Freakonomics

The Deflation of “I’m Sorry” in the Economics of Apologies

A recent study suggests the best apology may be one that involves monetary compensation. Experience shows the best apologies are ones that include credible, demonstrable action that shows you really mean ‘I’m sorry.’ [Illustration Credit: Paul Rogers/New York Times]

A recent study suggests the best apology may be one that involves monetary compensation. Experience shows the best apologies are ones that include credible, demonstrable action that shows you really mean ‘I’m sorry.’ [Illustration Credit: Paul Rogers/New York Times]

We may have entered an era when a simple “I’m sorry” has little currency to the recipient of an apology. You might do better offering some form of compensation.

Effective apologies have become a mainstay topic when discussing crisis communications. Crisis counselors, including us, have encouraged sincerity buttressed by demonstrable actions to correct the wrong that required an apology. But a recent study hints that might not be enough to regain or even maintain a level of trust. 

Ben Ho is an associate professor of behavioral economics at Vassar College who applies economic tools like game theory and experimental design to understand social systems such as apologies, identity, fairness and attitudes about climate change. Ho holds seven degrees from Stanford and MIT in economics, education, political science, math, computer science and electrical engineering. He was recently featured in a  Freakonomics podcast  about apologies. [Photo Credit: Tamar M. Thibodeau / Vassar College]

Ben Ho is an associate professor of behavioral economics at Vassar College who applies economic tools like game theory and experimental design to understand social systems such as apologies, identity, fairness and attitudes about climate change. Ho holds seven degrees from Stanford and MIT in economics, education, political science, math, computer science and electrical engineering. He was recently featured in a Freakonomics podcast about apologies. [Photo Credit: Tamar M. Thibodeau / Vassar College]

Benjamin Ho, an economics professor at Vassar who studies apologies, teamed up with Uber to test a variety of apologies following a ride gone bad. Apologies that included a commitment to do better in the future often backfired, especially when there was another subpar ride. The apologies that worked best involved monetary compensation.

If Ho was a psychologist, he might have explored why an apology tied to money was a better palliative than an apology tied to a commitment to do better. My dime store interpretation: People have become increasingly cynical. They doubt whether a promise about better behavior in the future will be – or can be – kept. Immediate gratification, like a $5 coupon for a future Uber ride, is more satisfying because it’s more tangible.

Tangibility is the key here. People expect an apology. It’s like “thoughts and prayers” after a mass shooting. But the apology isn’t enough. What counts is the action that follows. The more tangible the action, the better. Or as Ho put it, “Show me the money, basically.”

The Uber example focuses on money, but compensation isn’t the only tangible value apology recipients may desire. If a new water reservoir construction site suffers a major slide, neighbors will be less interested in money than concrete assurances the problem has been fixed. If your bank has been hacked, depositors will want protection from theft.

The phrase “action speaks louder than words” applies. Apologies are something you say. Actions are something you do. Saying you are sorry is important, but it’s best to prove your sincerity through meaningful, relevant and tangible actions. What you say and do after the apology is what counts.

You can’t overlook the economics of apologies. As Ho explained to NPR, “We tested apologies with or without a coupon. We found basically the most effective [Uber] apology, the ones that increased revenues, were just with a $5 coupon.”

Ho’s findings suggest apologies can be transactional. However, as any husband has discovered when bringing home flowers when he forgets an anniversary, the gesture only gets temporary love. You might earn forgiveness, but you don’t build trust with money or flowers.

Trust is the true goal of an apology. Individuals, businesses, nonprofits and public agencies need to realize the point of an apology is to regain trust that is lost or tested – and, when possible, to burnish a reputation. Trust and an enhanced reputation typically aren’t built on cash; they are earned by credible, demonstrable actions, which may include restitution. 

The underlying message of Ho’s study is that ordinary, pro forma apologies aren’t enough now, if they ever were. If you face a crisis, big or small, treat it seriously and put on your work boots to do what’s necessary to earn trust. 

Doing anything less is worse than a waste of time; it is a lost opportunity. And the loss could be permanent.

Gary Conkling Image.jpg

Gary Conkling is principal and co-founder of CFM Strategic Communications, and he leads the firm's PR practice, specializing in crisis communications. He is a former journalist, who later worked on Capitol Hill and represented a major Oregon company. But most importantly, he’s a die-hard Ducks fan. You can reach Gary at garyc@cfmpdx.com and you can follow him on Twitter at @GaryConkling.

 

Turn Your Voice into Thought Leadership

Freakonomics Radio is a great example of employing a podcast to extend a brand into new channels. Podcasts can also be a great way to give voice to thought leadership.

Freakonomics Radio is a great example of employing a podcast to extend a brand into new channels. Podcasts can also be a great way to give voice to thought leadership.

Podcasts represent a proven path to express thought leadership, expand a brand and create a loyal following. But don’t be fooled by their seeming simplicity, podcasts require mastery of the format, relentless discipline and creative spark to succeed.

Freakonomics Radio is a popular podcast that extends the franchise of zany, offbeat economics that started with an improbable bestselling book about “cheating teachers, bizarre baby names and crack-selling mama’s boys.” Reluctantly started by a wary journalist and an equally wary economist, Freakonomics has morphed into a series of books, lectures, documentaries, guest appearances and a radio show.

There also is the Freakonomics “Question of the Day Podcast” that features shorter audio discussions tackling issues such as “Why Do People Believe Compliments, But Not Criticism?” and “Would You Ever Eat Bargain Sushi?”

Freakonomics creators Stephen Dubner and Steven Levitt are busy guys. They bother with podcasts because it complements and augments their brand in another channel. It is hard to read a book or view a video while driving, jogging or walking, but you can listen to the radio or an iPod. Podcasts are an avenue to reach your audience in a very direct, personal communication channel.

That avenue can have a lot of potholes and side streets to navigate. Producing a podcast of 30 to 60 minutes requires more than a tape recorder, a few scattered ideas and a soft drink. You need good recording equipment, a script and topics people want to hear about. 

Podcasts can be valuable content, but also hollow efforts unless they are promoted through social media or an email list and posted on an easily navigable website or online newsroom.

The voice or voices are everything in a podcast. There are no visual attractions or sight cues. The audience depends on what it hears. The better the quality, the more likely they are to keep listening.

There are technical twists, too. Quality sound is essential. You need to produce different audio files such as MP3 and WAV to accommodate a range of listeners and their devices. If you are going to integrate music or background sound, you will need someone with the skill to mix your podcast. You also need someone to ensure your final product is clean and to maintain a content management system.

The good news is that producing high-fidelity sound is a lot easier and cheaper than it used to be. But it isn’t necessarily easy.

The result can be worth the effort. The effort starts with ideas that are several notches away from stuffy, but still useful and relevant to your listeners. Your voice talent needs to practice, and perhaps take some voice coaching. He or she may never sound like Morgan Freeman, but you certainly don’t want to sound like a bad version of Gilbert Gottfried or Roseanne Barr. Your team needs to be equipped for the job so you produce top-notch sound to convey your messages.

Podcasts can be an entertaining way to charm and communicate to customers. It’s up to you to provide the entertainment and charm.