I was reading The Guardian’s John Quiggin’s article yesterday, about banking being geared towards the 1% and a major crash being needed to fix it. John Quiggin is an economist at the University of Queensland and the thrust of his article is that “financialised capitalism has failed, and cannot be fixed by more and better regulation”.
I somewhat agree with him. After the massive crash of the system in 2008, has any banker been jailed? A few, but only a very few. And who has paid for the mistakes that were made? Joe Public through taxes and governments through austerity. Meanwhile, the banking system is back to pre-crash levels of profitability.
But that’s not the reason I’m posting this here. It was more a throwaway paragraph in the middle of John’s article that caught my eye:
Banking has developed an ingrained culture of dishonesty, illustrated by a fascinating experiment reported in Nature.
I immediately googled the details of the experiment in more depth. Basically, it uses an experiment of coin tossing to see how honest you are. This experiment proves to be reliable in gauging honesty, and goes as follows:
You get ten coin tosses. No one is watching, but you need to record your results. Heads pays $20 and tails pays nothing. You have an opportunity to get $200, but it would be shocking to see such a result as, statistically, it is pretty much impossible. The results should instead be around 50%.
The researchers then tried this experiment on a group of 128 employees selected from across various functions of a large international bank. Half the group were given the experiment and, in the set-up, told that they were doing this as themselves and their job had no relevance. The other half were set-up with their role as a banker made clear to be important to the test.
Yep, the bankers cheated and the people being themselves were honest.
“The control group behaved mostly honestly. On average, they reported successful coin flips in 51.6% of the cases, which is not significantly different from 50%. By contrast, the bank employees were substantially more dishonest in the professional identity condition. On average, they reported 58.2% successful coin flips, which is significantly above chance and significantly higher than the success rate reported by the control group.”
Intriguingly, they only found this skewed dishonest behaviour in people who work in banking, not in to other professions or industries.
If you want to read the whole detail, click here and download the 3-page PDF.