Close Close
ThinkAdvisor

Life Health > Running Your Business

Beware the ‘personal fudge factor’

By Brian Anderson

X
Your article was successfully shared with the contacts you provided.

When people consider acting unethically, do they tend to look at it as more of a “50 shades of grey” issue than a black-and-white issue?

Yep.

There are undoubtedly bugs in our moral code — hidden reasons and justifications in our own minds about why it’s OK to cheat or steal, up to a certain extent.

Dan Ariely, a professor of psychology and behavioral economics at Duke University and a founding member of the — love this name — Center for Advanced Hindsight, researches this very topic. He is known for conducting some amusing and unorthodox experiments and for questioning the forces that influence human behavior and the irrational ways in which we all often behave.

Ariely has given a number of TED Talks, including one that provides some interesting perspective for insurance and financial advisors who may wrestle with temptation to cheat a little here or there on seemingly minor issues.

Ariely says his interest in cheating started with the Enron scandal. He wondered whether it was just a few bad apples who capable of doing such things or a more endemic situation in which many people were capable of behaving this way. He also wondered under what circumstances cheating might be seen as more acceptable.

Through a series of experiments, Ariely found that there weren’t a few people who cheated a lot; in fact, there were a lot of people who cheated a little bit. And people tended to engage in unethical behavior more if they witnessed others like them cheating.

On the one hand, Ariely says, we all want to be able to look in the mirror and feel good about ourselves — so we don’t want to cheat. On the other hand, we might see that we could cheat a little bit and still feel good about ourselves.

“In economic theory, cheating is a very simple cost-benefit analysis,” Ariely said in a TED Talk on the subject. “You say, ‘What’s the probability of being caught? How much do I stand to gain from cheating? And how much punishment would I get if I get caught?’ And you weigh these options out, you do this simple cost-benefit analysis and you decide whether it’s worthwhile to commit the crime or not.”

John Q. Advisor comes across a situation where there is a choice to be made. It’s nothing he sees as major, but there is an ethical question nonetheless. He knows the choice he wants to make is wrong. But he sees others doing it, he thinks the risk of getting caught is minimal, and he finds a way to justify his actions in his mind. Maybe it’s the old “everybody else is doing it” or the easy way out: “In the grand scheme of things, this is inconsequential.”

But Advisor ultimately decides whether he can live with the choice or not.

“Maybe what is happening is that there is a level of cheating we can’t go over, but we can still benefit from cheating at a low degree as long as it doesn’t change our impressions about ourselves,” Ariely says. “We call this a personal fudge factor.”

In his research, Ariely also found that people’s tendency to cheat increases when they see another person or multiple people cheating who are from a group they relate to or are associated with, such as the same company or the same school. People may feel that gives them permission to cheat, or that it’s more acceptable if people in their group participate as well.

But if a person sees somebody from a group the person doesn’t relate to, such as a rival company or school, cheating, suddenly the person’s awareness of honesty goes up and cheating goes down, Ariely found.

The point is that we all have many intuitions in our lives, and you may believe your intuition is right even though it may fail an ethical test.

“We have very strong intuition about all kinds of things — our own abilities, how the economy works, how we should pay schoolteachers,” Ariely concluded in his TED Talk. “But unless we start testing those intuitions, we’re not going to do better.”

When you look at yourself in the mirror, do you like what you see?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.