of our own morality is connected to the amount of cheating we feel comfortable with. Essentially, we cheat up to the level that allows us to retain our self-image as reasonably honest individuals.
Into the Wild
Armed with this initial evidence against the SMORC, Racheli and I decided to get out of the lab and venture into a more natural setting. We wanted to examine common situations that one might encounter on any given day. And we wanted to test “real people” and not just students (though I have discovered that students don’t like to be told that they are not real people). Another component missing from our experimental paradigm up to that point was the opportunity for people to behave in positive and benevolent ways. In our lab experiments, the best our participants could do was not cheat. But in many real-life situations, people can exhibit behaviors that are not only neutral but are also charitable and generous. With this added nuance in mind, we looked for situations that would let us test both the negative and the positive sides of human nature.
IMAGINE A LARGE farmer’s market spanning the length of a street. The market is located in the heart of Be’er Sheva, a town in southern Israel. It’s a hot day, and hundreds of merchants have set out their wares in front of the stores that line both sides of the street. You can smell fresh herbs and sour pickles, freshly baked bread and ripe strawberries, and your eyes wander over plates of olives and cheese. The sound of merchants shouting praises of their goods surrounds you:
Eynav and Tali entered the market and headed in different directions, Eynav using a white cane to navigate the market. Each of them approached a few vegetable vendors and asked each of the sellers to pick out two kilos (about 4.5 pounds) of tomatoes for them while they went on another errand. Once they made their request, they left for about ten minutes, returned to pick up their tomatoes, paid, and left. From there they took the tomatoes to another vendor at the far end of the market who had agreed to judge the quality of the tomatoes from each seller. By comparing the quality of the tomatoes that were sold to Eynav and to Tali, we could figure out who got better produce and who got worse.
Did Eynav get a raw deal? Keep in mind that from a purely rational perspective, it would have made sense for the seller to choose his worst-looking tomatoes for her. After all, she could not possibly benefit from their aesthetic quality. A traditional economist from, say, the University of Chicago might even argue that in an effort to maximize the social welfare of everyone involved (the seller, Eynav, and the other consumers), the seller should have sold her the worst-looking tomatoes, keeping the pretty ones for people who could also enjoy that aspect of the tomatoes. As it turned out, the visual quality of the tomatoes chosen for Eynav was not worse and, in fact, was superior to those chosen for Tali. The sellers went out of their way, and at some cost to their business, to choose higher- quality produce for a blind customer.
WITH THOSE OPTIMISTIC results, we next turned to another profession that is often regarded with great suspicion: cab drivers. In the taxi world, there is a popular stunt called “long hauling,” which is the official term for taking passengers who don’t know their way around to their destination via a lengthy detour, sometimes adding substantially to the fare. For example, a study of cab drivers in Las Vegas found that some cabbies drive from McCarran International Airport to the Strip by going through a tunnel to Interstate 215, which can mount to a fare of $92 for what should be a two-mile journey.1
Given the reputation that cabbies have, one has to wonder whether they cheat in general and whether they would be more likely to cheat those who cannot detect their cheating. In our next experiment we asked Eynav and Tali to take a cab back and forth between the train station and Ben-Gurion University of the Negev twenty times. The way the cabs on this particular route work is as follows: if you have the driver activate the meter, the fare is around 25 NIS (about $7). However, there is a customary flat rate of 20 NIS (about $5.50) if the meter is not activated. In our setup, both Eynav and Tali always asked to have the meter activated. Sometimes drivers would tell the “amateur” passengers that it would be cheaper not to activate the meter; regardless, both of them always insisted on having the meter activated. At the end of the ride, Eynav and Tali asked the cab driver how much they owed them, paid, left the cab, and waited a few minutes before taking another cab back to the place they had just left.
Looking at the charges, we found that Eynav paid less than Tali, despite the fact that they both insisted on paying by the meter. How could this be? One possibility was that the drivers had taken Eynav on the shortest and cheapest route and had taken Tali for a longer ride. If that were the case, it would mean that the drivers had not cheated Eynav but that they had cheated Tali to some degree. But Eynav had a different account of the results. “I heard the cab drivers activate the meter when I asked them to,” she told us, “but later, before we reached our final destination, I heard many of them turn the meter off so that the fare would come out close to twenty NIS.” “That certainly never happened to me,” Tali said. “They never turned off the meter, and I always ended up paying around twenty-five NIS.”
There are two important aspects to these results. First, it’s clear that the cab drivers did not perform a cost- benefit analysis in order to optimize their earnings. If they had, they would have cheated Eynav more by telling her that the meter reading was higher than it really was or by driving her around the city for a bit. Second, the cab drivers did better than simply not cheat; they took Eynav’s interest into account and sacrificed some of their own income for her benefit.
Making Fudge
Clearly there’s a lot more going on here than Becker and standard economics would have us believe. For starters, the finding that the level of dishonesty is not influenced to a large degree (to any degree in our experiments) by the amount of money we stand to gain from being dishonest suggests that dishonesty is not an outcome of simply considering the costs and benefits of dishonesty. Moreover, the results showing that the level of dishonesty is unaltered by changes in the probability of being caught makes it even less likely that dishonesty is rooted in a cost-benefit analysis. Finally, the fact that many people cheat just a little when given the opportunity to do so suggests that the forces that govern dishonesty are much more complex (and more interesting) than predicted by the SMORC.
What is going on here? I’d like to propose a theory that we will spend much of this book examining. In a nutshell, the central thesis is that our behavior is driven by two opposing motivations. On one hand, we want to view ourselves as honest, honorable people. We want to be able to look at ourselves in the mirror and feel good about ourselves (psychologists call this ego motivation). On the other hand, we want to benefit from cheating and get as much money as possible (this is the standard financial motivation). Clearly these two motivations are in conflict. How can we secure the benefits of cheating and at the same time still view ourselves as honest, wonderful people?
This is where our amazing cognitive flexibility comes into play. Thanks to this human skill, as long as we cheat by only a little bit, we can benefit from cheating and still view ourselves as marvelous human beings. This balancing act is the process of rationalization, and it is the basis of what we’ll call the “fudge factor theory.”
To give you a better understanding of the fudge factor theory, think of the last time you calculated your tax return. How did you make peace with the ambiguous and unclear decisions you had to make? Would it be legitimate to write off a portion of your car repair as a business expense? If so, what amount would you feel comfortable with? And what if you had a second car? I’m not talking about justifying our decisions to the Internal Revenue Service (IRS); I’m talking about the way we are able to justify our exaggerated level of tax deductions to ourselves.
Or let’s say you go out to a restaurant with friends and they ask you to explain a work project you’ve been spending a lot of time on lately. Having done that, is the dinner now an acceptable business expense? Probably not.
