Honesty is an important part of our everyday life. In both business and our private lives, relationships are made and broken based on our trust in the other party’s honesty and reciprocity.

A 2016 study investigated honesty, beliefs about honesty and economic growth in 15 countries and revealed large cross-national differences. Results showed that average honesty was positively associated with GDP per capita, suggesting a relationship between honesty and economic development. However, expectations about countries’ levels of honesty were not correlated with reality (the actual honesty in reporting the results of a coin flip experiment), but rather driven by cognitive biases (Hugh-Jones, 2016).

People typically value honesty, tend to have strong beliefs in their morality and want to maintain this aspect of their self-concept (Mazar et al., 2008). Self-interest may conflict with people’s honesty as an internalized social norm, but the resulting cognitive dissonance can be overcome by engaging in self-deception, creating moral “wiggle room” that enables people to act in a self-serving manner. When moral reminders are used, however, this self-deception can be reduced, as demonstrated in laboratory experiments conducted by Mazar and colleagues. It is not surprising, then, that a lack of social norms is a general driver of dishonest behavior, along with high benefits and low costs of external deception, a lack of self-awareness, as well as self-deception (Mazar & Ariely, 2006).

Honesty must also be understood in the context of group membership. Employees of a large international bank, for example, behaved honestly on average in an experiment’s control condition, but when their professional identity as bankers was rendered salient, a significant proportion of them became dishonest. This suggests that the prevailing business culture in the banking industry weakens and undermines the honesty norm (Cohn et al., 2014) (see also identity economics).

 

Cohn, A., Fehr, E. & Maréchal, M. (2014). Business culture and dishonesty in the banking industry. Nature, 516, 86-89.

Hugh-Jones, D. (2016). Honesty, beliefs about honesty, and economic growth in 15 countries. Journal of Economic Behavior & Organization, 127, 99-114.

Mazar, N., Amir, O., & Ariely, D. (2008). The dishonesty of honest people: A theory of self-concept maintenance. Journal of Marketing Research, 45(6), 633-644.

Mazar, N., & Ariely, D. (2006). Dishonesty in everyday life and its policy implications. Journal of Public Policy & Marketing, 25(1), 117-126.