Surprising research on dishonesty -

Washington, Wall Street, and most we meet in everyday life cheat, yet we really have not spent a lot of time research why we are dishonest. Finding the truthful man is not going to be easy and we do not have a good understanding why. This has changed with Dan Ariely's insightful book The Honest Truth About Dishonesty. This is a book that will truly change your mind on a lot of moral issues. I cannot remember the last time there was so much research that I found surprising to my conventional views as an economist.

As an economist who has been strongly influenced by the work of Gary Becker, cheating is just a rational problem of cost/benefit analysis. People cheat because they look at the cost of being punished times the probability of being caught versus the potential gain.  You find the expected value of the cost and then determine if the benefit is worthy of the risk. Students cheat because of the gain of a grade. Businesses cheat for profit. People deal drugs because the profit is grader than the cost of going to jail. Life is  simple. Dan Ariely shows again and again that the rational standard model of cost benefit analysis does not work. We cheat all of the time regardless of the benefit or the chance of getting caught. Of course, when the cost is very low, we cheat more, but there is much more going on with our behavior.

Everyone cheats but just a little; however, the degree of cheating is measurable even though it does not fit the rational model. Ariely has tested in a very systematic manner the environment whereby people will cheat more or be more honest. Using very strong controlled measures in a lab, he can can make some definitive statements on honesty. There are actions that can make us more honest, but again they do not fit the simple rational model. Temptation is real, so action has to taken to reduce the environment for temptation even though this is usually not just increasing penalties. The implications for eduction, regulation, and management are very strong. This is a must read for just about every group I know.