How cheating New York cabbies can explain bigger corporate crimes

New business school study shines light on how fraudsters rationalise actions
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Cheating by drivers of New York’s yellow cabs is helping to illuminate the psychology of white-collar fraud.

To understand how fraudsters make themselves feel comfortable with their actions, accounting academics studied a year of official data on taxi rides to two destinations, Newark airport and Staten Island, primarily from Brooklyn.

Both trips contain an opportunity to fleece the passenger by flouting the rules on which toll booth lane taxis ought to use. The “E-ZPass” lane mandated for taxis is quicker and cheaper than queueing up to pay in cash.

But unscrupulous cabbies can make a little more money by using the cash lane, as the delay bumps up the fare and the tip is calculated from this inflated sum (on both routes the passenger pays the toll, it should be added — and enforcement of the rules is patchy).

Shivaram Rajgopal, a Columbia Business School accounting professor, and co-author Roger White, of Emory University’s Goizueta Business School, found a dramatic difference in the numbers of taxi drivers cheating on the two routes.

Cabbies on the Newark route were more than 50 times more likely to gouge their passenger than those on the Staten Island route.

The study puts this down to the fact that New York taxis are barred from picking up a fresh fare at Newark airport and other New Jersey destinations. The authors argue that the restriction fosters a grievance — a feeling of being “in the hole” — that allows drivers to rationalise a decision to overcharge the innocent passenger.

Regulatory constraints can have a similar effect on some corporate leaders, the academics suggest, prompting sharp practice as a way of recovering what the fraudster sees as lost ground.

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