Economics is the study of people’s rational choices in scarcity and uncertainty.
The problem: people aren’t rational. They often act against their own economic interests—or appear to. So we have behavioral economics to figure out why.
Now, you might think businesses are different since they focus on the bottom line, not vague feelings. Yet companies can act as irrational as individuals do. And they may be even less likely to realize it, much less admit it.
That’s a shame because everyone might be better off if they did.
Not so long ago, work was a daytime, Monday-through-Friday thing for most people. Now much of the U.S. economy runs 24/7.
As a result, millions of workers have unpredictable schedules. This is especially common in retailing. Chain stores use algorithms to match staffing with store traffic.
One recent study says steady schedules can bring in more revenue.
University of California researchers worked with Gap stores in the Chicago and San Francisco areas to measure the impact of stable work schedules. Here’s how it worked, as reported in The New York Times:
The study randomly assigned about two-thirds of the stores to a so-called treatment group, in which managers were encouraged to provide workers with more consistent start and stop times from day to day, and more consistent schedules from week to week. Many managers were also authorized to slightly increase the total number of payroll hours that they could allocate to their workers. Scheduling at the remaining one-third of the stores continued largely as usual.
The result: The change in average sales during the experiment was 7 percent higher at the stores subject to the new policies than at the stores in the control group.
So, when managers let people work regular hours, sales rose 7%. Across a sizable company like Gap, that’s millions of dollars a month.