Gift Exchange or Corruption

Gift exchange has been in the news as of late. It turns out that when Senator Obama visited all those heads of state last week his staff came bearing gifts and he was reciprocated in kind. One might reasonably ask why gifts are needed in this instance – did they have any material effect on the conversations and photo ops that took place? I doubt it. But protocol is what it is and when in Rome… Personally, I tend to think of most gifts labeled as such in this way and where there is two-way exchange, a bow to ritual without any particular productive value. But owing to the insight of George Akerlof, the Nobel Prize winner, most economists think of labor market transactions as having an essential element of gift exchange and in that context the gift exchange is both productive and necessary. I’ll elaborate on why below.

Before I do, however, let’s note that corruption has also been in the news. That’s no shock, what with outrageous CEO compensation, an NBA ref who bet on games he worked in, and, of course, all the transgressions by folks who worked in the Bush Administration, as documented in David Silver’s cleverly conceived Gone Gallery. Nonetheless, the story about Alaskan Senator Ted Stevens taking excessive gifts from the VECO Corporation, an oil services company, and concealing the fact came as a surprise to many. Obviously, VECO expected something in return but according to this NPR piece:

This is the nature of gift exchange as favors. When one gives a gift as favor one doesn’t specify the favor expected in return. One might communicate about needs and provide hints as to what sorts of favors would be valued, but there is no quid pro quo. Which leads to the rather obvious question, what sorts of gift exchange are legitimate and productive and what others are acts of corruption? Is it easy to tell the one from the other or is it all very subtle, the appropriate determination made with nuance that many of us might miss?

Here is the efficiency argument for gift exchange in the workplace, articulated at greater length in the Akerlof piece linked to above. (The link goes to JSTOR. If you can’t access it because you are not at a University that subscribes to JSTOR, the original citation is from the Quarterly Journal of Economics, 1982 and you may be able to find the piece elsewhere.) To many people, this argument will seem obvious and not at all surprising. But to economists trained in neoclassical theory, the story poses a puzzle, which I will try to describe as well to help the reader better appreciate the gift exchange idea.

Work happens in a social environment where typically a worker cares about his fellow workers and hence he wants his employer to care likewise. Employers show they care by treating their employees fairly. Fairness is a tricky thing. Usually it is in reference to behavioral norms that are not stipulated contractually. In certain type of work, for example in many sales jobs, employees are paid at least in part on commission, e.g., waiters make a good part of their income on tips. There are many jobs where the output of the individual employee is hard to measure because it is all team production, so in those jobs there can’t be piece work. But in many jobs where output of the individual employee can be measured there nevertheless are no piece rates and each employee doing the same work gets the same wage. That is the puzzle for economists.

Output variation across individuals can be attributed to differences in ability, to differences in the intensity of effort put in doing the work, and to chance factors that are out of control of anyone. Parsing those is a near impossible task, often even for the worker himself. And being punished for bad luck seems inherently unfair. So in a good work situation there is a wage for the job that seems typical for that type of work, a minimal performance standard that if not reached is grounds for dismissal (in real life this is done via progressive discipline rather than as a one shot process) and then a performance norm above the minimal standard which is what good workers aim to achieve. The difference between that norm and the minimal standard is a gift. The workers give it willingly because it is a good place to work. There is also a gift aspect to the wage. The workers would still be willing to keep the job even if they were paid less. But the higher wage elicits better worker performance. (The norm is influenced by the wage that is paid.) So there is definitely an element of I’ll scratch your back if you’ll scratch mine to the relationship.

From the point of view of one co-worker dealing with his peers it’s like the Three Musketeers – One for all, and all for one. If a co-worker is struggling there is a sense of duty to help and get that person through the tough time, with an equal sense that the help would be reciprocated if the situation was reversed. This is all part of what makes the workplace attractive for the employees. The employer could opt for the alternative, adopting piece rate compensation and pitting one employee against another by demanding that each monitor the other’s transgressions and then reporting malfeasance when they see it. But the finding is that the performance norms that emerge from these environments are substantially lower, so much so that this “squeezing blood out of a stone” approach is not regarded as good management. It’s in this sense that the gifts are necessary. Without them everyone is worse off.

This continues to be true in the case of corruption, which if we want to think of it as a conspiracy means there is effective gift exchange among the conspirators. The corruption is seen by drawing a larger circle. Others not part of the conspiracy would then take the actions of the conspirators as unfair, possibly hostile, and clearly anti the promotion of the public good.

Recently the film The Insider has been airing on some of the satellite movie channels. It is about the conspiracy by Big Tobacco to withhold evidence about the addictive and harmful nature of cigarette smoking, about the whistle blower Jeffrey Wigand and his breach of contract with Brown and Williamson to do an interview with Mike Wallace to air on 60 Minutes, only to see the piece pulled by CBS management because of the implications the airing would have on CBS’ stock price, but then to have the information leaked by the producer of the show, Lowell Bergman, who was committed to see the truth win out. It’s a compelling film for anyone who hasn’t yet seen it and in this case identifying corruption was a slam dunk; there is no subtlety to that part of the story at all.

Likewise for the case of Senator Ted Stevens, though to date there have only been indictments and, as has been well reported, our system is to assume innocence until proven guilty. So here I mean to argue only that in the event he is proven guilty the harm or potential harm will be straightforward to assess. Favoritism for VECO is unfair to VECO’s competitors and to the extent that VECO got awarded or would get awarded no-bid contracts for services, the public is generally disserved by the process and the lack of accountability in doing government business this way, amply proven in Iraq, which is reason enough to be suspicious of the large gifts Stevens did receive.

But now let’s turn the question inward to our own activities on our respective campuses as learning technologists and ask the same sort of questions.

Do we engage in gift exchange? If so, is it the same when interacting with vendors, professional organizations like Educause, our peers on other campuses, our peers on our own campuses outside our own units, and the people with whom we work every day? Or are there differences to this type of gift exchange depending on nature of the relationship? Is there a risk of corruption in each and if so, how would corrupt behavior likely appear? What are the warning signs that we should be on the lookout for?

I’m not sure that I can answer all these questions well, but some are straightforward. Gift exchange is prevalent in our work. Let’s make the point simply at first and then build from there. Consider the various listservs we find ourselves on. The default minimal performance standard is to lurk and oftentimes when we’re busy with other things, that’s what we opt to do. Then, any informative or thoughtful post that moves the conversation along or starts a new thread has to be considered a gift, ditto for comments on other peoples’ blogs, and also for blog posts each of us make that cause a positive reaction in some of our readers, if only to echo what they’ve already been thinking, and even if the reaction is negative as long as it provokes more thinking on their part. We’re in the knowledge business. Pushing ideas around is what we do.

From there we can likewise reason through something similar for email, instant messaging, phone calls, and face to face conversation. There is a minimal performance standard that in most cases is probably pretty low. And there is the expected norm behavior that differs substantially from the minimum. So much of what we do in this regard is gift. Have you ever seen an employee disciplined for poor performance and possibly let go as a consequence? I’ve been through that unpleasantness, but not often and I take it is extremely rare as a general proposition. It’s outside the usual behavior. Even when there is austerity owing to tight budgets, the inclination is to manage that through the normal turnover - retirements, moves to another town perhaps because a spouse found a job there, etc., and not consider performance related separation at all. The rule is to have work performance substantially in excess of what would trigger dismissal.

Relationships with vendors have a different aspect to them because money and material goods may be part of the gifts. On your part you may be instrumental in awarding a contract for services, software, or hardware to a particular vendor. They, in turn, may provide gifts, especially meals, at national meetings or when they make visits to your campus. There definitely are norms about these behaviors but not everyone may be aware of those norms. Further, there may be ethics rules at your campus under which you are supposed to operate as well. For example, if a team from your Campus makes a trip to the corporate headquarters of a vendor in its do-diligence to evaluate the company along with its product, then there is a reasonable expectation that the company will pay for meals on the visit and feed you well as a way to facilitate conversation, but if they take you to a swank restaurant and order very pricey wine in the process, potentially you run afoul of the ethics rules. The point is that you are there to evaluate your product and the ability for you to work with the company in as objective a manner as possible and not be swayed in that decision by the food and drink.

That’s the easy part to think through. The harder part concerns access to higher ups in the company and to privileged information, especially after a contract has been signed. There are several issues to think through in that regard – shaping the course of future product development, how information (about how much the service contract costs, bugs in the software, etc.) gets shared with you and other customers that you might view as peers, and managing the relationship which occurs at several levels at your university and at the company simultaneously, to mention but a few of the issues.

As far as I know there is no training given to learning technology staff anywhere about appropriate ways to interact with vendors – what types of gift exchange makes the working relationship better and what pushes you down the slippery slope. Instead, we all work through the issues while doing. Whether training beforehand on this would be of use is something to mull over.

Let’s turn next to working with a professional organization like Educause, where by the nature of the work much of the interaction ends up being with peers from other institutions. The difference between that and interactions with peers elsewhere that are otherwise unmediated is the professional recognition that might be obtained from the one but not the other. The professional recognition is a reward that accrues to the individual mostly and to the home institution of that individual to a lesser degree. That reward goes hand in hand with “responsibility to the profession,” as in it is the responsibility of a senior learning technologist to mentor their more junior brethren. If asked why people do work with Educause, serve on their committees, etc., professional responsibility is likely to be one big reason given. (A third possibility that I’ve not yet mentioned is professional development for the participant. There is much that can be learned from this sort of engagement.) The potential corruption in this case is pretty easy to describe – when is this too much of a good thing where the home campus, the one paying the salary of the learning technologist, doesn’t internalize the benefit from the activity, even when taking a broad and long term view? But, easy though it might be to describe, drawing the line is equally hard. The problem presents itself mainly when the person has discretionary funds and hence controls his or her own travel budget. Here’s another one where I’ve not heard of training to help people sort through the thinking.

The issues about our own learning, on the one hand, and our unit’s internalizing the benefit from that, on the other, also exists in peer relationships that go outside the unit, whether on campus or off. This is a similarity with mediated relationships through professional organizations. The difference is that the recognition factor is lessened and may be entirely non-existent. Replacing that is the friendship factor. Friendships with colleagues may be good and productive things that aide in getting work done. Yet indulging with friends as a substitute for work obviously creates issues. Once again defining the problem is easy but identifying the line is very hard. The related salient issue is hours per week spent at work. Those higher up in administration may be putting in 60 hours per week or more. If one lives the job, the work/play distinction blurs. What difference does it make if one plays during normal work hours but puts in work time during the wee hours of the morning or if one plays at the office and then works at home, provided students and instructors and other clients are not adversely impacted by the time and site shifting? Put this way and given that much of the work is self-directed, a condition that holds for many of us, the individual herself might not know which side of the line she is on. Others may rush to judgment based on an incomplete understanding of the situation and a belief that work should happen in a more traditional manner. But juggling the demands of work and family as well as managing both our productive periods and our dull interludes might mean a non-traditional approach is better. This is another tough one.

Gift exchange in our own unit might be best uncovered by asking how our actions improve the productivity of our co-workers. Sometimes this happens by ceding discretion to co-workers and trusting the solutions they propose. That best encourages their learning-by-doing. But other time this happens by doing the opposite, offering critique of their work they’ve already produced so they have something to react to when trying to make improvements. Yet other times this happens by injecting humor into the work, to encourage the camaraderie a la The Three Musketeers and to create a relaxed tone which helps people to work their best. Corruption when considered in this context might be viewed as going overboard in any of these dimensions.

There are other issues aside from where to draw the line. Norms change over times, differ across generations of people at any one time, and determining whether a gift is given simply to keep up with a changing norm or is meant as bribe may be hard to do. Twenty five years ago I would willingly have shared a hotel room with a colleague when on the road. Now I expect a private room and can’t imagine how I could function otherwise. My parents never outgrew having coffee grinds from a can, Maxwell House or Yuban for their morning coffee and didn’t even move away from making it with a percolator till they retired in Florida. That’s what I grew up with but now good coffee is a very important part of my workday.

I suspect others could make quite a long list of creature comforts that are part of their everyday expectations. Why do these creature comforts evolve over time? As David Brooks observes (and many other have too) we now live in a culture of debt, fueled by expectations that we should have things that cost in excess of 100% of what we earn. If one were to try to thwart this escalation by offering gifts only to the extent that they can actually be afforded, would that person run the risk of converting the effective workplace to the alternative where it seems the bleeding-blood-from-a-stone approach rules? As Akerlof points out, the fairness idea is made in reference to local norms and is all about relative deprivation to those norms, not about absolute deprivation in any sense. Are any of us as individuals in a position to affect those norms to reduce the escalation in gift giving that is needed to generate reciprocity?

And there is the related notion of habituation. Gift giving may work best if there is some genuine surprise in the gift, a signal of thoughtfulness and insight in the gift selection. Grandparents love those cards the grandkids make because they can see in these objects the efforts of the kids themselves. Repeated gift giving makes it harder to come up with the novel offering with the personal touch and that factor in itself feeds the escalation process. If I can’t be clever in the gift I’m going to give you but last time around I spent $50 on the gift, then this time I’ll spend $100 and let my increased spending substitute for my lack of creativity. The issue exists even when we’re giving our own time and effort rather than cash.

There is also the issue of the lag between the original gift and the reciprocal act. In a good and healthy relationship the timing is dictated primarily by productivity considerations. When can the gift do the most good and when is the giver most able to make the gift? A recipient of a rather large gift, however, feels an ethical need to acknowledge the gift as a thank you gesture. Often, to make the thank you appear meaningful, the recipient feels obligated to give a gift in return and to do so irrespective of the productivity considerations. That can speed up the back and forth and a vicious cycle ensues.

What began as a healthy relationship can turn into a corrupt one for these reasons. So we may be tempted on occasion to go the squeaky clean route and avoid any appearance of bribe in the gifts we offer, perhaps by not offering gifts at all. But that will be self-defeating because gift giving is an essential part of work. The best we can hope for, I believe, is to understand that moderation in all things is a worthy ideal to pursue and to periodically keep an eye on and review with colleagues the big picture goals we’re trying to accomplish. If we get off track a bit we can redirect the course we’re on before we go over the deep end. At least, I hope so.