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The Benefits of a Small Community

According to economist Steven Levitt, author of Freakonomics, being part of a community where others know us does influence behavior. The proof is in Paul Feldman's bagel business. Feldman delivers bagels to companies and allows individuals to pay on the honor system. Over the years, Feldman has kept meticulous records. Among the lessons learned, Levitt points out that smaller offices are more honest than big ones. An office with a few dozen employees generally outpays (for bagels) by 3 to 5 percent an office with a few hundred employees.

This may seem counterintuitive. In a bigger office, a bigger crowd is bound to convene around the bagel table, providing more witnesses to make sure you drop your money in the box. But in the big office/small office comparison, bagel crime seems to mirror street crime. There is far less street crime per capita in rural areas than in cities, in large part because a rural criminal is more likely to be known (and therefore caught). Also, a small community tends to exert greater social incentives against crime, the main one being shame.

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