Monday, June 23, 2008

Framing

When I was in Philadelphia last week, I met a woman who had worked in the HR department at United Airlines. As one might expect, the employees at United are not a happy group, but they also don't want to leave. I asked the woman why, pointing out that people such as flight attendants are quite intelligent, and could presumably make more money doing something they might like better.

She said the issue is that the flight attendants love the travel benefit (talk about your busman's holiday!). I asked the HR woman whether the travel benefit compensated for the pay lost not working in other areas. She said no--that many workers could make tens of thousands more, which would, of course, suffice to pay for a large number of plane tickets. But beyond this, people could use the money to buy things other than plane tickets, were they to chose.

This seems like a classic example of framing. Flight attendants see their travel benefit as an entitlement, and they would have to be paid something more than the value of the entitlement to let it go. Economics needs to get better at figuring this stuff out.

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