“Bankers have a very bad image,” said social scientist Alain Cohn of the University of Chicago. In surveys, “people think they are more dishonest than criminals.” Do bankers deserve their bad reputations? And if so, is the problem inherent dishonesty or a culture that encourages cheating? Why do bankers so often get embroiled in scandals?
That’s what Cohn and two colleagues from the University of Zurich decided to investigate with a scientific experiment. What they found was that in a special coin-flipping game set up to measure honesty, bankers didn’t cheat any more than random people, until they were prompted with information reminding them of their profession. Then they cheated quite a bit even though the maximum payoff in the game was only $200. The researchers believe this says something important about the culture in the banking industry. The results were published this week in the journal Nature in a paper titled: Does banking culture increase dishonesty?
Marie Claire Villeval of the University of Lyon offered an accompanying opinion piece with a more emphatic title: Professional identity can increase dishonestly.
The experiment, said Cohn, used a game similar to one they employed in a previous study on inmates in a maximum security prison. The prison subjects were asked to flip a coin ten times in a private room, after being told for each toss one outcome (heads or tails) would pay out 50 cents.
Cohn cautioned against using these experiments to make blanket judgments about groups because many factors can influence cheating in this game, including how much the subjects need the money.
What’s interesting, he said, is what happens within the same group when you change the starting conditions. In the prison experiment, half of the group was asked some random questions before the game and the other half, questions about their criminal history. “They cheated a lot more when they were reminded they were criminals,” said Cohn.
In this new experiment, 128 subjects were employees from a “large international bank” whose identity the scientists would not disclose. To make sure they weren’t observing a problem with just this one bank, they also included a smaller number of subjects drawn from a handful of other banks. In this experiment, the potential payoff per coin flip was $20.
To detect cheating, the scientists didn’t need any hidden cameras. They used statistics. If enough bankers go into the booth and flip the coin, and they win much more than 50% of the time, that’s a good indication that something funny is going on.
When asked a bunch of random questions first, such as how much TV they watched during a typical week, the bankers played pretty fair, winning about 52% of the time. They were, said Cohn, quite honest.
But that changed when they were asked questions prompting them to think about their status as bankers – such as what kind of work they did at the bank where they were employed. Then they won about 58% of the time, which is unlikely to happen unless some of them cheated.
Cohn said in the group prompted to think about their profession, about 10 percent of the bankers claimed they won on all 10 out of 10 flips. The odds of that happening by chance are less than one in a thousand.
In various control groups, people with other kinds of jobs didn’t cheat any more after being reminded of their occupations. The researchers looked at people from medicine, manufacturing, information technology and other areas, though they did not test scientists despite several prominent scandals rocking that profession as well.
The scientists interpreted their result to suggest something about the culture in the banking industry encourages people to think cheating is okay. As a solution, Cohn, said, they considered perhaps asking bankers to take something like the Hippocratic Oath. But that’s just a guess, he said. Finding a good solution would take a lot more research. It’s hard, he said, to change the culture across an entire industry.
