A defense-economist-turned-office-caterer, Feldman quit analyst work in 1984 to sell bagels full time. Delivering to office parks around Washington, D.C., he faced the same math any high-volume, low-margin vendor faces: hiring someone to staff a register at every drop-off, or chasing down individual payments, would have cost more than the bagels themselves were worth. A cashier at each of 140 client companies was never going to pencil out for a dollar-a-bagel business.
The standard fix — a locked machine, a card reader, a person collecting cash — assumes customers can't be trusted and prices that assumption into the business. Feldman instead left an open cash box and a stack of bagels in the office break room each morning and came back before lunch to collect whatever money was there, effectively wagering that the cost of occasional theft would be lower than the cost of preventing it.
Feldman delivered bagels and a plywood cash box (after baskets and coffee cans both proved too easy to steal from) to a company's break room each morning with a handwritten price list, then returned before lunch to collect the money and leftovers — no register, no attendant, no enforcement beyond an occasional typed note shaming chronic underpayers. Because he could measure money collected against bagels taken down to the penny, the business became an accidental, continuously running experiment on white-collar honesty, run across hundreds of companies for two decades.
Accepted shrinkage as a cost of doing business, and the uncollected money became a live dataset on honesty, measured down to the penny.
Open cash box eliminated cashier costs, making the business viable.
Tracking bagels vs. money revealed payment rates and patterns.
Light social nudges (notes, personal delivery) kept honesty high enough.
Theft data became a free, continuous research dataset.
When prevention costs more than loss, accept the loss and measure it—the data can be more valuable than the savings.
By the mid-1990s the operation delivered roughly 700 dozen bagels a week to about 140 companies at an overall payment rate settling around 87-89%.
FOLLOW THE EVIDENCE
The sources
- What the Bagel Man Saw The New York Times Magazine (hosted via University of Chicago Price Theory) · pricetheory.uchicago.edu
- White-Collar Crime Writ Small: A Case Study of Bagels, Donuts, and the Honor System American Economic Review · aeaweb.org