Home > Uncategorized > Lying, cheating bankers are not born; they’re created.

Lying, cheating bankers are not born; they’re created.

from David Ruccio

Lying, cheating bankers are not born; they’re created.

That’s the conclusion of the new study by Alain CohnErnst Fehr, and Michel André Maréchal, “Business culture and dishonesty in the banking industry,” published in Science.

In other words, all of the various dishonest behaviors of bankers in recent years—from manipulating the foreign exchange market, LIBOR, and the gold market to mis-selling interest-rate swaps, mortgage backed securities, and credit-default swaps—for which some bankers have been fined but none of them jailed, can be attributed to the fact that “being a banker” made people more likely to cheat.

Their study is based on the idea that individuals have multiple social identities.

Which identity and associated norms are behaviourally relevant depends on the relative weight an individual attributes to an identity. In a given situation, behaviour is shifted towards those norms that are associated with the more salient identity. Thus, if the banking culture favours dishonest behaviours, it should be possible to trigger dishonesty in bank employees by rendering their professional identity salient.

And so they did: in a simple coin-toss game, they discovered respondents who were primed to think of themselves as “everyday people” did not lie about the results (despite the fact there was ample room to do so) while the group who were primed to think of themselves as “bankers” tended to lie significantly more.

The policy lesson the authors draw is that “banks should encourage honest behaviours by changing the norms associated with their workers’ professional identity.” An alternative lesson would be that the identity of lying, cheating bankers can be eliminated by getting rid of the banks themselves.

  1. Ken Zimmerman
    November 29, 2014 at 6:05 pm

    David, I wish this “study” was as important as you believe it is. Back when i earned by first PhD Talcott Parson’s work was still a major dominant factor in sociology. His view in simple terms is that people’s actions are explained by the normative system in which they are embedded. I and many others pointed out to Parsons (and others) that it is just not that simple. Saying that a person does what s/he does because of the cultural (normative) system in which they’re embedded is akin to saying “the devil made me do it,” and just as useful and informative. I agree with the notion that bankers are “created,” not born. But it is not culture that does the creating. Rather bankers are created in complicated interactions of many actors (human and nonhuman) in situations that are also themselves changed by the interactions. We need lots of ethnographic details on an ongoing basis to figure out how “banker worlds” are created, and how it might be possible to change those worlds. “Norm” is just a word. It explains nothing. Depending on how “banker actions” are created, even “getting rid of the banks themselves” may not end such actions.

  2. November 30, 2014 at 6:05 am

    Relevant in this context is the Zimbardo Stanford Prison Experiment. Students randomly assigned to play guards would take up their roles, acting very cruelly towards prisoners, while the prisoners also changed their behaviors to conform to their roles. Basically people act according to how they are expected to act, as was noted by Adam Smith a long time ago. Social Norms are maintained by expectations about these norms and people acting to conform to these expectations. This has some importance and relevance to how to go about creating change in the system.

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