Over the past several weeks, I’ve been discussing the topics covered in Dan Ariely’s book Predictably Irrational, a book about behavioral economics. I’ve also been providing my thoughts as to how you might use his findings in your business.
In the previous chapter, Chapter 11, of the book, Ariely began a discussion of cheating, the conditions under which normally honest people resort to cheating, and some ideas for stopping it.
As it turns out, according to Ariely’s findings, most people are prone to cheating when they can. And while we can minimize cheating by reminding people of their moral beliefs, we can not eliminate it, and we’d be kidding ourselves if we thought we could.
In Chapter 12 of Predictably Irrational, the final chapter I’ll be reviewing, the author discusses the important role context plays in determining how honest we are.
What he and his colleagues found through several experiments is that people are more tempted toward dishonesty when money is not involved. For example, people are more likely to take a pencil from the office than ten cents from the petty cash box to buy a pencil, or to take a Coke from a shared refrigerator than a dollar from a co-workers desk to buy one.
The Experiments
One of the experiments performed was to place a six pack of Coke in some community refrigerators in MIT dorms. In other community refrigerators Ariely inserted a plate with 6 one dollar bills on it. This experiment showed that while students were willing to take the Cokes, they were much less likely to take the cash.
In another experiment, the researchers set up conditions similar to the experiments conducted in Chapter 11. They created a math test and broke participants into three groups. One group handed their results to a grader who then paid the participant fifty cents for each correct answer. The second group was told to check their own test against the answer sheet, tear up their test, and tell the grader how many they had correct. They were also paid fifty cents for each correct answer. The third did the same, graded their own test, tore up their answer sheet, and told the grader how many they had correct. However, the third group was then paid with tokens instead of cash. They could walk 12 feet and redeem the tokens for fifty cents each, though.
They results of the experiment showed that the second group (who tore up their answer sheets and were rewarded with cash) cheated a little bit, but the third group, who were rewarded with tokens instead of cash, were willing to cheat a lot more. Some even cheated all the way and claimed to have gotten all the problems correct – something that was rare in any test were money was directly involved as a reward.
So, it seems the more removed actual money is from the situation, the more it releases people from their moral constraints. So while a company executive would not steal cash from an old lady, they would be willing to back-date stock options to enrich themselves.
It’s just so much easier for people to rationalize dishonesty when non-monetary objects (e.g. tokens, stock options, Paypal accounts) are involved rather than real money.
So it does seem that cash actually makes people more honest. And the fact that we are moving more and more to a cashless society has the author concerned. As we move away from cash, there will be fewer and fewer “moral constraints” to keep people from misbehaving.
How Can You Use This?
One option is obviously to deal in cash, both as a consumer and as a business owner. It will take away the temptation from both you and your customers to cheat.
However, seeing that that is very unlikely given our penchant for plastic today, what else can we do?
One thing we can do is remember the lessons from the last chapter. Use reminders of people’s ethics and morality to keep them honest in their dealings with you.
And if you have employees or are an employee yourself, an occasional reminder that time is valuable might help. It’s important to keep in mind that time does equal money for employees since they are often being paid for their time, and the results they achieve during that time. So time spent surfing the Internet, updating Facebook or Twitter, or watching videos at Hulu may not feel like stealing from the company, but in a way it really is.
I hope you’ve enjoyed this series of posts about Predictably Irrational. Starting next week, I’ll be reviewing books on a pretty regular basis. Next Monday, I’ll start this new practice with a review of Bulletproof Your Job: 4 Simple Strategies to Ride Out the Rough Times and Come Out On Top at Work.
If there are other books you think I should review, please feel free to send me an email (dman (at) techgurumarketing (dot) com) or leave a comment.
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