Science News

Bankers behaving badly

Fri, 21st Nov 2014

Chris Smith

The financial environment makes bankers behave badly and become prone to dishonesty, new research has shown. Money

Public opinion surveys placed bankers amongst the leaat-trusted members of society, below even criminals and prisoners. This label might not be so wide of the mark, though, with a study in Switzerland showing that bankers playing a simple game are prone to cheat. 

Writing in Nature, Michel Marechal and his colleagues at the University of Zurich recruited over one hundred financiers to play a simple coin-tossing game. The participants were told to toss the coin and report whether they had thrown a heads or a tail. Through chance alone, half of the throws should return heads. The players were also told that for every head they would win $20. 

Critically, the throws were unobserved, so the bankers could elect to cheat if they wished and mis-report their outcomes to push up their winnings. But before they played the participants were asked some questions carefully chosen to make them think about their leisure activities or home-lives, or to put them into a banking mindset, by asking them about their work. 

When the participants were primed in this way to think about out-of-work activities, there was no evidence of cheating - the win rates they reported were exactly what would be expected through random chance, showing that they were playing honestly. But when the players were primed first with work-related questions they began to be dishonest, reporting significantly more wins across the group than would be expected. 

"It's not so much the banking sector attracts dishonest individuals, because when they weren't thinking about work these people behaved honestly," says Marechal. "But when they are in their work mindset, then they begin to cheat." Instead Marechal speculates that it is the environment in which they work that skews banker's perceptions of what is morally or socially acceptable behaviour. 

"The banks should do more to cultivate a culture of good behaviour. I think perhaps these people should take an oath similar to the Hippocratic oath sworn by doctors."

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I think you would find pretty much the same behaviour in any industry that pays bonuses for hitting targets with other people's assets. Recent revelations about police records and health service administration show what happens when management isn't actually in touch with the product, and targets are not related to actual achievement. Politics is the ultimate example of statistical cynicism: politicians claim credit when people are happy, and explain the necessity for hardship when they aren't, but they are not actually capable of controlling anything except their own salaries. alancalverd, Fri, 21st Nov 2014

I would think it would be an over-exaggeration to say that all "bankers" are dishonest.  I have always assumed that the bank tellers that I come face to face with are generally honest in, and out of their work. 

The "investment bankers" may be a different breed altogether, making cutthroat business decisions based on hunches. 

I wonder if those individuals who get into the high level investment banking are of a cutthroat mindset that allows them to easier rationalize the fudging the coin toss (or other game allowing cheating for profit).  So, while the work environment may foster that mentality, it may be the ones that have marginal ethics that actually get ahead in the environment. CliffordK, Sat, 22nd Nov 2014

The interesting thing about this study is that they controlled quite carefully for the issues that Alan raises. Also, the bankers behaved themselves when they weren't thinking about work - it was only when they were primed to adopt a banking mindset that they began to cheat. Other occupations did not succumb in the same way, and that was the main thrust of the findings - it's the environment that has reset the social norms in the bankers. chris, Sun, 23rd Nov 2014

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