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Bankers' Bad Behavior Is Driven By Workplace Culture

By Bethany Hubbard
Nov 19, 2014 10:59 PMNov 19, 2019 10:50 PM


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It’s been six years since the 2008 financial collapse, and revelations of dirty deeds in the banking industry are still making headlines even today. By one measure financial services is the least trusted sector of the economy the world over, beating even pharmaceutical companies and — gasp! — journalists. But the question remains, is this because banking attracts inherently dishonest people? Or is it that the culture of banking encourages otherwise fine people to act badly? A new study on bank employees finds that the latter is overwhelmingly true: bank employees tend to behave dishonestly only after they’ve been made to think about their profession.

Primed to Lie

Researchers from the University of Chicago and the University of Zurich recruited 128 bank employees from a large, international bank. The bank employees had 11.5 years of experience, on average. Roughly half of them worked in core business units (e.g. trading, private banking) and half worked in support units (e.g. human resources, risk management). The experiment was conducted online. It began with a survey: half of the employees were asked about their daily habits, such as ‘“How many hours per week do you watch television on average?” The other half of the group answered questions related to their profession, such as ‘‘What is your function at this bank?’’ This was intended to subconsciously prime one group to think of their professional association. The online prompt then told participants to pull out a coin and toss it ten times. They were told which was the winning side, let’s say heads. Each “heads,” they were informed, would win them $20. What’s more, they’d only get their payout if their number of “heads” was higher than some threshold — but they weren’t told what that number was. Subjects self-reported each coin toss result online — a setup ripe for cheating.

Under the Influence

The researchers found that participants primed with questions about their profession were more likely to lie and report a result that earned them cash. Though the participants performed the task in private, researchers were able to determine a dishonesty percentage by looking at the expected binomial distribution — meaning one would expect a 50/50 split of heads and tail tosses over the group as a whole. The control group reported 51.6 percent money-making tosses, not significantly different from the expected 50 percent, while the “primed” group reported 58.2 percent. To further confirm their findings, the researchers compared the bank employees to a group of 222 university students, who completed the same coin-tossing test. The students again were asked either control questions or questions related to banking (e.g. naming tasks a bank employee might perform) at the start of the study. The primed students showed no higher level of dishonesty than the control students, suggesting that being in the banking industry, and not simply the thought of money, changes behavior. The results were published this week in Nature.

Road to Recovery

The researchers believe this is a first step in beginning to understand how a business culture can alter employee behavior. If expectations of honesty replace expectations of deceit, then at an individual level people’s behavior might change too, the study’s results suggest. One such model could be the Hippocratic oath taken by some newly minted physicians, in which they pledge to ethically care for their patients. Some researchers have suggested that people working in the financial industry should take a similar oath. In the Netherlands a similar oath became requisite for bankers earlier this year. So, contrary to what it may sometimes seem, bankers aren’t all bad people. And there are ways to encourage them to be better. But banking? Well it’s in need of some urgent care.

Image by Peshkova / Shutterstock

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