Information and Incentives

I tell folks all the time that  99% of the time the problem with bad governance is not bad people in the government (or at least not bad before they entered government) but bad incentives and information.

Take the recent public reaction against the new TSA search procedures.  Its not that everyone in the TSA aspired for a job where they could grope stranger's nads.  Its that the incentives in government make risk management impossible.

Let's look first at the cost side.  How much do internal TSA evaluation and incentive systems value

  • protection of individual rights and privacy
  • stewardship of taxpayers money

Can we safely say close to zero?  I don't think anyone at the TSA is being denied promotion because they were insufficiently concerned with the fourth amendment.

So what is it that does matter in their incentive system?  I would argue that they have one single, overriding concern -- to avoid an incident for which they can be retroactively blamed as being insufficiently diligent.   If you are confused about how this incentive might arise, Conservatives need only look at themselves.  How many of you have pounded Janey Napolitano for being insufficiently diligent, for example in her "the system worked as it was supposed to" comments.

I spent a lot of time at HBS, in consulting at McKinsey, and in corporate life worrying about incentive systems.  And the absolute first rule, in my mind, is to ignore the official incentive system and explore what really drives behavior.  For example, a company might have a finely balanced set of published performance measures, but if the last three promotions all went to the person who sucked up the most to the boss, the latter will likely influence behavior much more than the published system.

The same is true at the TSA.  I have no idea what their official performance metrics are.  But to a large extent these metrics are irrelevant anyway in an environment where it's impossible to be fired and salaries and promotions have more to do with seniority than performance.   In this environment, unofficial incentives are going to be very powerful, and I am virtually positive the overriding such incentive is avoiding blame due to lack of diligence.

So we should not be surprised if the TSA runs out of control with its diligence in a way that is unchecked by any considerations of cost, privacy, or risk management.  This incentive is so powerful that the only way to override it is either through executive leadership or legislative action.  We'll see if we get either, but trashing privacy and the fourth amendment tend to be bipartisan hobbies so I am not wildly confident much will change.


  1. Matthew Brown:

    People want to believe that the problem with government is bad people because they want to believe that it can be fixed — that all we need to do is throw the bums out and put the RIGHT people in charge and everything will be great.

  2. DJB:

    "This incentive is so powerful that the only way to override it is either through executive leadership or legislative action."

    I read "Execute" leadership, which I thought was a great idea, and would be the more immediately effective option.

  3. ben:

    2 to 1? I recently passed through LAX and counted 10 TSA staff standing around joking and 2 actually doing anything. That's while we waited in a long line waiting to be processed. Not pleased. More recently I took two flights, first from Tel Aviv to Heathrow, and then on to Edinburgh. I counted 15 independent security checks, from bag checks to repeated boarding pass and passport checking. We were only in the air for a total of three hours and but somehow it took 14 hours from beginning to end to get through the day. A total of 1 hour 45 minutes in Tel Aviv to clear the first 8 checks. Boarding begins 60 minutes before take off. We only just clear security in time to make the boarding call. Yes, Israel faces real security threats, but the incentives for security overkill are no less real for governments elsewhere.

  4. ColoComment:

    Another factor, and one that contributes to air passengers' disinclination to complain on site, to ask for a supervisor, or to otherwise push back against the mini-tyranny of TSA is the feeling that your life would immediately get a whole lot worse if you did.

  5. ArtD0dger:

    Actually, if these search procedures become routine, the TSA WILL attract people who aspire to the job because they can grope stranger's nads.

  6. Aaron:

    One of the first things that I learned after being promoted to management in a past life was that when there is a difference between what people are being told to do, and what they understand that they are being paid to do, the smart people in the organization ignore what they are told to do, and go for the money.

    Of course government employee respond in the same way. I think the problem is that we don't want to see ourselves as sitting at the center of the flawed incentive system.