Robin Hood Under the Hood: Wealth-Based Discrimination in Illicit Customer Help

Abstract

This paper investigates whether an employee's perception of customer wealth affects their likelihood of engaging in illegal behavior. We propose that envy and empathy lead employees to discriminate in illicitly helping customers based on customer wealth. We test for this hypothesis in the vehicle emissions testing market, where employees have the opportunity to illegally help customers by passing vehicles that would otherwise fail emissions tests. We find that for a significant number of inspectors, leniency is much higher for those customers with standard vehicles than for those with luxury cars, while a smaller group appears to favor wealthy drivers. We also investigate the psychological mechanisms explaining this wealth-based discriminatory behavior using a laboratory study. Our experiment shows that individuals are more willing to illegally help peers when those peers drive standard rather than luxury cars and that envy and empathy mediate this effect. Collectively, our results suggest the presence of wealth-based discrimination in employee-customer relations, and that envy toward wealthy customers and empathy toward those of similar economic status drive much of this illegal behavior. Implications for both theory and practice are discussed.

Keywords: Unethical behavior; Empathy; Envy; Fraud; Robin-Hood; Wealth-based discrimination