The Honest Truth About Dishonesty

Dr. Dan Ariely

• Publisher: Harper
• Year: 2013
• ISBN:
  9780062298553
• Topic: Psychology
• Subtopic: Social Psychology
• Index: Psychology

"A lively tour through the impulses that cause many of us to cheat, the book offers especially keen insights into the ways in which we cut corners while still thinking of ourselves as moral people."— Time

Dan Ariely, behavioral economist and New York Times bestselling author of Predictably Irrational and The Upside of Irrationality, returns with a thought-provoking work that challenges our preconceptions about dishonesty and urges us to take an honest look at ourselves.

Does the chance of getting caught affect how likely we are to cheat?

How do companies pave the way for dishonesty?

Does collaboration make us more or less honest?

Does religion improve our honesty?

Most of us think of ourselves as honest, but, in fact, we all cheat. From Washington to Wall Street, the classroom to the workplace, unethical behavior is everywhere. None of us is immune, whether it's a white lie to head off trouble or padding our expense reports. In The (Honest) Truth About Dishonesty, award-winning author Dan Ariely shows why some things are easier to lie about than others; how getting caught matters less than we think in whether we cheat; and how business practices pave the way for unethical behavior, both intentionally and unintentionally. Ariely explores how unethical behavior works in the personal, professional, and political worlds, and how it affects all of us, even as we think of ourselves as having high moral standards. But all is not lost. Ariely also identifies what keeps us honest, pointing the way for achieving higher ethics in our everyday lives.

With compelling personal and academic findings, The (Honest) Truth About Dishonesty will change the way we see ourselves, our actions, and others.

CHAPTER 1

Testing the Simple Model of Rational Crime (SMORC)

Let me come right out and say it. They cheat. You cheat. And yes, I also cheat from time to time.

As a college professor, I try to mix things up a bit in order to keep my students interested in the material. To this end, I occasionally invite interesting guest speakers to class, which is also a nice way to reduce the time I spend on preparation. Basically, it’s a win-win-win situation for the guest speaker, the class, and, of course, me.

For one of these “get out of teaching free” lectures, I invited a special guest to my behavioral economics class. This clever, well-established man has a fine pedigree: before becoming a legendary business consultant to prominent banks and CEOs, he had earned his juris doctor and, before that, a bachelor’s at Princeton. “Over the past few years,” I told the class, “our distinguished guest has been helping business elites achieve their dreams!”

With that introduction, the guest took the stage. He was forthright from the get-go. “Today I am going to help you reach your dreams. Your dreams of MONEY!” he shouted with a thumping, Zumba-trainer voice. “Do you guys want to make some MONEY?”

Everyone nodded and laughed, appreciating his enthusiastic, non-buttoned-down approach.

“Is anybody here rich?” he asked. “I know I am, but you college students aren’t. No, you are all poor. But that’s going to change through the power of CHEATING! Let’s do it!”

He then recited the names of some infamous cheaters, from Genghis Khan through the present, including a dozen CEOs, Alex Rodriguez, Bernie Madoff, Martha Stewart, and more. “You all want to be like them,” he exhorted. “You want to have power and money! And all that can be yours through cheating. Pay attention, and I will give you the secret!”

With that inspiring introduction, it was now time for a group exercise. He asked the students to close their eyes and take three deep, cleansing breaths. “Imagine you have cheated and gotten your first ten million dollars,” he said. “What will you do with this money? You! In the turquoise shirt!”

“A house,” said the student bashfully.

“A HOUSE? We rich people call that a MANSION. You?” he said, pointing to another student.

“A vacation.”

“To the private island you own? Perfect! When you make the kind of money that great cheaters make, it changes your life. Is anyone here a foodie?”

A few students raised their hands.

“What about a meal made personally by Jacques Pépin? A wine tasting at Châteauneuf-du-Pape? When you make enough money, you can live large forever. Just ask Donald Trump! Look, we all know that for ten million dollars you would drive over your boyfriend or girlfriend. I am here to tell you that it is okay and to release the handbrake for you!”

By that time most of the students were starting to realize that they were not dealing with a serious role model. But having spent the last ten minutes sharing dreams about all the exciting things they would do with their first $10 million, they were torn between the desire to be rich and the recognition that cheating is morally wrong.

“I can sense your hesitation,” the lecturer said. “You must not let your emotions dictate your actions. You must confront your fears through a cost-benefit analysis. What are the pros of getting rich by cheating?” he asked.

“You get rich!” the students responded.

“That’s right. And what are the cons?”

“You get caught!”

“Ah,” said the lecturer, “There is a CHANCE you will get caught. BUT—here is the secret! Getting caught cheating is not the same as getting punished for cheating. Look at Bernie Ebbers, the ex-CEO of WorldCom. His lawyer whipped out the ‘Aw, shucks’ defense, saying that Ebbers simply did not know what was going on. Or Jeff Skilling, former CEO of Enron, who famously wrote an e-mail saying, ‘Shred the documents, they’re onto us.’ Skilling later testified that he was just being ‘sarcastic’! Now, if these defenses don’t work, you can always skip town to a country with no extradition laws!”

Slowly but surely, my guest lecturer—who in real life is a stand-up comedian named Jeff Kreisler and the author of a satirical book called Get Rich Cheating—was making a hard case for approaching financial decisions on a purely cost-benefit basis and paying no attention to moral considerations. Listening to Jeff’s lecture, the students realized that from a perfectly rational perspective, he was absolutely right. But at the same time they could not help but feel disturbed and repulsed by his endorsement of cheating as the best path to success.

At the end of the class, I asked the students to think about the extent to which their own behavior fit with the SMORC. “How many opportunities to cheat without getting caught do you have in a regular day?” I asked them. “How many of these opportunities do you take? How much more cheating would we see around us if everyone took Jeff’s cost-benefit approach?”

Setting Up the Testing Stage

Both Becker’s and Jeff’s approach to dishonesty are comprised of three basic elements: (1) the benefit that one stands to gain from the crime; (2) the probability of getting caught; and (3) the expected punishment if one is caught. By comparing the first component (the gain) with the last two components (the costs), the rational human being can determine whether committing a particular crime is worth it or not.

Now, it could be that the SMORC is an accurate description of the way people make decisions about honesty and cheating, but the uneasiness experienced by my students (and myself) with the implications of the SMORC suggests that it’s worth digging a bit further to figure out what is really going on. (The next few pages will describe in some detail the way we will measure cheating throughout this book, so please pay attention.)

My colleagues Nina Mazar (a professor at the University of Toronto) and On Amir (a professor at the University of California at San Diego) and I decided to take a closer look at how people cheat. We posted announcements all over the MIT campus (where I was a professor at the time), offering students a chance to earn up to $10 for about ten minutes of their time.* At the appointed time, participants entered a room where they sat in chairs with small desks attached (the typical exam-style setup). Next, each participant received a sheet of paper containing a series of twenty different matrices (structured like the example you see on the next page) and were told that their task was to find in each of these matrices two numbers that added up to 10 (we call this the matrix task, and we will refer to it throughout much of this book). We also told them that they had five minutes to solve as many of the twenty matrices as possible and that they would get paid 50 cents per correct answer (an amount that varied depending on the experiment). Once the experimenter said, “Begin!” the participants turned the page over and started solving these simple math problems as quickly as they could.

On the next page is a sample of what the sheet of paper looked like, with one matrix enlarged. How quickly can you find the pair of numbers that adds up to 10?

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Figure 1: Matrix Task

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This was how the experiment started for all the participants, but what happened at the end of the five minutes was different depending on the particular condition.

Imagine that you are in the control condition and you are hurrying to solve as many of the twenty matrices as possible. After a minute passes, you’ve solved one. Two more minutes pass, and you’re up to three. Then time is up, and you have four completed matrices. You’ve earned $2. You walk up to the experimenter’s desk and hand her your solutions. After checking your answers, the experimenter smiles approvingly. “Four solved,” she says and then counts out your earnings. “That’s it,” she says, and you’re on your way. (The scores in this control condition gave us the actual level of performance on this task.)

Now imagine you are in another setup, called the shredder condition, in which you have the opportunity to cheat. This condition is similar to the control condition, except that after the five minutes are up the experimenter tells you, “Now that you’ve finished, count the number of correct answers, put your worksheet through the shredder at the back of the room, and then come to the front of the room and tell me how many matrices you solved correctly.” If you were in this condition you would dutifully count your answers, shred your worksheet, report your performance, get paid, and be on your way.

If you were a participant in the shredder condition, what would you do? Would you cheat? And if so, by how much?

With the results for both of these conditions, we could compare the performance in the control condition, in which cheating was impossible, to the reported performance in the shredder condition, in which cheating was possible. If the scores were the same, we would conclude that no cheating had occurred. But if we saw that, statistically speaking, people performed “better” in the shredder condition, then we could conclude that our participants overreported their performance (cheated) when they had the opportunity to shred the evidence. And the degree of this group’s cheating would be the difference in the number of matrices they claimed to have solved correctly above and beyond the number of matrices participants actually solved correctly in the control condition.

Perhaps somewhat unsurprisingly, we found that given the opportunity, many people did fudge their score. In the control condition, participants solved on average four out of the twenty matrices. Participants in the shredder condition claimed to have solved an average of six—two more than in the control condition. And this overall increase did not result from a few individuals who claimed to solve a lot more matrices, but from lots of people who cheated by just a little bit.

More Money, More Cheating?

With this basic quantification of dishonesty under our belts, Nina, On, and I were ready to investigate what forces motivate people to cheat more and less. The SMORC tells us that people should cheat more when they stand a chance of getting more money without being caught or punished. That sounds both simple and intuitively appealing, so we decided to test it next. We set up another version of the matrix experiment, only this time we varied the amount of money the participants would get for solving each matrix correctly. Some participants were promised 25 cents per question; others were promised 50 cents, $1, $2, or $5. At the highest level, we promised some participants a whopping $10 for each correct answer. What do you think happened? Did the amount of cheating increase with the amount of money offered?

Before I divulge the answer, I want to tell you about a related experiment. This time, rather than taking the matrix test themselves, we asked another group of participants to guess how many answers those in the shredder condition would claim to solve correctly at each level of payment. Their predictions were that the claims of correctly solved matrices would increase as the amount of money went up. Essentially, their intuitive theory was the same as the premise of the SMORC. But they were wrong. It turned out that when we looked at the magnitude of cheating, our participants added two questions to their scores on average, regardless of the amount of money they could make per question. In fact, the amount of cheating was slightly lower when we promised our participants the highest amount of $10 for each correct answer.

Why wouldn’t the level of cheating increase with the amount of money offered? Why was cheating slightly lower at the highest level of payment? This insensitivity to the amount of reward suggests that dishonesty is most likely not an outcome of a cost-benefit analysis. If it were, the increase in the benefit (the amount of money offered) would lead to more cheating. And why was the level of cheating lowest when the payment was greatest? I suspect that when the amount of money that the participants could make per question was $10, it was harder for them to cheat and still feel good about their own sense of integrity (we will come back to this later). At $10 per matrix, we’re not talking about cheating on the level of, say, taking a pencil from the office. It’s more akin to taking several boxes of pens, a stapler, and a ream of printer paper, which is much more difficult to ignore or rationalize.

To Catch a Thief

Our next experiment looked at what might happen if participants felt that there was a higher probability of getting caught cheating. Basically, we inserted the mental equivalent of a partially operating security camera into the experiment.

We asked one group of participants to shred one half of their worksheet—which meant that if they were dishonest, we might find some evidence of it. We asked a second group to shred the whole work sheet, meaning that they could get off scot-free. Finally, we asked a third group to shred the whole worksheet, leave the testing room, and pay themselves from a sizable bowl of money filled with more than $100 in small bills and coins. In this self-paying condition, participants could not only cheat and get away with it, but they could also help themselves to a lot of extra cash.

Again, we asked a different group to predict how many questions, on average, participants would claim to solve correctly in each condition. Once again, they predicted that the human tendency for dishonesty would follow the SMORC and that participants would claim to solve more matrices as the probability of getting caught decreased.

What did we find? Once again, lots of people cheated, but just by a bit, and the level of cheating was the same across all three conditions (shredding half, shredding all, shredding all and self-paying).

NOW, YOU MIGHT wonder if the participants in our experiments reall...