What is your reputation worth?

We are very protective of how others see us. How protective, and why?

Imagine you said something that you never intended to be or sound racist, but that could easily be interpreted to be blatantly so. You discover someone is willing to share that information within your community: your friends, your family, your colleagues, your neighbours and so on. How would you feel about that? Could you persuade everyone that whatever is being claimed you said was taken out of context, and that you are not in the least racist? Or would you do whatever it took to stop this message getting out in the open? What sacrifice would you make to safeguard your reputation?

Reputations certainly count for businesses. A famous case from 1990 was the recall of 160 million bottles of Perrier mineral water, after excessive (but by no means harmful) levels of benzene were found in some of the product. The recall and the PR around it cost the company reportedly $250 million. Despite this, Perrier’s market share tumbled from 15% to 9% in the US, and from 49% to 30% in the UK, and five years later, their sales were still only half of what they were at the peak in 1989. Part of the problem was that this episode revealed that Perrier water was not actually naturally sparkling — the CO2 gas was (and is) extracted separately from the source, and added to the water in the bottling plant. ‘Deception’, the consumer thought.

More recently, there is the scandal in the automobile industry. In 2015 Volkswagen was discovered to have equipped 11 million of its cars with a ‘defeat device’ to fool emissions testing equipment. And just this week Audi (which is part of the VW group) and Mercedes have joined the dieselgate alumni. The share prices of both companies (who are also implicated in a cartel investigation) has taken a battering. That is entirely due to the reputational damage which is expected to be reflected in sales figures. People don’t want to be seen driving cars that are cheating society.

That’s what our reputation looks like (image: terimakasih0)

What about our personal reputations? They are pretty important for our social and professional functioning (just think what finding a new job will be like for the teacher who was alleged to have had sex with a pupil in the toilet of an aeroplane). But a good reputation was essential long before there were aeroplanes. For our distant ancestors, losing it might have meant banishment from the tribe, and surviving on your own was not easy back then.

How can we tell how important we find our reputation? Businesses can estimate the effect of a dented reputation means on their revenue, but how do you go about it as an individual? This is something Andrew Vonasch, a psychologist at the University of North Carolina at Chapel Hill, and colleagues set out to investigate across several studies.

They found that reputation is a good that transcends nations and cultures. In a survey that ran in 100 countries, more than 150,000 participants rated moral reputation as more important than any non-moral value other than physical security, and well above being rich or having an exciting life.

Our reputation matters, and we’re willing to step up to defend it. In a range of hypothetical settings, the researchers observed that participants, given a choice between…

  • … a year in jail with a clean reputation afterwards, and perpetually being seen as a criminal by their community, 40% people chose to go to prison
  • … going through life with a prominent swastika tattoo (without being able to explain why to everyone taking you for a Neo-Nazi), and having your dominant hand amputated, 70% chose to lose their hand
  • …immediate death, and living to be 90, but with a reputation of being a paedophile (that you would be unable to disprove), 53% choose to die at once. (The average age of the participants was 35, so this represented a significant decision).

Now you could object that this is not entirely realistic. Researchers do indeed have a problem: they cannot really wreck a poor participant’s reputation for real, and less still cause them permanent physical harm. Nevertheless, the tendencies are revealing, and suggest that there is a rational trade-off being considered here. And real life, outside the safe environment of a psychology lab, sadly also has way too many examples of people committing suicide as a result of a tarnished reputation (deserved or not).

But the researchers came up with an ingenious experiment that would take them closer to reality. 123 undergraduate students were told the university was running an investigation into implicit racism on the campus. This would involve administering the Implicit Association Test and then disseminating the results to all members of the university, listing the names of the students, with the highest scoring ones first. The participants carried out the IAT, but were given rigged test results: either 31 (“not very racist”) or 97 (“extremely racist”).

Thank goodness for these worms! (source: authors’ paper)

At that moment, the participants were given the option to carry out another task. If they submerged their hand in a container filled with superworms for one minute, their results would be removed from the email. 30.4% of participants in the high racism condition and 3.9% in the low racism condition opted for this task. The authors hypothesize that many participants doubted that their test results would actually be shared, and that in a real situation even more of them would have opted for a close encounter with the worms. The experiment was repeated with the worms swapped for a tank with ice water. Here 62.8% of participants iin the high-racism condition opted to endure pain to avoid reputational damage, and 8.9% in the low-racism condition.

The value of reputation is not only visible by what we are prepared to do to avoid disturbing information to become widely known. We also seek to signal positive reputational signs. Users of auction sites like eBay rely on feedback from those with whom they have done business, and sellers in particular are anxious to resolve any problems lest a buyer leaves a negative mark. On social media sites such as Facebook and Twitter, the number of friends or followers, and the number of ‘likes’ are highly salient, quantitative signals a user’s reputation. And bloggers too seek likes or recommendations, or publicize the number of ‘shares’ of their posts.

This is by no means a recent phenomenon. For centuries, Christian church services have been featuring collections of alms. It is impossible to pinpoint the exact motivation of the members of the congregation for placing their coins in the basket or on the plate, but the ritual’s highly public nature is for sure a clever trick of those in charge to nudge churchgoers into contributing.

We humans are, inherently, traders. We trade goods and services for money, and we trade our time with others and with ourselves. Our willingness to make sacrifices to preserve our reputation — either by seeking to enhance it, or by defending it when it’s under threat — confirms that like most other things, our reputation has a price too. What is yours?

Originally published at koenfucius.wordpress.com on July 28, 2017.

Thank you for reading this story. If you liked it, please consider enhancing my reputation by recommending it (just click or tap on the 💚 icon nearby) and bringing it to the attention of others. And share it wide and far — use the Twitter and Facebook icons hereabouts, or DIY for other channels. Thanks!

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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