Predictably Irrational

by Dan Ariely

  Yes, we were tempting them. We were making it easy to cheat. Would the crème de la crème of America’s youth take the bait? We’d have to see.

  AS THE FIRST group settled into their seats, we explained the rules and handed out the tests. They worked for their 15 minutes, then copied their answers onto the bubble sheet, and turned in their worksheets and bubble sheets. These students were our control group. Since they hadn’t been given any of the answers, they had no opportunity at all to cheat. On average, they got 32.6 of the 50 questions right.

  What do you predict that the participants in our other experimental conditions did? Given that the participants in the control condition solved on average 32.6 questions correctly, how many questions do you think the participants in the other three conditions claimed to have solved correctly?

  Condition 1

  Control

  = 32.6

  Condition 2

  Self-check

  = _____

  Condition 3

  Self-check + shredding

  = _____

  Condition 4

  Self-check + shredding + money jar

  = _____

  What about the second group? They too answered the questions. But this time, when they transferred their answers to the bubble sheet, they could see the correct answers. Would they sweep their integrity under the rug for an extra 10 cents per question? As it turned out, this group claimed to have solved on average 36.2 questions. Were they smarter than our control group? Doubtful. Instead, we had caught them in a bit of cheating (by about 3.6 questions).

  What about the third group? This time we upped the ante. They not only got to see the correct answers but were also asked to shred their worksheets. Did they take the bait? Yes, they cheated. On average they claimed to have solved 35.9 questions correctly—more than the participants in the control condition, but about the same as the participants in the second group (the group that did not shred their worksheets).

  Finally came the students who were told to shred not only their worksheets but the bubble sheets as well—and then dip their hands into the money jar and withdraw whatever they deserved. Like angels they shredded their worksheets, stuck their hands into the money jar, and withdrew their coins. The problem was that these angels had dirty faces: their claims added up to an average 36.1 correct answers—quite a bit higher than the 32.6 of our control group, but basically the same as the other two groups who had the opportunity to cheat.

  What did we learn from this experiment? The first conclusion, is that when given the opportunity, many honest people will cheat. In fact, rather than finding that a few bad apples weighted the averages, we discovered that the majority of people cheated, and that they cheated just a little bit.* And before you blame the refined air at the Harvard Business School for this level of dishonesty, I should add that we conducted similar experiments at MIT, Princeton, UCLA, and Yale with similar results.

  The second, and more counterintuitive, result was even more impressive: once tempted to cheat, the participants didn’t seem to be as influenced by the risk of being caught as one might think. When the students were given the opportunity to cheat without being able to shred their papers, they increased their correct answers from 32.6 to 36.2. But when they were offered the chance to shred their papers—hiding their little crime completely—they didn’t push their dishonesty farther. They still cheated at about the same level. This means that even when we have no chance of getting caught, we still don’t become wildly dishonest.

  When the students could shred both their papers, dip their hand into the money jar, and walk away, every one of them could have claimed a perfect test score, or could have taken more money (the jar had about $100 in it). But none of them did. Why? Something held them back—something inside them. But what was it? What is honesty, anyhow?

  TO THAT QUESTION, Adam Smith, the great economic thinker, had a pleasant reply: “Nature, when she formed man for society, endowed him with an original desire to please, and an original aversion to offend his bretheren. She taught him to feel pleasure in their favourable, and pain in their unfavourable regard,” he noted.

  To this Smith added, “The success of most people . . . almost always depends upon the favour and good opinion of their neighbours and equals; and without a tolerably regular conduct these can very seldom be obtained. The good old proverb, therefore, that honesty is always the best policy, holds, in such situations, almost always perfectly true.”

  That sounds like a plausible industrial-age explanation, as balanced and harmonious as a set of balance weights and perfectly meshed gears. However optimistic this perspective might seem, Smith’s theory had a darker corollary: since people engage in a cost-benefit analysis with regard to honesty, they can also engage in a cost-benefit analysis to be dishonest. According to this perspective, individuals are honest only to the extent that suits them (including their desire to please others).

  Are decisions about honesty and dishonesty based on the same cost-benefit analysis that we use to decide between cars, cheeses, and computers? I don’t think so. First of all, can you imagine a friend explaining to you the cost-benefit analysis that went into buying his new laptop? Of course. But can you imagine your friend sharing with you a cost-benefit analysis of her decision to steal a laptop? Of course not—not unless your friend is a professional thief. Rather, I agree with others (from Plato down) who say that honesty is something bigger—something that is considered a moral virtue in nearly every society.

  Sigmund Freud explained it this way. He said that as we grow up in society, we internalize the social virtues. This internalization leads to the development of the superego. In general, the superego is pleased when we comply with society’s ethics, and unhappy when we don’t. This is why we stop our car at four AM when we see a red light, even if we know that no one is around; and it is why we get a warm feeling when we return a lost wallet to its owner, even if our identity is never revealed. Such acts stimulate the reward centers of our brain—the nucleus accumbens and the caudate nucleus—and make us content.

  But if honesty is important to us (in a recent survey of nearly 36,000 high school students in the United States, 98 percent of them said it was important to be honest), and if honesty makes us feel good, why are we so frequently dishonest?

  This is my take. We care about honesty and we want to be honest. The problem is that our internal honesty monitor is active only when we contemplate big transgressions, like grabbing an entire box of pens from the conference hall. For the little transgressions, like taking a single pen or two pens, we don’t even consider how these actions would reflect on our honesty and so our superego stays asleep.

  Without the superego’s help, monitoring, and managing of our honesty, the only defense we have against this kind of transgression is a rational cost-benefit analysis. But who is going to consciously weigh the benefits of taking a towel from a hotel room versus the cost of being caught? Who is going to consider the costs and benefits of adding a few receipts to a tax statement? As we saw in the experiment at Harvard, the cost-benefit analysis, and the probability of getting caught in particular, does not seem to have much influence on dishonesty.

  THIS IS THE way the world turns. It’s almost impossible to open a newspaper without seeing a report of a dishonest or deceptive act. We watch as the credit card companies bleed their customers with outrageous interest rate hikes; as the airlines plunge into bankruptcy and then call on the federal government to get them—and their underfunded pension funds—out of trouble; and as schools defend the presence of soda machines on campus (and rake in millions from the soft drinks firms) all the while knowing that sugary drinks make kids hyperactive and fat. Taxes are a festival of eroding ethics, as the insightful and talented reporter David Cay Johnston of the New York Times describes in his book Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else.

  Against all of this, society, in the form of the governm
ent, has battled back, at least to some extent. The Sarbanes-Oxley Act of 2002 (which requires the chief executives of public companies to vouch for the firms’ audits and accounts) was passed to make debacles like Enron’s a thing of the past. Congress has also passed restrictions on “earmarking” (specifically the pork-barrel spending that politicians insert into larger federal bills). The Securities and Exchange Commission even passed requirements for additional disclosure about executives’ pay and perks—so that when we see a stretch limo carrying a Fortune 500 executive, we know pretty certainly how much the corporate chief inside is getting paid.

  But can external measures like these really plug all the holes and prevent dishonesty? Some critics say they can’t. Take the ethics reforms in Congress, for instance. The statutes ban lobbyists from serving free meals to congressmen and their aides at “widely attended” functions. So what have lobbyists done? Invited congressmen to luncheons with “limited” guest lists that circumvent the rule. Similarly, the new ethics laws ban lobbyists from flying congressmen in “fixed-wing” aircraft. So hey, how about a lift in a helicopter?

  The most amusing new law I’ve heard about is called the “toothpick rule.” It states that although lobbyists can no longer provide sit-down meals to congressmen, the lobbyists can still serve anything (presumably hors d’oeuvres) which the legislators can eat while standing up, plopping into their mouths using their fingers or a toothpick.

  Did this change the plans of the seafood industry, which had organized a sit-down pasta and oyster dinner for Washington’s legislators (called—you guessed it—“Let the World Be Your Oyster”)? Not by much. The seafood lobbyists did drop the pasta dish (too messy to fork up with a toothpick), but still fed the congressmen well with freshly opened raw oysters (which the congressmen slurped down standing up).23

  Sarbanes-Oxley has also been called ineffectual. Some critics say that it’s rigid and inflexible, but the loudest outcry is from those who call it ambiguous, inconsistent, inefficient, and outrageously expensive (especially for smaller firms). “It hasn’t cleaned up corruption,” argued William A. Niskanen, chairman of the Cato Institute; “it has only forced companies to jump through hoops.”

  So much for enforcing honesty through external controls. They may work in some cases, but not in others. Could there be a better cure for dishonesty?

  BEFORE I EVEN attempt to answer that question, let me describe an experiment we conducted that speaks volumes on the subject. A few years ago Nina, On, and I brought a group of participants together in a lab at UCLA and asked them to take a simple math test. The test consisted of 20 simple problems, each requiring participants to find two numbers that would add up to 10 (for a sample problem, see the table below). They had five minutes to solve as many of the problems as they could, after which they were entered into a lottery. If they won the lottery, they would receive ten dollars for each problem they solved correctly.

  As in our experiment at the Harvard Business School, some of the participants handed in their papers directly to the experimenter. They were our control group. The other participants wrote down on another sheet the number of questions they solved correctly, and then disposed of the originals. These participants, obviously, were the ones with the opportunity to cheat. So, given this opportunity, did these participants cheat? As you may have surmised, they did (but, of course, just by a bit).

  Look at your watch, note the time, and start searching for two

  numbers in the matrix below that will add up to exactly 10.

  How long did it take you?

  1.69

  1.82

  2.91

  4.67

  4.81

  3.05

  5.82

  5.06

  4.28

  6.36

  5.19

  4.57

  Up to now I have not told you anything new. But the key to this experiment was what preceded it. When the participants first came to the lab, we asked some of them to write down the names of 10 books that they read in high school. The others were asked to write down as many of the Ten Commandments as they could recall.* After they finished this “memory” part of the experiment, we asked them to begin working on the matrix task.

  This experimental setup meant that some of the participants were tempted to cheat after recalling 10 books that they read in high school, and some of them were tempted after recalling the Ten Commandments. Who do you think cheated more?

  When cheating was not possible, our participants, on average, solved 3.1 problems correctly.*

  When cheating was possible, the group that recalled 10 books read in high school achieved an average score of 4.1 questions solved (or 33 percent more than those who could not cheat).

  But the big question is what happened to the other group—the students who first wrote down the Ten Commandments, then took the test, and then ripped up their worksheets. This, as sportscasters say, was the group to watch. Would they cheat—or would the Ten Commandments have an effect on their integrity? The result surprised even us: the students who had been asked to recall the Ten Commandments had not cheated at all. They averaged three correct answers—the same basic score as the group that could not cheat, and one less than those who were able to cheat but had recalled the names of the books.

  As I walked home that evening I began to think about what had just happened. The group who listed 10 books cheated. Not a lot, certainly—only to that point where their internal reward mechanism (nucleus accumbens and superego) kicked in and rewarded them for stopping.

  But what a miracle the Ten Commandments had wrought! We didn’t even remind our participants what the Commandments were—we just asked each participant to recall them (and almost none of the participants could recall all 10). We hoped the exercise might evoke the idea of honesty among them. And this was clearly what it did. So, we wondered, what lessons about decreasing dishonesty can we learn from this experiment? It took us a few weeks to come to some conclusions.

  FOR ONE, PERHAPS we could bring the Bible back into public life. If we only want to reduce dishonesty, it might not be a bad idea. Then again, some people might object, on the grounds that the Bible implies an endorsement of a particular religion, or merely that it mixes religion in with the commercial and secular world. But perhaps an oath of a different nature would work. What especially impressed me about the experiment with the Ten Commandments was that the students who could remember only one or two Commandments were as affected by them as the students who remembered nearly all ten. This indicated that it was not the Commandments themselves that encouraged honesty, but the mere contemplation of a moral benchmark of some kind.

  If that were the case, then we could also use nonreligious benchmarks to raise the general level of honesty. For instance, what about the professional oaths that doctors, lawyers, and others swear to—or used to swear to? Could those professional oaths do the trick?

  The word profession comes from the Latin professus, meaning “affirmed publicly.” Professions started somewhere deep in the past in religion and then spread to medicine and law. Individuals who had mastered esoteric knowledge, it was said, not only had a monopoly on the practice of that knowledge, but had an obligation to use their power wisely and honestly. The oath—spoken and often written—was a reminder to practitioners to regulate their own behavior, and it also provided a set of rules that had to be followed in fulfilling the duties of their profession.

  Those oaths lasted a long time. But then, in the 1960s, a strong movement arose to deregulate professions. Professions were elitist organizations, it was argued, and needed to be turned out into the light of day. For the legal profession that meant more briefs written in plain English prose, cameras in the courtrooms, and advertising. Similar measures against elitism were applied to medicine, banking, and other professions as well. Much of this could have been beneficial, but something was lost when professions were dismantled. Strict professionalism was replaced by flexibility, individual judgment, the laws o
f commerce, and the urge for wealth, and with it disappeared the bedrock of ethics and values on which the professions had been built.

  A study by the state bar of California in the 1990s, for instance, found that a preponderance of attorneys in California were sick of the decline in honor in their work and “profoundly pessimistic” about the condition of the legal profession. Two-thirds said that lawyers today “compromise their professionalism as a result of economic pressure.” Nearly 80 percent said that the bar “fails to adequately punish unethical attorneys.” Half said they wouldn’t become attorneys if they had it to do over again.24

  A comparable study by the Maryland Judicial Task Force found similar distress among lawyers in that state. According to Maryland’s lawyers, their profession had degenerated so badly that “they were often irritable, short-tempered, argumentative, and verbally abusive” or “detached, withdrawn, preoccupied, or distracted.” When lawyers in Virginia were asked whether the increasing problems with professionalism were attributable to “a few bad apples” or to a widespread trend, they overwhelmingly said this was a widespread issue.25

  Lawyers in Florida have been deemed the worst.26 In 2003 the Florida bar reported that a “substantial minority” of lawyers were “money-grabbing, too clever, tricky, sneaky, and not trustworthy; who had little regard for the truth or fairness, willing to distort, manipulate, and conceal to win; arrogant, condescending, and abusive.” They were also “pompous and obnoxious.” What more can I say?

  The medical profession has its critics as well. The critics mention doctors who do unnecessary surgeries and other procedures just to boost the bottom line: who order tests at laboratories that are giving them kickbacks, and who lean toward medical tests on equipment that they just happen to own. And what about the influence of the pharmaceutical industry? A friend of mine said he sat waiting for his doctor for an hour recently. During that time, he said, four (very attractive) representatives of drug companies went freely into and out of the office, bringing lunch, free samples, and other gifts with them.