Renting a Car in Mexico and New Zealand: The Role of Trust in Economic Efficiency and Cultural Differences

I recently read a book by Russ Roberts¹, in which he talked about the importance of trust in life, both to make life nicer² and to make economic life easier (and better).  Our experiences in renting a car in Mexico (we went to the Yucatan peninsula in January 2015) and in New Zealand (in 2014) are a good example of Mr. Roberts’ point.

When we were in New Zealand, we took the ferry from Wellington to Picton, at the top of the South Island.  We were going to pick up a car at the ferry terminal in Picton.  There was a long line at each rental agency (a lot of people had taken the ferry).  We were renting from Avis.  When we got to the front of the line, the people at the desk just gave us the keys, told us where the car was, and said to come back if there are any problems with it.  When we turned the car in three weeks later at the Christchurch airport, it was much the same: Here are the keys; send me the bill; good-bye.

The process in Mexico was very different.  The line at the Avis counter in the airport in Cancun was much shorter, but it took much longer.  Part of that may be that things go at a little slower pace in Mexico, but most of it was due to a lack of trust.  It took the guy ahead of me a long time to return his car because they had found a small scratch they said was not on the car when he picked it up and he hadn’t purchased the insurance.

When it was my turn, things continued to go slowly.  First, there were questions.  Then rental agent gave me a detailed list of all the charges and the expected total of my bill, making sure I understood what the total amount was going to be, none of which they did in New Zealand.  They needed to do it in Cancun, I suppose, because the total amount, once they added in all the extras, was so much more than the rate on the original reservation.  Finally, we went out and inspected the car, writing down every minor little mark – even though I was buying all of the insurance, so it didn’t matter.  When we turned the car in, ten days later, the process was much the same, and just as slow, including the inspection of the car.

While I expected renting a car in Mexico to take longer, I was surprised it was so laborious.  The key seemed to be a lack of trust.  It was like buying gas in Mexico.  You can’t pump gas yourself in Mexico (it’s like New Jersey, unless they have changed the rules in New Jersey recently), and the guidebooks tell you to check to make sure the person pumping the gas puts the meter back to zero and to watch him or her do it.

Similarly, the car rental process was in Mexico was so inefficient.  It took so much longer, it obviously costs the car rental company (and, therefore, the consumer) more, and it was so much more tiring than it needed to – all because ever last detail of the transaction had to be gone over.

In New Zealand there was a degree of trust between Avis and me, so the transaction could go quickly and smoothly.  In Mexico, however, the lack of trust made things slower, more difficult, and more costly.
------------
¹ Russ Roberts, How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness, p. 190-96 (2014).  I didn’t mention the title of the book in the body of the post because when some people see or hear “Adam Smith” they stop listening (or reading) because of the preconceived notions they have of Adam Smith.  Actually, Adam Smith is much more than what some people incorrectly think of The Wealth of Nations.  In any case, Mr. Roberts’ book is about Adam Smith’s “other book,” The Theory of Moral Sentiments.  The Theory of Moral Sentiments was originally published in 1759 and revised in 1791.  It is said that Adam Smith himself thought The Theory of Moral Sentiments was the better book.  (Nicholas Phillipson, Adam Smith: An Enlightened Life, p. 274 (2010).)

² The word that Adam Smith actually used was “lovelier.”  But Smith used the word in a different way than it is used today.  Here is how Russ Roberts explains it:

“[W]hen Smith says that we want to be lovely, he mean worthy of being loved. … He’s saying that we want to be seen as having integrity, honesty, good principles.  We want to earn respect, praise, attention, and our good name – our good reputation – honestly. (p. 42)

NOTE:  I have posted this article in both of my blogs, The View from Right Field and A Different New Zealand, because I thought it might be of interest to readers of both.

UPDATE (5/21/15 5:20 pm): Corrected a typo in the second to the last paragraph of the main body of the post.