Our pal Michael Orbach pointed us (via boing boing) toward Professor Ben Ho’s look at the economic value of apologies. Here’s what Ho, an assistant professor of economics at Vassar, says about the existing research.
If you do it right, apology is good for your bottom line! In a study called “Mea Culpa: Predicting Stock Prices From Organizational Attributions,” published in Personality Social Psychology Bulletin in 2004, F. Lee, C Peterson and L Tiedens found that “companies that admitted responsibility for bad earnings had higher stock prices one year later than those who did not.” (I think the “taking responsibility” element is key. It’s not enough to say “sorry the market didn’t rebound as quickly as we’d hoped” or “due to unforeseen difficulties with our manufacturing plant in Sheboygan…” or something. It’s the ownership, stupid.) And Ho’s own paper with Elaine Liu, “Does sorry work? The impact of apology laws on medical malpractice,” published in Journal of Risk and Uncertainty in 2001, found that after a given state passed a law encouraging doctors to apologize (by making such apologies inadmissible in court), that state’s malpractice cases settled 19-20% faster, and there was a 16-18% reduction in the number of claims filed in the first place. And the most severe cases were the ones most likely to settle quickly. So far, 36 states have passed such laws. SEEMS LIKE A PLAN, FOURTEEN REMAINING STATES.
Ho’s research, influenced by game theory, has found that to be effective, apologies have to be perceived as difficult. (“The fundamental insight of the model is that for an apology to restore the broken trust, the apology must be hard,” is the way he puts it.)
When we are wronged, we all want the transgressor to apologise. However, often when they apologise, we punish them for it. We make them feel bad. The reason? If an apology were easy, it would no longer have any meaning.
So for Ho, the ritual excoriation of the sinner in social media has an important function. When most of us screw up –us regular schmoes, the writers and doctors and businessfolk — we don’t have the honor (/sarcasm) of being castigated by the public at large for what we did. We are not Biebers, living out our cruelties and incompetencies on a wide stage. For many lawyers and physicians, the apology itself is the opportunity for catharsis for the sinned-against.
Ho’s conclusion that apologies, to be received well, must be seen as difficult is borne out in our analyses. The apologies that work (and don’t cause more mockage by us, or by the Twitterverse) are the ones that take ownership, that completely take responsibility for the wrongdoing, that offer no excuses, that don’t use weasel words like “if anyone was offended” or “even though everyone else was doing it.” The fact that these apologies leave you no crutches, no scapegoats, no bright shiny objects to stand behind — that’s what makes them hard. And worth making. And worth accepting. And worth money, apparently.
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