Just back from a trans-Atlantic business trip. Traveled with two colleagues. We all flew business class. As professional analysts, we were morally obliged to micro-analyze the service provided. We did so and concluded that, given the choice, all of us would rather fly economy and pocket the ~£2000 price difference.
At first glance, flying business class looks like sheer waste. A better (pareto-optimal) system would be to give me the option of flying business class or flying economy and keeping the difference. A company I used to work for did just that. Colleagues flying from India to the US could buy their tickets through the corporate travel desk, or claim the typical price of a ticket from the company and buy their own tickets. It worked fine.
But there is something puzzling here. The bring-your-own-ticket solution is not complicated, but it remains quite rare. Why? Are companies just dumb? Or could there be something more subtle going on here?
One possibility is that the executives who typically fly business class are so rich that they would very rarely choose to go through the hassle of buying their own tickets for extra pocket money. This is possible, but it doesn't ring true. I know lots of people who fly business class. Most of them would be quite willing to spend half an hour on the internet for £2000. Their problem is that the companies they work for don't let them make this pocket money.
Another possible theory, one I like better though its less fully fleshed out, goes as follows: Companies want their senior people to make more discretionary trips. And people make more discretionary trips if the economy + £2000 option is kept off the table.
The first thought in this theory is that business trips are a pain. Most business travelers have long outgrown the romance of travel. Nothing counter-intuitive about that.
The second thought here is that business trips, especially the useful ones, are discretionary. The trip I just went on certainly fits this bill: I didn't have to go. I could have had the same meetings on video conference. The main point of going was to establish personal rapport with the people I was meeting, so subsequent video conferences and email exchanges are less stilted. And the improved communication that that personal rapport creates is genuinely valuable to the company. People who know each other do collaborate better.
The third and most critical thought is that I am more likely to make this discretionary trip if I were offered just the option of flying business class than if I were offered the choice of business or economy + £2000. The presence of the economy + £2000 option changes the attitude towards travel, and makes the discretionary trip less likely. Consider these choices:
Choice set A: My choices are (a) business class vs (b) economy + £2000. There is no way to avoid the trip. In this context, I would always choose b.
Choice set B: My choices are (a) no trip vs (b) business class. I would choose b sometimes, say x% of the time.
Choice set C: My choices are (a) no trip vs (b) business class vs (c) economy + £2000, I would choose b or c sometimes, say y% of the time.
The argument hinges on x being greater than y. I haven't heard of any behavioural experiments where these specific choices have been tested. But there have been plenty of experiments in which the presence of a third choice has reframed the context, and shifted or even flipped preferences between two options.
I wonder what the chat happening in the business traveler's unconscious might be...
In the first situation the traveler’s thinking is mercenary. The chat is "They...the cruel, thoughtless world...run by The Man...they are making me suffer for twelve hours in an freezing aluminum can. Let me get something out of it. Let me make myself some money."
In the second situation the thought process is work-focused. The chat is "Those guys across the pond are doing cool things. I really should go see them and find out more about what they're up to. Darn...flying is a pain...never mind...I'll survive it...I can sleep on the plane. Lets go next week."
In the third the chat starts off being work-focused but winds up being mercenary. The chat is "Those guys across the pond are doing cool things. I really should go see them and find out more about what they're up to. Darn...flying is a pain. They'll give me £2000 to fly. Bunk the £2000. I just want to do my job and live my life. Can't I just ask the US guys to email their decks?"
I assuming here that very few business travellers will concoct reasons to fly across the Atlantic make £2000 of pocket money. But I'm sure there are some out there...fascinating people.
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