Are bankers inherently dishonest?

24 November 2014

Interview with

Professor Michel Maréchal, University of Zurich

Bankers are among the most publicly-distrusted professionals at the moment. And Moneythis appears to be a label that they deserve, because a new study has shown that when bankers are thinking about banking, they are much more likely to behave dishonestly. Researchers at the University of Zurich asked more than 100 financiers to play a coin-tossing game and report the numbers of heads or tails they threw, knowing that they would get a financial reward for every head they reported. When they played after answering questions about their home-lives or leisure activities they totted up the coin tosses honestly. But if they played after being put into a banking mindset first, by talking about their jobs, they began to cheat, as Michel Maréchal explained to Chris Smith...

Michel -  So, we wanted to analyse whether the business culture in the banking industry favours dishonest behaviour.  We found in a survey that actually, the image of the banking industry is quite poor.  So, people think that bankers are more dishonest than criminals.  We were not only interested in the level of dishonesty, but whether the culture in the banking industry is likely to favour or tolerate dishonest behaviour.

Chris -  What did you do?  How did you explore that?

Michel -  The goal is to measure the influence of the culture.  This is not an easy task.  What we did is, we randomly assigned bank employees into two different experimental conditions.  So, in the main experimental group, we reminded the participants of their occupation and role by asking them about their professional background.  So for example, we asked them what bank they work for or how many years they have been working in the banking industry.  This manipulation puts their occupation and role into associated norms on top of their minds.  In contrast, we had a control condition, asking them question about for example, their leisure activity.

Chris -  I see.  So, what you're trying to do is put them in the banking mind-set before they do the tasks in your study or put them into a more kind of outside work mind-set and see whether when they're in their workplace mind-set, their level of honesty differs.

Michel -  Exactly.  So, subjects were instructed to flip a coin 10 times and to report the outcome of these coin tosses.  They knew in advance for each coin toss whether they would win $20 US if they flipped heads or if they flipped tails.  Because the subjects were unobserved while they were doing this task was impossible for us to identify who exactly cheated and who not.  But we know that around 50% of the coin flips should have been successful if everyone would have reported honestly.

Chris -  So, if you look at the whole group of them together, you can ask, "Is the proportion who are winning higher than chance would predict?"  and if so, that's telling you that there's some dishonesty going on.  People are misreporting what their real coin flips were.

Michel -  Exactly.

Chris -  You did this for people when they're in their banking mind-set, having been primed by these, 'think about your job' words, versus people who were thinking about the golf course or going swimming or something.  Did you see a difference between those two conditions?

Michel -  Yes.  So, we have basically two results.  When the bankers thought about the leisure time, they were honest on average.  So then there was not much cheating.  But when they were reminded of their occupational role, so when they were primed in the mind-set of a banker then they started to cheat significantly, which suggests the business culture or the norms in the banking industry favour dishonest behaviour.

Chris -  How do you think that this finding, which is fairly dramatic, should be taken forward?  What should be done and can anything be done to sort this out?  Is there any precedent for this sort of situation?

Michel -  The result suggests that banks should actually promote more honest behaviour by changing the norms that are associated with the profession as a banker.  But this will obviously take time and will require actions from various angles.  Many experts have actually suggested that bankers should take a professional oath, similar to the Hippocratic Oath for physicians.  However, such an oath alone would not be sufficient.  It's necessary that banks actually make a detailed analysis of their work routines to find out where and when the employees make critical decisions regarding norm obedience.  This will allow to generate common knowledge about what type of behaviours are actually socially desirable and which not, and also will allow that the peers enforce these new honesty norms.

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