To Cheat, or Not to Cheat

It is a month since I last wrote a blog. Just to ensure that I retain the habit of writing blogs, I fall back on my favourite book “Predictably Irrational” by Dan Ariely. In this blog, I summarise two chapters of this book written on “character” – it explores the circumstances when honest people cheat and how non-monetary exchanges increase the chances of cheating.

In 2004, the total cost of all robberies in the United States was $525 million. Compare that to the $600 billion that is lost because of employee’s theft and fraud at the work place. The retail industry loses $16 billion a year to customers who buy clothes, wear them with the tags tucked in, and return these secondhand clothes for a full refund. India hasn’t faced this problem yet - Thanks to the punch line “Goods once sold will not be taken back”

In this blog, we are not talking about crooks who are dishonest thieves but about people who generally consider themselves honest.

To see how much an honest person would cheat, a controlled experiment was conducted at the Harvard School of Business. Students were given 50 multiple choice questions to answer in 15 minutes. At the end of that time, they would be asked to transfer their answers from their worksheet to a scoring sheet. For each correct answer the students would receive 10 cents. In the second setup, a new group of students take the same test, but they were asked to transfer their answers to the score sheet that already has correct answers pre-marked. They would count how many questions they had answered correctly and write it at the top of the scoring sheet. The third group was asked to shred their worksheet and handover only the scoring sheet. As you see with every experiment the scope for cheating increased. The first group scored 32.6, but the second and third group scored 36.1. It was found that the increase in the score was mainly due to cheating. When given an opportunity, many honest people will cheat but not wildly. In another twist to the experiment, the fourth group was asked to write the Ten Commandments before taking the test. Surprisingly, this group, though having a similar scope for cheating like the third group, did not score as much as the third group. Writing the Ten Commandments before taking the test had an effect on their integrity and so they did not cheat.

Similar experiments were conducted in MIT but with a difference. Instead of giving cash, the students were given non-monetary tokens that could be encashed later. The results were very surprising. The third group cheated a whole lot more - as much as twice the first group. So when the cash was replaced with tokens the amount of cheating increased dramatically. In another experiment conducted in the MIT dormitories, a six-pack of Coke cans was left in the communal fridge. Within 3 days all the cans were gone. However when 6 one dollar bills were left in the fridge it remained untouched for more than 3 days. This means that not only did the non-monetary tokens “release” people from some of their moral constraints, but for quite a few of them, the extent of the release was so complete that they cheated as much as possible.

A person may not feel dishonest or guilty, taking a pen from office supplies or using photocopiers for personal use. But he would not take any cash that he finds in the office cupboard. When we deal with money, we are primed to think about actions as if we had just signed an honor code. But look at the latitude we have with non-monetary exchanges. When we look around us, much of the dishonesty we see involves cheating that is one step removed from cash. Companies cheat with their accounting practices; executives cheat by using backdated stock options; individuals exaggerate the cost of the television on their property loss report, or employees falsely report a meal as a business meal.

How can we fix this? We could label each item in the supply cabinet with a price (for instance) or use wording to explain stocks and stock options clearly in terms of their monetary value. However, in the larger context, we need to wake up to the connection between non-monetary currency and our tendency to cheat. Develop and maintain high level of integrity by doing daily prayers and reading spiritual and moral books. Let not even an iota of dishonest thought come to your mind. By assigning currency values to the non-monetary objects, make sure it influences you to not cheat.

Happy Reading,
Ram