Friday, 20 September 2013

Cottage holidays and social norms

For those unfamiliar with cottage holidays, the ideas is pretty simple: You rent a house, bungalow, or beach hut for a week or more, make yourself at home, relax and enjoy. What I want to explore is how different the experience feels in the UK and Denmark.
      When you arrive at a cottage in the UK you can expect ample supply of toilet rolls, kitchen towels and logs for the fire. There will almost certainly be a library of books, CDs, DVDs and local maps for you to enjoy. Bed linen is provided free of charge. At one cottage we recently went to there was a complimentary bottle of wine.
     Contrast this with Denmark. Here you have to pay for any electric, water and gas you use. Don't expect any toilet rolls or kitchen towels, let alone a complimentary bottle of wine. There's no library. Bed linen, or anything else, comes with an extra charge.
      Which system would you prefer? The economist in me says that I am supposed to prefer the Danish system. All the 'complimentary' things that are provided in a UK cottage are clearly added on to the overall bill. So you ultimately end up paying for them. Which means we are almost certainly better off in the Danish system because we use less than the average in terms of gas, electric and water, we're happy to bring our own bed linen, and we don't really like drinking cheap wine.
      There's something about the Danish system, however, that we don't like. To understand why it is necessary to think about social norms. The UK system makes you feel more at home. You feel like a welcome guest. You can relax. The Danish system puts more emphasis on money. These reminders of the fact you are paying money, e.g. reading the utility meters at the start and end of the holiday, crowd out the 'welcome' feeling. You are not a welcome guest, you are a paying customer. This makes it a bit less pleasant. I'm sure it also means guests will take a bit less care of the cottage during their stay.   
     The more general point this contrast illustrates is how social norms and money don't mix all that well. The cottage holiday system relies heavily on social norms. You are trusted to look after the cottage, to not steal anything, and to basically leave the place as you found it. The UK system with its complimentary bottle of wine lets social norms dictate. The Danish system with its itemized costs risks crowding out social norms. Which may explain why guests cannot be trusted with a library. 
      This kind of trade-off between social norms and money is very common. Consider, for example, effort in the workplace. In most jobs you inevitable have to put some trust in workers to do their best. You cannot constantly monitor performance. The more 'performance targets' and the like a worker is subjected to the more the social norms to do a good job are crowded out.
      Be careful, therefore, when mixing money with social norms. As Dan Ariely discusses in his book Predictably Irrational it is a not a good idea to mention how much the dinner cost on a first date. 

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