- Researchers from Harvard and University of Utah found that the mere promise of money is enough to cause people to make unethical decisions
- Results of the study found people would engage in insider trading and lying if they stood to gain financially, but they wouldn’t if there was no money involved
- Participants ‘completely lost track of everything’ in the effort of pursuing cash
PUBLISHED: 15:47 EST, 14 June 2013 | UPDATED: 21:29 EST, 14 June 2013
The mere prospect of cash can make unethical behavior much more likely, found a study released last month.
Researchers from the University of Utah and Harvard wanted to find out exactly what kind of effect the promise of money had on people’s behavior.
The study found that when people stood to gain financially, they were much more likely to behave unethically than otherwise.
The price of ethics: The study found that people behave more unethically when they stand to gain financially, especially in the realm of business
‘We were interested in why good people would do bad behavior,’ Kristin Smith-Crowe, a management professor and co-author of the study told CNBC.
Smith-Crow of the University of Utah and Maryam Kouchaki of Harvard University used 324 university students for the study. The group was broken into two groups and took part in the same exercises – only one group was offered a financial reward for certain behavior, and the other wasn’t.
In one exercise, the students were presented with unethical acts and asked how likely they were to engage in the acts – one group for money, and one group for nothing.
In another, they played a ‘deception game,’ in which one group could earn more money by lying rather than telling the truth, and the other would gain nothing from the lies.
A third game allowed the students to choose to hire an employee who would share insider information if hired, and for the second group the candidate had no inside knowledge.
Greed is good: Gordon Gekko’s mantra rings true for a lot of top executives in the business world
In the fourth game, students engaged in a performance task in which they could earn money by being dishonest (there was nothing to gain by being dishonest for the second group).
The study found that people given an opportunity for financial gain were much more likely to be unethical in their intentions, decisions and behavior than those who weren’t.
A sample scenario is: ‘You work as an office assistant for a department at a University. You’re alone in the office making copies and realize you’re out of copy paper at home. You therefore slip a ream of paper into your backpack.’
‘The study didn’t ask people to do horrible acts, there were more mundane like stealing office supplies,’ Smith-Crowe told CNBC.
Cold hard cash: It’s been said that money corrupts, but the latest study shows the mere thought of it is enough to prompt unethical behavior
‘But it just shows how insidious this can be. These were normal people and this is something we can all be affected by,’ she said.
Smith-Crowe said that when it comes to making a business decision, study participants with the promise of money set aside their moral issues across the board.
It’s this kind of behavior we’ve seen often in the downfall of major corporations: white collar crimes that begin with a small ethical misstep and snowball into huge acts of fraud.
In recent years, we’ve seen huge corporations such as Enron and Lehmann Brothers collapse due to fraud, and Bernie Madoff who defrauded investors of almost $65 billion.
Smith-Crowe said that when participants in the study had an opportunity for financial gain, they became single-minded in the pursuance of it.
‘They completely lost track of everything else except pursuing their self interests,’ Smith-Crowe told CNBC.
‘They focused on the cost benefit of their decisions rather than how it might affect other people.’
Cashing in: Study participants set aside all moral questions when making business decisions that would bring in more money
The study is just the latest in a series of academic studies that show that money corrupts. One 2012 study by the University of Michigan showed that ‘upper class individuals behave more unethically that lower-class individuals’, which researchers said showed a more favorable attitude towards greed.
The findings show that ‘the mere presence of money… can serve as a prompt for immoral behavior operating through a business decision frame,’ the study notes.
‘These findings suggest that money is a more insidious corrupting factor than previously appreciated, as mere, subtle exposure to money can be a corrupting influence,’ it concludes.
‘The next question is how business decisions can be framed so that money won’t be corrupting,’ said Smith-Crowe to CNBC.
‘We’re looking into that. We hope there’s a positive story out there.’