Why bankers seem more dishonest than prison inmates
Bank employees are not inherently untruthful, but they work in a setting that could encourage cheating
- Several scandals have undermined confidence in bankers in recent years, giving them a bad reputation. Research by Alain Cohn, a postdoctoral fellow at Chicago Booth, with Ernst Fehr and Michel André Maréchal of the University of Zurich, underlines how dimly the public views banking. When the researchers asked survey participants to guess how bank employees would behave in an unsupervised coin-tossing task, participants predicted that bankers would be less honest than prison inmates (see chart).
- The research also suggests that the prevailing banking culture brings out dishonest behavior in otherwise truthful bankers. In an experiment, 208 bank employees were asked to toss a coin 10 times without supervision. Before each toss, participants were told that one side, heads or tails, would earn them $20. Those in the “treatment” group were asked to discuss their work as bankers before performing the coin tosses. They claimed winning 58% of the time, much higher than random chance—a benchmark of honesty—would predict. Nearly 10% of the group reported winning all 10 tosses.
- By contrast, bankers in the “control” group, who were not asked about their work, appeared to be honest, reporting that they won about half the tosses.
- The researchers speculate that being reminded about work may have made bankers in the treatment group more materialistic, and thus more willing than others to sacrifice honesty. They find that the bankers who strongly endorsed the statement “social status is primarily determined by financial success” were likely to cheat, and that the treatment group agreed more than the control group that the statement was true.