ab?ut their inv?lvement in a study significantly changed their acti?ns. (It’s a well-d?cumented s?cial-science finding called the Hawth?rne effect.) Tail?red inf?rmati?n with targets and feedback was the m?st c?st-effective interventi?n, impr?ving fueling precisi?n, in-flight efficiency measures, and efficient taxiing practices by 9% t? 20%. The interventi?n, it appeared, t? have enc?uraged a new habit, as fuel efficiency measures remained in use after the study ended. The implicati?ns were: an estimated c?st savings t? the tune ?f $5.37 milli?n in fuel c?sts f?r the airline and reducti?n in emissi?ns ?f m?re than 21,500 metric t?ns ?f carb?n di?xide ?ver the eight-m?nth durati?n ?f the study.
In case ?f captains receiving feedback regarding fuel efficiency ?r surge?ns using checklists, ?ne ?f the maj?r g?als ?f the interventi?n was t? influence the participants t? act in a certain reinf?rced way. S?, in a sense, the researchers were trying t? enc?urage a behavi?ral change the same way managers at Uber were trying t? influence behavi?ral changes in their drivers’ behavi?r.
But there is a significant difference acr?ss these three examples. Are the nudges used f?r the benefit ?f b?th parties inv?lved in the interacti?n ?r d? they create benefits f?r ?ne single side and c?sts f?r the ?ther? If the f?rmer, then (as Richard Thaler and Cass Sunstein argue in their influential b??k Nudge) we are “nudging f?r g??d.” Thaler and Sunstein identify three guiding principles that sh?uld be ?n t?p ?f mind when designing nudges: Nudges sh?uld have transparency and never be misleading, easily ?pted ?ut ?f, and driven by the str?ng belief that the behavi?r being enc?uraged will impr?ve the welfare ?f th?se being nudged.
That’s where the thin line between reinf?rcing certain beneficial behavi?rs and manipulating pe?ple lies. And that’s als? where little difference between applying behavi?ral ec?n?mics ?r any ?ther strategies ?r framew?rks f?r leadership, talent management, and neg?tiati?ns can be seen. We always have the ch?ice ?f using them f?r either g??d ?r bad.
If there exists misalignment between the interests ?f a c?mpany and its empl?yees, then the ?rganizati?n might expl?it its ?wn members as Uber appears t? have d?ne. But there are plenty ?f scenari?s where the interests can, in fact, be aligned — the c?mpany certainly benefits fr?m higher levels ?f perf?rmance and m?tivati?n in th?se cases, and the w?rkers feel m?re satisfacti?n with their w?rk.
And that is where there is a great p?tential in applying behavi?ral ec?n?mics in ?rganizati?ns: t? create real win-wins f?r b?th the parties inv?lved.
Piece w?rk – where an individual gets paid f?r a piece ?f w?rk – has been ar?und f?r a quite a l?ng time. The smartph?ne rev?luti?n has put piece w?rk ?n ster?ids and led t? the rise ?f the gig ec?n?my. Regulat?rs, c?urts and trade uni?ns are catching up and there is ?ng?ing scrutiny ?f the crimes and misdemean?rs ?f certain business m?dels. H?wever, there is n?thing inevitable ab?ut the future ?f w?rk and in the same way that the likes ?f Uber caused disrupti?n t? the transp?rt sect?r, s? in turn, they may face disrupti?n fr?m changing s?cietal expectati?ns ?f what classifies as the acceptable treatment ?f w?rkers. Reputati?ns are in the balance and the c?mpanies that are pr?active, resp?nsible and acc?untable are likely t? be the ?nes that stay ar?und l?ngest.