The Deflation of “I’m Sorry” in the Economics of Apologies

We may have entered an era when a simple “I’m sorry” has little currency to the recipient of an apology. You might do better offering some form of compensation.

Effective apologies have become a mainstay topic when discussing crisis communications. Crisis counselors, including us, have encouraged sincerity buttressed by demonstrable actions to correct the wrong that required an apology. But a recent study hints that might not be enough to regain or even maintain a level of trust.

Benjamin Ho, an economics professor at Vassar who studies apologies, teamed up with Uber to test a variety of apologies following a ride gone bad. Apologies that included a commitment to do better in the future often backfired, especially when there was another subpar ride. The apologies that worked best involved monetary compensation.

If Ho was a psychologist, he might have explored why an apology tied to money was a better palliative than an apology tied to a commitment to do better. My dime store interpretation: People have become increasingly cynical. They doubt whether a promise about better behavior in the future will be – or can be – kept. Immediate gratification, like a $5 coupon for a future Uber ride, is more satisfying because it’s more tangible.

Tangibility is the key here. People expect an apology. It’s like “thoughts and prayers” after a mass shooting. But the apology isn’t enough. What counts is the action that follows. The more tangible the action, the better. Or as Ho put it, “Show me the money, basically.”

The Uber example focuses on money, but compensation isn’t the only tangible value apology recipients may desire. If a new water reservoir construction site suffers a major slide, neighbors will be less interested in money than concrete assurances the problem has been fixed. If your bank has been hacked, depositors will want protection from theft.

The phrase “action speaks louder than words” applies. Apologies are something you say. Actions are something you do. Saying you are sorry is important, but it’s best to prove your sincerity through meaningful, relevant and tangible actions. What you say and do after the apology is what counts.

You can’t overlook the economics of apologies. As Ho explained to NPR, “We tested apologies with or without a coupon. We found basically the most effective [Uber] apology, the ones that increased revenues, were just with a $5 coupon.”

Ho’s findings suggest apologies can be transactional. However, as any husband has discovered when bringing home flowers when he forgets an anniversary, the gesture only gets temporary love. You might earn forgiveness, but you don’t build trust with money or flowers.

Trust is the true goal of an apology. Individuals, businesses, nonprofits and public agencies need to realize the point of an apology is to regain trust that is lost or tested – and, when possible, to burnish a reputation. Trust and an enhanced reputation typically aren’t built on cash; they are earned by credible, demonstrable actions, which may include restitution.

The underlying message of Ho’s study is that ordinary, pro forma apologies aren’t enough now, if they ever were. If you face a crisis, big or small, treat it seriously and put on your work boots to do what’s necessary to earn trust.

Doing anything less is worse than a waste of time; it is a lost opportunity. And the loss could be permanent.