Money Morality

A new blog, and a new look at the Societe Generale scandal! Dan Ariely takes a behaviorist approach to the scandal, citing a study done on Harvard and MIT students and their tendency to cheat (I've always wondered why these experiments usually involve ivy-league students. Perhaps ivy-leaguers have a predisposition to dishonesty...which would explain a lot about our government and big business...). You can read the details of the experiment in the post, but what were the main conclusions?

So what’s going on here and what lesson can we learn about it for Societe Generale? As it turns out, it is much easier for us to be dishonest when we are one step removed from cash. This is why we are more comfortable taking office supplies home than cash; Why it is relatively easy for executives to cheat by backdating their stock options; and this I suspect is why Jerome Kerviel was able to erase $7.14 billion for Societe Generale. After all, he was dealing with stock derivatives that are multiple steps removed from cash. This might seem a very pessimistic perspective on human nature, but if we accept that when we deal with more abstract and nonmonetary currency our morality is less able to guard us against dishonesty, we might be able to learn some lessons from this disaster and reduce the likelihood of waking up one day to another Societe Generale?

This can be taken further than just cheating and scandal. The same sort of moral abstraction can account for the enactment of trade or foreign policies that result in death, destruction, or poverty. By taking a step back, guilt and responsibility can often be transgressed. The question is: how do we get politicians to "feel" the impact of the policies they legislate?