(Dis)honesty At Face Value

White lies. Fibs. Exaggerations. Omissions. A lie by any other name is still a lie. Why do we do it?

The art of deception is a survival skill that all creatures have in their inventory. The chameleon changes colours to blend in with its surrounding when faced with danger. The Possum “plays dead” in hopes its enemy will wander off. Gorillas have been documented leading their group away from food, only to return later on and enjoy it themselves. The bigger the brain, the larger the capacity to lie, and the larger the extent of dishonesty for personal gain. So why are people so comfortable lying?

Director of the centre of advanced hindsight at MIT and Professor of behavioural economics at Duke university, Dan Ariely, has been researching the reasons people lie for decades and has culminated his findings in a 2015 documentary entitled “(dis)honesty: The truth about lies. The dishonesty project outlines the role of rationalization as the mode of escaping moral fiber, stating that we want to lie, but also want to see ourselves as good people. This phenomenon is characterized as “The fudge factor”. Throughout his career Ariely created several studies which measured the extent of which people lie and the justifications behind them. Central theories revolve around social norms, personal gain, conflicts of interest, self-deception, and creative genius.

In regard to the financial industry, there is one justification that stands out among the rest. The reasoning behind the results of behaviour of participants in the matrix studies, which highlighted the relationship between direct and indirect gains and proved that the extent of our dishonesty increases when the object of our gain is further away from us. In this study, participants are told to answer questions within a limited timeframe and check their own answers to determine the corresponding cash prize. The more correct questions, the higher the cash reward. In all cases of the study the participants cheated for self- benefit. Among forty thousand people there were only twenty big cheaters (who lied about all incorrect answers, who stole roughly $400 total. There were however twenty thousand little cheaters (who lied about 1 or 2 incorrect answers) and stole roughly $50,000 in total. The overall economic impact of twenty thousand little cheaters far outweighs the impact of the twenty big cheaters. A variant was later added to the studies in which the prize was poker chips which could then be traded in for money. The results showed that participants cheated twice as much, emphasizing that lying for indirect gain is easier to rationalize.

What does this say about our future? As technology progresses we move farther away from direct contact with money and use alternate methods like credit cards, mobile apps, online accounts, purchases and transfers, to name a few. The further we get the easier it will be to deceive. If Ariely’s theory that people are twice as likely to lie for indirect gains is true, how will this affect the extent of which dishonesty, at the current rate, will define the world we give to generations?

To set a standard amongst the financial world we need to resist the idea that social norms have inherent validity. Its not right to exaggerate fees, to omit costs, to cheat taxes, to advise against a person’s best interest to further your own, to rationalize immoral behaviour. Remind yourself, and remind others that moral fiber exists as long as we hold ourselves accountable to it.

(Dis)Honesty: The truth about lies. Dir. Yael Melamede. Perf: Dan Ariely, 2015. Film.
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