Cash Shy

On Monday I did an interview for a TV show (to appear in 2010), and they put me up at a famous expensive hotel.  I’m sure others get extra value from this hotel, but it didn’t do much for me.  I asked the show manager about this and he said that they have ethical problems with paying cash to interviewees, but want to compensate them for their trouble.  I sighed, thinking: what exactly could go wrong with cash that couldn’t go wrong with generous travel compensation?

I suppose we could make sense of this by assuming that observers can’t be bothered to notice the amount of cash given or the quality of the travel provided, all they can tell is if you were given cash, travel expenses, or both.  But I’m kinda skeptical this is really what’s going on.

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  • Sean C.

    It’s like when hockey players got in trouble for exchanging their first class air tickets for economy, and pocketing the difference.

  • conchis

    One potential way around this could be to ask them to donate the cash to a charity of your choosing, instead of the hotel. Surely, they couldn’t have an ethical problem with that? (And it’s totally fungible from your end.)

  • michael vassar

    Arbitrary ‘ethical’ constraints may well be cover for blatantly unethical behavior. Could be that someone gets a personal kickback from the hotel. The policy transfers money from stockholders to that person.

  • Henrico Otto

    Taxes.

  • Matt

    Is money unethical? I think most of this countries problems stem from the fact that money doesn’t have a PR agent.

  • Robert Koslover

    Paying you for your “expenses” is only keeping you revenue neutral. But paying you for more than your expenses means that you are being employed, in some sense. I suspect that Henrico Otto is right here, i.e., “taxes.” However, paying expenses exceed certain guidelines may be pushing the limits, taxwise. For those of us who work in either government or government-contracting, those limits are moderately-well defined by official per-diem and housing rates and rules. See http://en.wikipedia.org/wiki/Per_diem and http://www.gsa.gov/Portal/gsa/ep/contentView.do?contentType=GSA_BASIC&contentId=17943, for example.

  • Robert Koslover

    I left a word out. Meant to say: paying expenses that exceed certain guidelines…

  • lambert

    [

    “… a TV show … said that they have ethical problems with paying cash to interviewees..]

    ______

    Exactly what ‘ethical problems’ would arise with cash payments {??}

    • Jeff

      I presume that the ethical problems originate in paying your interviewees. If you’re a nonfiction television program, paying your interviewee may influence them to say what you want them to say, rather than their actual opinion. This is equivalent to Robin’s argument that aspiring pundits don’t choose unpopular ideas

      The question is why doesn’t that apply to paying for expensive hotels, and I think the answer is it should. The city-based per diem should hold force: nobody in the role of interviewee or independent expert or any other role that we expect neutrality from should take more than the per diem.

      But how do you enforce that? And who decides who’s supposed to be an independent expert?

  • Jim Babcock

    Television studios have strong reasons to pick a single hotel, form a relationship with that hotel’s management, and host all their guests there. It reduces the probability that the studio will lose track of someone or try to pick them up from the wrong place. If issues arise, using a trusted party ensures that they will be handled correctly and discreetly. Many of the guests that studios use are politicians or actors, both of which are groups that are especially likely to raise a stink if their hotel is less than perfect. Basically, it’s cheaper to give a bunch of people an expensive hotel room that they don’t need than to deal with the logistics and risk of putting people in different places.

    • Will

      This seems like the most likely explanation to me so far. Do you have any particular knowledge or experience in the industry?

    • http://hanson.gmu.edu Robin Hanson

      In this case I happen to know they scheduled my room via Travelocity, which suggests they didn’t get a special deal on the price, and they were willing to pick a different hotel if I had suggested one.

  • Mike

    I think the idea is that to pay cash cheapens the service you provide. But they want to acknowledge the service nonetheless.

    For instance, if I need help moving, I ask my friends, but I don’t offer to pay them — that would seem crass. Instead I offer something like dinner for everyone or I throw a party later.

    Maybe you ask a neighbor to watch a pet while you’re away. Again, cash payment seems crass, unless the neighbor is a teenager. Instead you might bring them back something from your trip or give them a bottle of wine or something.

    Why does cash payment seem crass? I gather there is a sense that when you pay someone cash, the implication is you have payed them at a fair rate — quid pro quo. A gift does not imply fair exchange, and thus avoids the social awkwardness of setting a price on your friend’s time or level of generosity.

    • Jeff

      This also seems highly plausible to me, and brings to mind Daniel Ariely’s distinction between market norms and social norms. Paying for an expensive hotel suite may make guests feel grateful without making them feel like it’s a transaction.

  • http://perfectsubstitute.blogspot.com Justin Ross

    I think Mike is onto something with this:

    I think the idea is that to pay cash cheapens the service you provide. But they want to acknowledge the service nonetheless.

    Perhaps they provide swanky hotel stays for the same reason we give presents instead of cash at Christmas.

  • Kevin Dick

    I’m surprised nobody has put forth a pure status signaling explanation. On first principles, it seems like television appearances should have a lot to do with status. I can think of several status-related hypotheses:

    Perhaps people who stay in a fancy hotel feel a higher status and project this on television, making them better guests.

    Perhaps the combination of staying in a fancy hotel and appearing on television induces a feeling of increased status that is more valuable than appearing on television plus cash.

    Maybe conferring high status on guests with a stay in a fancy hotel makes the producers feel they have made a good decision in inviting the guest to appear.

  • mobile

    TV shows compete for high quality guests and must provide their guests with a good experience, to encourage the guests to come back and also to build up a good reputation among the guests’ peer group. This effect also increases your likelihood of getting some good softball questions.

    Depending on your peer group, shows that pay in cash might be held in lower regard. TV shows must also compete for ethically sensitive viewers and avoid negative publicity that may come from seeming to endorse the views of their guests.

    If the industry standard were to pay cash to guests, conflicts would invetiably arise about whether some guests deserve to be paid more than other guests and why. The convention of not paying guests is a stable equilibrium that saves the TV shows from having to do (additional) ego-damage control.