Banking Culture Encourages Dishonesty
What is it about the financial sector that encourages bad behavior?
December 30, 2014 |By Francesca Gino
A paper recently published in Nature magazine found that the financial sector’s culture encourages dishonesty.
For the study published in Nature, Alain Cohn and his colleagues divided 128 employees of a large bank into two groups. In the first group, bankers were primed to think about their professional identity, with questions such as “what is your function at this bank?” Bankers in the second group, instead, completed a survey about their wellbeing and everyday life that did not include questions about to their professional life. Next they all tossed a virtual coin 10 times, in private, knowing each time which outcome would earn them $20 for the flip. They then had to report their results online to claim any winnings. The second group of bankers behaved honestly—reporting half heads, half tails—but there was cheating among those whose professional identity had been primed. In their case, in fact, the percentage of winning tosses came in at an incredibly fortunate 58.2 percent. Interestingly, the researchers also conducted the same experiment in other industries but did not find the same skewing when employees were primed to think about their work.
The authors conclude that the prevailing business culture in the banking industry weakens and undermines honesty.
Research in moral psychology and behavioral ethics, however, suggests that the dishonesty may be due something more basic: money and number crunching are an important part of the banking industry.
When people are focused on money, research shows, they behave in self-interested ways. Even thinking about money leads people to be less helpful and fair in their dealings with others, to be less sensitive to social rejection, and to work harder toward personal goals. In fact, money can make us so focused on our selfish motives that it can even lead to unethical behavior.