Thursday 19 October 2017

Business: The truth is that we're all little cheaters

The (Honest) Truth About Dishonesty
How We Lie to Everyone -- Especially Ourselves
By Dan Ariely

James Pressley

WE like to think of ourselves as honest. Yet in reality we all cheat, says behavioural economist Dan Ariely in his new book, 'The (Honest) Truth About Dishonesty'. No wonder the euro is falling apart.

Mr Ariely is the Duke University professor who wrote 'Predictably Irrational', a look at how irrational behaviour bends our lives in predictable ways. Though his new book doesn't discuss the euro debacle, it does document a human trait that has warped the single currency from the beginning.

Our behaviour reflects two conflicting motives: we want to feel good when we look in the mirror, yet we also hope to benefit from cheating, he says, drawing on experiments with thousands of people. The upshot: we cheat just a little, not enough to dent our self-image, he says.

"Very few people steal to a maximal degree," Mr Ariely writes. "But many good people cheat just a little here and there by rounding up their billable hours, claiming higher losses on their insurance claims, recommending unnecessary treatments."

What does this have to do with the euro? Plenty. The single-currency project has always entailed fiscal sleights of hand, political self-deception and outright cheating.

European leaders knew, for example, that their countries lacked elements deemed vital for an optimal currency area, such as flexible labour markets and similar business cycles. Yet they pressed on, convinced that all would be well if they could get their public debts and deficits under control.

In 2004, the Greek government disclosed that its socialist predecessor had sneaked into the euro with phoney data. Mr Ariely has filled his book with amusing examples of how the cheating psychology plays out in everyday life. Office workers who wouldn't dream of taking €3.50 from petty cash will help themselves to paper for their home printer.

Mr Ariely and his colleagues explored such behaviour in experiments that offered students a chance to earn cash by filling out a mathematical worksheet. The more problems they solved, the more money they got.

Though the experimenters did encounter some aggressive cheaters, it was the little chiselers who cost the most.

"Because there were so many of them, we lost thousands and thousands of dollars to them -- much, much more than we lost to the aggressive cheaters," he writes.

Seen from that perspective, Greece may be the least of Europe's worries.

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