Adding up the Little Things

Another section of quote from Predictably Irrational, from the chapter, "The Context of Our Character, Part I: Why We Are Dishonest, and What We Can Do about It":

In 2004, the total cost of all robberies in the United States was $525 million, and the average loss from a single robbery was about $1,300. These amounts are not very high, when we consider how much police, judicial, and corrections muscle is put into the capture and confinement of robbers--let alone the amount of newspaper and television coverage these kinds of crimes elicit. I'm not suggesting that we go easy on career criminals, of course. They are thieves, and we must protect ourselves from their acts.

But consider this: every year, employees' theft and fraud at the workplace are estimated at about $600 billion. That figure is dramatically higher than the combined financial cost of robbery, burglary, larceny-theft, and automobile theft (totaling about $16 billion in 2004); it is much more than what all the career criminals in the United States could steal in their lifetimes; and it's also almost twice the market capitalization of General Electric. But there's much more. Each year, according to reports by the insurance industry, individuals add a bogus $24 billion to their claims of property losses. The IRS, meanwhile estimates a loss of $350 billion per year, representing the gap between what the feds think people should pay in taxes and what they do pay. The retails industry has its own headache: it loses $16 billion a year to customers who buy clothes, wear them with the tags tucked in, and return these secondhand clothes for a full refund.

Add to this sundry everyday examples of dishonesty--the congressman accepting golfing junkets from his favorite lobbyist; the physician making kickback deals with the laboratories that he uses; the corporate executive who backdates his stock options to boost his financial pay--and you have a huge amount of unsavory economic activity, dramatically larger than that of the standard household crooks.