09 June 2015

The Truth About Dishonesty

The Flexible Nature of Honesty and Rationalisation

Humans are engaged in a constant internal conflict: the desire to view themselves as honest while simultaneously benefiting from dishonest acts. Thanks to our "flexible cognitive psychology" and the ability to rationalise our actions, we can do both. The speaker highlights that we tend to cheat "just a little bit", allowing us to gain from dishonesty while still maintaining a self-perception as good, honest people. This rationalisation is key; the more we can rationalise an action, the more dishonest we can be without feeling bad. The research, involving 30,000 people, revealed that while there are very few "big cheaters," there is a vast number of "little cheaters" whose collective minor transgressions (e.g., 18,000 individuals stealing $36,000 in total) have a far greater economic impact than the few major ones (e.g., 12 individuals stealing $150). This pattern is argued to reflect real-world society, where the majority of dishonesty stems from generally good people cheating slightly.

The Impact of Psychological Distance on Dishonesty

The transition towards a "cashless society" and complex financial instruments creates a significant "psychological distance" between individuals and the consequences of their actions. For instance, taking a pencil from an office feels vastly different from taking 10 cents from a petty cash box, even if the intent is to buy a pencil, because the act is removed from direct monetary exchange. This distance can make it easier for people to engage in dishonest behaviour without perceiving themselves as doing anything wrong. The banking industry is presented as a prime example, where manipulating complex systems like interest rates, with many layers and indirect impacts on the global economy, allows individuals to make detrimental decisions while still believing they are not doing "anything terrible".

Digitalisation and the Normalisation of Transgression

The digital realm fosters an "amazing level of rationalisation" for dishonest actions. The ease of illegal downloads, such as music or books, leads many, particularly young people, to not feel bad about it. They often rationalise these actions by claiming musicians want their music to be heard, record labels are evil, they weren't going to buy the music anyway, and "everybody is doing it". This contrasts sharply with the difficulty of rationalising a physical act like leaving a restaurant without paying, demonstrating how some situations lend themselves more readily to justification than others.

The Power of Moral Reminders and the "What the Hell" Effect

Even simple reminders of morality can significantly reduce dishonest behaviour. Experiments showed that asking students to recall the Ten Commandments, or even having self-declared atheists swear on a Bible, virtually eliminated cheating opportunities. This suggests that merely thinking about morality increases self-supervision and makes individuals more thoughtful about their actions, leading to fewer transgressions. However, continuous small acts of dishonesty can lead to a "what the hell effect". People balance feeling good about themselves with minor cheating, but if they cross a personal threshold and no longer perceive themselves as "good," they might switch to cheating "all the time," much like breaking a diet.

The Role of "New Pages" and Forgiveness

The Catholic confession is explored as a potential mechanism for addressing widespread dishonesty. While the idea that the "cost" of confession deterring cheating is not strongly supported, there is some evidence that feeling good and "clean" after confession encourages honest behaviour for a period. Most interestingly, confession might address the "what the hell effect" by allowing individuals to "open a new page". Experiments with non-Catholic "confession" processes (allowing people to acknowledge bad deeds and ask for forgiveness) showed a subsequent reduction in cheating. The speaker suggests that religion has "figured out" the need for this renewal, and questions how society can implement similar opportunities for public figures, like bankers, to periodically ask for forgiveness and "start a new page" to help them "feel clean again and able to act on their goodness".

Conflicts of Interest and the Need for Systemic Change

Conflicts of interest create a strong bias in how people perceive reality, making them justify their viewpoints. If motivated (e.g., by a favourite football team or a $5 million salary), individuals will interpret situations in a biased way. The example of a banker paid to view mortgage-backed securities as a good product illustrates how financial incentives, combined with peer influence and complex computations, can distort perception, even causing individuals to "shade their evaluation even further". The financial crisis is cited as a situation where people were placed in circumstances "guaranteed to blind or at least to distort their vision". The critical takeaway is that the problem isn't just a few "bad people"; rather, "we all have the capacity to be quite bad under the right circumstances". Therefore, merely removing individuals is insufficient; the fundamental change required is to alter the "incentive structure" that encourages such misbehaviour.