The wage employee is typically not super well off and it's much more personal to see a lowlife get ahead by cheating when you're poor. I think people get a lot more upset about cheats when they're barely making it by doing things the honest way.

Their motivation is personal and not rational. Some employees emotionally identify their workplace as their home, and their bosses like parents, so they do what they might do if someone stole from their home. Other workers incorrectly believe they will be rewarded for stopping a theft. Other workers just need an outlet where it’s socially acceptable for them to engage in greater-than-usual controlled violence against another person. Other workers just via personal morals feel that all theft should be stopped regardless of the rules/rewards. Other workers panic and don’t know what they should do in the case of shoplifting and then react chaotically/instinctually.

The cost to the company of a single employee injury or death sustained while stopping a shoplifter is probably equivalent to hundreds of single-person personal thefts. Even if there’s never any workers l-comp-esque payouts, the hours of administrative time spent reviewing and investigating the incident probably costs more than a dozen thefts.

Hypothetically (not saying it's justified):

You have one store where employees don't stop thieves.

You have another store where thieves are stopped by security and those who are caught have their hand chopped off.

A couple questions: 1) Is theft reduced 2) If theft is not reduced, does theft at least decrease at handless-thief store in favor of store that does nothing.

It's not hard for me to imagine that having say a hand chopped off even once can lead to hundreds of less thefts at a store.

My humble conjecture. Not saying hands should be chopped.