Bankers are basically just like everybody else. For the most part, they're honest people, unless they are reminded that they work in a bank. That is according to a new study conducted by researchers at the University of Zurich.
A spate of scandals that rocked the banking industry in the last decade has led to the growing distrust in bankers. Critics have even pointed out that the general corrosion of the industry's reputation is due to a corrupt banking culture that encourages bankers to be dishonest. This is why Alain Cohn, behavioral economist at the University of Chicago, set out with his Switzerland-based colleagues to look deeper into this claim.
The study found that bankers are not actually bad people themselves. The problem, according to the researchers, is the prevailing work culture in the bank industry where financial and material success is highly favored to the point of pushing people to be dishonest.
The researchers were able to reach this conclusion by recruiting 128 workers for an undisclosed major bank and randomly assigning them to two groups. One group was asked to answer random questions such as "How often do you watch TV?" while the control group was asked questions about their profession such as "At which bank do you work?"
The researchers then asked the participants to toss a coin 10 times. They told them that for each time they guessed head or tail correctly, they would be given $20 but only if their score was equal to or more than the score of another participant chosen randomly.
What the scientists found out was quite surprising. Under most circumstances, most people would not cheat when reporting their toss coin scores, even with the potential financial incentive of $200.
The bankers who answered the everyday life questionnaire reported a 51.6 percentage score on the toss coins, which statistically speaking sits around the right probability range, since the chances of getting a toss coin guess right is 50 percent.
The other group, however, reported an average percentage score of 58.2 percent, a significantly higher score than statistics predicts, leading the researchers to believe that the group that answered the profession-related questions were more inclined to lie about their scores. Cohn also says that some 10 percent of this group reported that they got 10 out of 10 coin flips right, even though the odds of that happening are less than one out of 1,000.
To allay criticisms that the study was done only on workers at a single bank, the researchers conducted the same study on another 133 participants from other banks. They were able to replicate the results.
Additionally, they conducted the study on other groups of people from other industries, including manufacturing, telecommunications, medicine and other fields, and found that those who answered the work-related questions did not report a percentage score higher than what statistics allows.
They also recruited 222 college students for a similar study to rule out the possibility that dishonesty was prompted by money and not banking culture and found no significant effect on dishonesty.
"Our results thus suggest that the prevailing business culture in the banking industry weakens and undermines the honesty norm, implying that measures to re-establish an honest culture are very important," Cohn says.
Cohn suggests that the banking industry can perhaps take a page out of the medicine industry's book and institute a professional oath similar to the Hippocratic Oath. Studies have shown that requiring persons to sign their names on an insurance form reduces the instances of people making false claims. Requiring bankers to put their names to an oath could likely do the same.
"Our results suggest that banks should encourage honest behaviors by changing the norms associated with their workers' professional identity," says Cohn. "It is very important to let employees know exactly what desired and undesired behaviors are. Then we could use a professional oath to activate these norms."
Results of the study are published in the journal Nature.