Compensating Suicide.

Author:Hebert, David J.
  1. Introduction

    This paper seeks to provide a new understanding of suicide in the workplace (and incentives created by steps taken to prevent it) in the hope that these tragic events can be reduced. Employee suicide, which we define as a person committing suicide as a direct result of factors caused by their workplace environment, is without a doubt a tragic event. Beyond the obvious effect that such an act has on the life of the individual, dozens if not hundreds of other people around and close to this person are affected as well. According to Paul and Jones (2009), approximately two-thirds of all suicides occur among people between the ages of twenty-five and sixty-five, and such suicides are particularly concentrated among people in the workplace. This finding comports with those of Mirza (2012), who studied the providers of employee assistance programs and found an increase in suicidal comments as well as fitness-for-duty referrals, which take mental health concerns into consideration. What's more, these employee suicides disproportionately affect people in developing countries.

    Listening to the news, one would conclude that employee suicide is the result of a confluence of undiagnosed depression and the desire to escape abusive or oppressive working conditions. These working conditions can be "first world oppressive," such as not having access to a window, having to work more than sixty hours per week, or having a fear of losing one's job, or they can be "third world oppressive," such as being physically beaten at work, made to work in appalling conditions, being paid barely above subsistence wages, or being forced to live on site in (typically abysmal) employer-provided housing. In other words, suicide by employees is understood to be the result of employees being harmed. This approach, popularized by Baumeister (1990) and extended by Agnew (1992), has come to be known as "escape theory."

    Not finding these psychologists' explanations satisfactory, economists have also offered insight. Hamermesh and Soss (1974) provide the first rational choice explanation of suicide. (1) Essentially, they model suicide as a costly end to the consumption of "living."

    Chuang and Huang (1997), Brainerd (2001), Lester (2001), and Suzuki (2008) study the link between various measures of economic well-being and suicide. Niedl (1996), Demir and Rodwell (2012), Balducci, Alfano, and Fraccaroli (2009), and Yildirim and Yildirim (2007) all find strong evidence that workplace bullying increases rates of depression and suicidal ideation and behavior. The conclusion of this research, summarized in Boccio and Macari (2014), is that removing that bullying will unambiguously be associated with positive outcomes and should decrease suicide rates. In other words, this literature arrives at a conclusion very similar to the work following the escape theory approach.

    We do not wish to dispute these findings here, as we believe that suicide is often the regrettable result of various factors and that efforts must be made to curtail this type of suicide. Instead, we take a different tack toward understanding employee suicide and posit that, in some situations, it might also be the unintended consequence of poorly designed policies meant to prevent suicide. Specifically, we examine the role of condolence payments to the families of people who commit suicide in influencing an individual's choice to commit suicide. Here, suicide is not the least-bad option but is instead the most-good option that the employee faces. Because of this situation, despite an overall acceptable quality of life, a person may still commit suicide. We distinguish this policy-induced suicide, as the employee willingly sacrifices himself or herself in order to achieve some sort of intergenerational investment. This action is fundamentally different from the type of suicide described by escape theory, in that the policy itself creates incentives that may induce suicides unrelated to adverse work conditions or other factors.

    Our theory can be further used to explain other forms of observed phenomena in the corporate world. For example, death is not the only form of self-sacrifice: severe bodily harm also qualifies. Our theory can also explain increases in employee abuse among peers. In these respects, our paper is most closely related to Marcotte (2003), which diverges (albeit slightly) from the escape theory that dominates virtually all aspects of suicide research. His paper extends Hamermesh and Soss (1974) to include attempted suicide, noting that some people are motivated by a wish to receive the increased social support they see given to people who unsuccessfully attempt suicide. The act of attempting suicide, therefore, is modeled as a type of gamble: if the person lives, then they receive a form of payoff. Where Marcotte (2003) argues that people may attempt suicide to secure benefits and examines the different means by which to commit suicide and their associated probabilities of death, our paper argues that people may commit suicide with certainty to secure benefits for dependents. Thus, we argue that under specific circumstances, the action is fundamentally different from other suicides.

    Our paper focuses on the suicides at Foxconn in 2010. Beginning in early 2010, a small number of suicides occurred at a particular Foxconn factory that happened to assemble products for Apple. (2) When the media found out, the call to action was loud and clear. Apple, which at the time was on its way to becoming the most profitable company in the world, was lambasted for outsourcing its labor to countries that abused their workers so severely that they were literally being driven to suicide to escape their awful working environments. Apple responded to this public outrage by pressuring Foxconn to compensate the victims' families, raise wages, and stop its abusive practices.

    According to conventional theory, the result should have been a clear decrease in suicides. However, what actually happened was an increase so severe and so alarming that Foxconn eventually installed suicide nets to prevent people from jumping off its buildings. Our work seeks to explain this observed phenomenon as a result of malaligned incentives created through implicit corporate policy.

    Our work contributes to two strands of literature. First, it contributes to the literature on moral hazard and insurance design. Insurance payments are often tailored to prevent the insured from abusing their coverage. Second, it contributes to the growing rational choice literature on seemingly irrational behavior. Starting with Becker (1968) and his work on the economics of crime, a fascinating area of economics has emerged that places seemingly irrational behavior squarely within the bounds of rational choice theory.

    Our paper proceeds as follows. Section 2 explains the history of the Foxconn suicides. Section 3 provides the theoretical explanation that we will be exploring. Section 4 tests our predictions with Foxconn, provides a brief discussion of alternative explanations, and explains why we believe our theory to be more accurate. We conclude with section 5. II. II.

  2. Employee Suicide at Foxconn

    All large companies--in fact, any large group of people--are statistically likely to have at least one person commit suicide over a sufficiently lengthy period. What is of interest for our purposes, however, is any instance of a significant change in the rate of suicide. In the case of Foxconn, the company experienced few suicides per year in absolute terms, with just one reported suicide in 2007 and one reported in 2009 (Tam 2010). However, employee suicide increased dramatically in 2010, with eighteen reported suicide attempts and fourteen confirmed deaths (Williams 2012; SINA English 2013). (3) After 2010, the number of suicides began to decrease. Thus, we have two periods of interest: the rapid increase from 2009 to 2010 and the steep decrease from 2010 to 2011. Table 1 summarizes these events.

    In July 2009, Sun Danyong, an employee at a Foxconn plant in Shenzhen (near Hong Kong), committed suicide after his home was raided and security guards allegedly beat him up. These incidents occurred after he...

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