prior probability

Lots of big box retailers like Walmart and Home Depot are ramping up their use of self-scanners in order to reduce their labor costs. That is, instead of waiting in a long line to have a cashier ring up your purchases, you can save time by going up to a self scanner and ringing up your purchases yourself. But according to two respected researchers at the University of Leicester (Adrian Beck and Matt Hopkins), self-scanners increase the level of shoplifting by reducing the perception of risk (i.e. the risk of getting caught shoplifting). Professors Beck and Hopkins conducted an extensive consumer survey to measure the incidence of “shrinkage” (i.e. theft) in retailers who employ self-scanners. Surveys, however, are notoriously unreliable, as they are based on self-reports, making it impossible to verify their accuracy. Indeed, our first reaction to their study was: Who would ever admit to stealing? The answer, it turns out, is more people than you might imagine. One-fifth of shoppers in their survey admitted to stealing from self-checkouts, with the majority of those claiming they did so regularly. In other words, self-service checkout technology creates a trade off between convenience and speed on the one hand and higher rates of shrinkage on the other. (You can find a link to the study here. Also, check out this thread on reddit on “Walmart self checkout.”)

Credit: Market Realist