The economics of fruit picking
A British fruit company gave three economists the chance to increase the company’s fruit harvest by tinkering with pay schemes of the pickers.
The owner had been paying a piece rate — a rate per kilogram of fruit — but also needed to ensure that whether pickers spent the day on a bountiful field or a sparse one, their wages didn’t fall below the legal hourly minimum. Farmer Smith tried to adjust the piece rate each day so that it was always adequate but never generous: The more the work force picked, the lower the piece rate. But his workers were outwitting him by keeping an eye on each other, making sure nobody picked too quickly, and thus collectively slowing down and cranking up the piece rate.
Over the course of three summers, three different approaches raised the total harvest by 50% the first year, another 20% the second year, and by another 20% the third year.
Stay Connected