Over the last few years, I’ve had some harsh words for bankers, banks, and the culture of the industry. In truth, I could have said worse, and it would have been justified.

That’s why the story of this bank—the Hancock Bank of Mississippi—deserves to be told, watched, and learned from. This is a case where banks play the role they are ideally meant to play, that is, they invest in the stabilization and growth of the community they’re part of, and wind up profiting in the long run from those investments.

It’s the way they did this that’s particularly remarkable—by literally laundering debris-covered dollar bills and handing them out to people in the days immediately following the Hurricane Katrina. How and why they did this is best left to the film clip; suffice it to say that Hancock gave out around $50 million in cash, with handwritten IOUs for contracts, and lost (only) about $200,000 of that when all was said and done. But in the 3 months following the storm, Hancock grew by $1.4 billion. It’s not hard to imagine that the kind of genuine investment they made in their community—both customers and not—earned so much loyalty.

Banks and their leadership have a long way to go to get out of the hole they’ve dug for themselves in the minds of most people. While disasters provide a great opportunity to show caring, I don’t think that banks need to wait for another hurricane to do something –there are many ways to show care and commitment to the community, and it’s in everyone’s interest that they start soon.

There are times when uncertainty is unbearable: waiting to hear about a school or job acceptance or pacing outside the operating theatre of a loved one. But other times we’re a lot happier being in the dark – or at least partially shaded.

Many of us have spent time beside a pool. And you have probably wondered: what are the odds that no kids have peed in the pool (or adults, for that matter). When pressed, we’d have to admit that the odds that the pool is peefree are close to zero, but the lack of absolute certainty allows us to relax and swim anyway. We may comfort ourselves with some fuzzy thought about chlorine or the immense volume of the pool relative to a few bladders, and our concerns slip away.

Now, compare this with watching a kid stand by the pool and pee into it. Throw in some swimming trunks around his knees and a frantic, embarrassed parent scooping him up, alas, too late. Now you’re no longer able to hold onto the slight possibility that the pool is free of urine. The relative volume of the water in the pool is now little comfort when you just saw a kid pee in it. So, how happy are to take a quick dip?

When things are very close to being certain but we are still able to pretend otherwise, we are experts at using this window, small though it may be, and expanding it. For example, lots of people don’t wash their hands after visiting the lavatory, we all know this, but we can happily imagine that everyone that cooks and serves in a restaurant we patronize does. At least until we see a server leave the stall, straighten their shirt in the mirror, and walk out without so much as a rinse. Dinner is served ruined! It’s only when we face direct evidence like this that we can no longer put our heads in the sand.

This also happens on a broader scale when we hold something or someone in high esteem and then something undesirable happens. Consider the five second rule for food: it’s just enough time that we can pretend that nothing has sullied our snack. Or think about people who “go vegetarian” after reading books like Eating Animals, as opposed to their friends who choose not to read it (sort of like poolgoers who look the other way in order not to see the kid in action). We could also consider all the people on both sides of the political spectrum who don’t listen (with any degree of earnestness) to the opinions and facts presented by the other side.  Ignorance may be bliss, but often it’s just a speck of reality that ruins our ignorance.

JP Morgan Chase’s loss of several billion dollars in 2012 was a similar situation. It’s difficult to imagine that over the last five years we were able to view any company as relatively pure, which is how many viewed JP Morgan Chase. It seemed likely that they, like other banking companies, probably had some skeletons in their closet, but we didn’t know for sure, and so they continued on with their relatively good reputation. In the race to the bottom of the banks, JP Morgan Chase’s CEO Jamie Dimon got the best title a banker these days can get: “the least-hated banker in America”. Now we have about three billion dollars to prove the contrary.

While it’s true that for a company that size, three billion a relatively small amount to lose (and surely their accountants could have hidden it), the problem is that now we have direct evidence that they’re not perfect. Once again we were forced to see reality, and we can no longer avoid the knowledge that the pool is polluted – even if the damage was done by the least-hated character. And I suspect that for many the events at JP Morgan Chase further polluted not only their opinion about that company, but also about banking generally.

Recently published in Wired UK.

Runners run, teachers teach, and cheaters cheat. It’s all there in the name, right? Despite the obvious logic, one could argue that even those who aren’t “runners” per se do, on occasion, run (even if it’s just across a busy street), and that we all occasionally teach our kids or friends something they didn’t know before. So what about cheaters?

 

I’ve written at (book) length about how all of us lie and cheat a little. Sometimes we’re unaware of it, as is the case when we have a conflict of interest or begin believing exaggerated versions of our own stories, and sometimes we’re not. Raise your hand if you’ve ever kept extra change after buying something or told someone you were busy when you weren’t. Exactly. So how does identity (whether it’s “liars” who do these kinds of things or just people who occasionally lie) play into cheating? If someone insinuated that you were a cheater before you even had the chance to bend the rules, would it make you cheat more, less, or the same?

 

A new experiment shows that unlike the swimming swimmers and baking bakers, would-be “cheaters” actually cheat less. In a series of three experiments, participants were given a chance to claim unearned money at the expense of the researchers.  There were two conditions in each experiment, and the only difference between them was in the wording of the instructions. In the first condition participants were told that researchers were interested in “how common cheating is on college campuses,” while in the second, they wondered “how common cheaters are on college campuses.”

 

This is a subtle but, as it turned out, significant difference. Participants in the “cheating” condition claimed significantly more cash than those in the “cheater” condition, who, similar to when we tempted people who had sworn on the bible, did not cheat at all. This was true in both face-to-face and online interactions, indicating that relative anonymity cannot displace the implications of self-identifying as a cheater.  People may allow themselves to cheat sometimes, but not if it involves identifying themselves as Cheaters.

 

It’s an interesting twist in the complex tapestry of cheating behavior, and I think it could be a useful means of curbing dishonesty; maybe beginning tax documents with a warning that “liars will be prosecuted” would help keep people from lying on their tax returns. Or maybe I’ll try having students recite the old cheater, cheater, pumpkin eater rhyme before tests… although “pumpkin eater” may not be much of an affront to the post-kindergarten set.

Sometimes people ask me what I like to read. Sadly, I don’t have a lot of time to read non-work related things, but here are a few of my favorite lie- and liar-based texts!

 

1)   The complete works of Sigmund Freud.

 

A list of the best books related to human nature, lying, and cheating would be nowhere without Freud and the explanatory power of rationalization. I know I should choose just one of them, but I’m not at home and can’t look through my books, and it’s been so long since I’ve read them, and I think I lost my notes…

 

2)   Three Men in a Boat (To Say Nothing of the Dog) by Jerome K Jerome.

 

My abiding love for this particular book has to do with many things—its comical style has aged well these last 100 plus years. Moreover, Jerome nicely captures our tendency toward dishonesty; we’re all a little dishonest, but only inasmuch as we can justify to ourselves:

“I knew a young man once, he was a most conscientious fellow and, when he took to fly-fishing, he determined never to exaggerate his hauls by more than twenty-five per cent… “But I will not lie any more than that, because it is sinful to lie.””

 

3)   A Million Little Pieces by James Frey.

 

A monument of embellishment, this highly fictionalized nonfiction account of Frey’s life offers a fresh take on the stories we tell to and about ourselves, that is, he shows us that people don’t just lie to make themselves look better. Where most people would elide events, Frey makes them more violent and grotesque. But of course, he had a whole lot to gain from doing so.

 

4)   How to Lie with Statistics by Darrell Huff.

 

I think it’s important to acknowledge that the scientific process, though we often look to it as revealing the truth about the things around us, is also full of problems. Duff sets about showing, in highly comedic fashion, how to skew a sample population, alter graphs to belie findings, disguise the actual nature of the claim, and so on.

 

5)   White Coat, Black Hat: Adventures on the Dark Side of Medicine by Carl Elliott.

 

Conflicts of interest, which are everywhere, underlie a lot of unintentionally dishonest behavior. This book takes a good, long look at the ways they bedevil medicine and create an amazing array of problems for everyone involved – with a very high cost for patients and society.

 

6)    The Adventures of Huckleberry Finn

 

Huck begins his narrative with the nature of lying and authorship: “There was things which he [Mark Twain] stretched, but mainly he told the truth.  That is nothing.  I never seen anybody but lied one time or another…” We can learn a lot watching Huck navigate the tricky of nature of truth and deception as he navigates the Mississippi, which is, incidentally, an adventure he inaugurates by faking his own death.

 

Happy reading!

Here’s my Q&A column from the WSJ this week — and if you have any questions for me, just email them to AskAriely@wsj.com.

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Dear Dan,

I was the whistleblower for a very large corporate disaster. Since the whistleblowing, I have been shocked at the vitriol and social exclusion I have suffered as a result of speaking the truth. What is it about whistleblowers that makes society want to exclude them? Any insights and guidance would be most welcome.

—Wendy

From what I understand, the backlash you are experiencing is very common among whistleblowers.

In thinking about your issue, I reflected on why I want my kids (ages 10 and 6) to solve their problems themselves, without involving higher authorities (their parents). Tattling is considered very negative behavior. Of course, sometimes my kids have legitimate claims that require an intervention from the “authorities,” but my negative reaction to tattling suggests that I’m willing to accept some violations of justice in order to have the problems solved internally.

Perhaps the friends of whistleblowers see them as not truly part of the social circle, since they’ve shown willingness to seek external authorities when conflicts emerge. Maybe your social exclusion is due to a belief that when problems emerge in the future, you will again look for an external authority? If you were Tom Sawyer, you could cut your hand and mix your blood with that of your friends to symbolize your connection, but given that this might not work for your age group, perhaps you need to find a related ritual that will show your commitment to the social group.

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Dear Dan,

I live in a quasi-urban area near Washington, D.C., don’t own a car and take the metro to work. Near my home is a fleet of Zipcars (a car-sharing system starting at $8 an hour, including gas, insurance and up to 180 miles of driving in a day). If I bought a car, the monthly costs alone (insurance, parking) would amount to about $200; then there’s the purchase of the car, gas and tolls. For that money I could regularly rent Zipcars.

So why don’t I? I could go to different restaurants and entertainment. But each time I think of doing this, I ask myself whether I want to spend the extra money to rent the car and usually decide against it.

This issue comes up the most with groceries. There’s a fantastic supermarket a quick drive away that sells much better and cheaper produce than my local store. In the end, I feel like I’m choosing between (1) overpaying at my local store and feeling cheated and (2) going to the better store but also feeling cheated because I spent $30 on a Zipcar to save that same amount on groceries. What do you suggest?

—Michal

What you’re experiencing is a conflict between your enjoyment of a better supermarket and your cost-benefit analysis. What’s interesting is that if you bought a car, you’d spend much more money overall, but on any given week you wouldn’t feel the pain of paying to get to the supermarket. Because a car can be used for so many different purposes, no single one will feel like the reason for the car, and you’d only focus on the marginal cost of driving a few extra miles, despite the car’s overall expense and inefficiency.

Instead, you could try calling Zipcar and offering to pay them in advance for three hours of car use four times a month for a year. This way you wouldn’t undergo a cost-benefit calculus for every visit to the supermarket.

And if you can’t convince Zipcar to do this, how about putting the money you’re saving by not having a car into a “Zipcar” bank account, and linking the Zipcar use to the money you’re saving? And to make sure you use this money for the Zipcar, commit to giving whatever’s left in that account at the end of the year to a charity you hate.

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Dear Dan,

A few weeks ago you told us that in romantic encounters, the heart grows fonder when we know less about a potential mate. Does it also work for job applicants? Do we like people more when they’re hired from the outside rather than from within?

—John

Plenty of lessons from romantic love apply to the rest of our lives, and you’re correct that this is one of them. There’s some evidence showing that CEOs hired from the outside get paid more than those from the inside and that they don’t do as well. I suspect that the reason for this is the same heightened expectations that come with lack of knowledge. The question, of course, is how to combat our natural tendency to be overly optimistic about people we don’t know very well—both romantically and professionally.

 

See the original article in the Wall Street Journal here.

Wondering whether you can ask someone to give you a PhD in exchange for a kickback? Curious whether you can get away with stuffing ballot boxes? Allow me to introduce you to the Encyclopedia of Ethical Failure. Every couple years the Department of Defense publishes the Encyclopedia (Word doc), which is likely the most sarcastic government document out there. Interestingly, golf and taxes seem to turn up a lot.

Of course, ethics for U.S. government employees and military includes a number of rules that most citizens don’t have to abide by, such as not endorsing candidates for office while in uniform. However, it doesn’t take a law degree to recognize the problems with many of these incidents. Here’s a tiny sample:

– “For a period of several years, two top executives at the Naval Undersea Warfare Center had an astonishing work record—they took nearly no vacation time at all. The reason, investigators soon discovered, was that the executives had been taking “religious compensatory time” instead. Curiously, the executives’ absences seldom fell on any traditionally observed religious holidays. Instead, investigators found that the pair’s so-called religious observances took place on days when they had medical appointments, sightseeing trips, and golf tournaments. Asked whether golf tournaments could be considered religious observances, one executive replied, “They could be for some people.”

– A Forest Service employee decided that while she was fulfilling payments for the Service using government checks, she would write a couple to her boyfriend, who had contracted with the Forest Service once upon a time. The checks she wrote under the guise of payment for firefighting services totaled over $600,000, and apparently went to pay for general expenses and, fittingly, for gambling.

– And in the quintessential story of government corruption, two VA employees are in jail for accepting more than $100,000 in kickbacks for red tape. Yes, actual red-colored tape.

The Encyclopedia shows not only that cheating (in all its myriad forms) is wrong, but also that it carries substantial repercussions; the size of the document serves as an indication that getting caught is fairly probable. The question I have is whether over time readers of the Encyclopedia will remember the instances as examples of what people do, forget where these examples came from, and perhaps start thinking of them more as clever and daring schemes than cautionary tales….

Three days after publication of my new book , The (Honest) Truth About Dishonesty, I was able to find electronic copies on a few websites that specialize in illegal content. These were high quality versions of the book, including the images of the cover, the references, and—my favorite part—the copyright notice.

I was flattered. On one of the sites, the book had been very popular, downloaded over 20,000 times in just a short period of time before my publisher shut it down.

I was also amused.  The irony of illegally downloading a book on dishonesty was painfully obvious.

But mainly I was curious, as is my wont. As someone who has been studying dishonesty for many years, what could I learn from the theft of my own book?

My first insight came with a personal conversion. Before it was my book being illegally downloaded, I was more on the “Information wants to be free” end of the spectrum. The sudden, though predictable, shift in my feelings when I found my own work being downloaded for free was a jarring experience. Maybe Information finds complete freedom too threatening, I thought, and maybe it would rather be a bit more protected. It was a very clear example of how my own views of morality are biased – as are everybody’s — based on our immediate perspective.

Recently in a lecture on dishonesty in San Francisco I was explaining, as I always do, that dishonesty is largely founded on our ability to rationalize, and a young guy stood up and argued that downloading music was actually the right thing to do. He said that the companies make lots of money while artists don’t (they make the music for the public, not for profit). And either way, he wouldn’t buy the music anyway so it wouldn’t make a difference. “My friend,” I said, “thank you for proving my point about rationalization.” Then I asked him to imagine if the product in question represented several months or even years of his life. All that time he was creating, writing, editing, and marketing this thing in order to fund his next project. And then everyone downloaded it, illegally, for free. At which point he sat down.

My second thought, after realizing my popularity in the “download for free” category, was about the potential for moral deterioration on a broader scale. Once people start seeing a particular behavior—such as illegally downloading books, music, and movies—as a very common behavior, there is a chance that this sense of social proof will translate into a new understanding of what is right and wrong. Sometimes such social shifts might be desirable—for instance, being part of an interracial couple used to be considered illegal and immoral, but now we see such couples all around us and it helps shape our understanding of social approval. However, the behaviors we most often observe and notice are ones that are outside of the legitimate domain (e.g., doping in sports, infidelity by politicians, exaggerated resumes by CEOs) and in these cases the social proof can change things for the worse.

And then I had an insight about confession.  How can we stop such trends toward dishonesty (in this case, broader acceptance of illegal downloading)? The problem is that if someone has acquired 97% of their music illegally, why would they legally buy the next 1%?  Would they do it in order to be 4% legal?  It turns out that we view ourselves categorically as either good or bad, and moving from being 3% legal to being 4% legal is not a very compelling motivation.  This is where confession and amnesty can come into play.

What we find in our experiments is that once we start thinking of ourselves as polluted, there is not much incentive to behave well, and the trip down the slippery slope is likely.  This is the bad news.  The good news is that in such cases, confession, where we articulate what we have done wrong, is an incredibly effective mechanism for resetting our moral compass.  Importing this religious practice into civic life was effective in the Truth and Reconciliation Act in South Africa, where acknowledging the many abuses and violations of the apartheid government allowed the South Africans to forgive past sins, and start fresh.

I think that this same approach could be effective in preventing people from illegally downloading music and books. Why don’t we offer young people (because let’s face it, most of them have some illegally downloaded material on their computers) the opportunity to admit and apologize, receive amnesty for the material they already have, and start fresh.

In the meantime, until we adopt this course of action, I am hoping that the New York Times will create a Best Seller list for a new category – the Most Illegally Downloaded Books.

Here’s my Q&A column from the WSJ this week — and if you have any questions for me, just email them to AskAriely@wsj.com.

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Dear Dan,

I’m shopping for several plane tickets for personal trips over the next couple of months, and I keep running into the same problem: “Current me” wants to pinch pennies by choosing overnight flights, routes with several legs or inconvenient airports that would require me to drive a few hours out of my way. “Future me”—the one that actually has to pick up the rental car at 11 p.m. and drive two hours from Phoenix to Tucson the night before a friend’s wedding—sometimes resents that I wouldn’t just spend an extra $100 to make an already expensive trip more pleasant. Travel-booking websites are getting better and better at predicting what will happen to flight prices, but I don’t seem to have gotten any better at predicting my own preferences.

How can I best determine whether these savings will feel worth it to me in the future? Or, failing that, how can I console myself when I’m pulling into a Tucson motel parking lot at 1 a.m.?

—Ruth

Your framing of the problem is spot on. In your current “cold” state, you focus on the price, which is clear and vivid and easy for you to think about. When you actually take the trip, that version of you will be feeling exhaustion and need for sleep (a “hot” state), which will be very apparent to you at that point—but it is not as vivid right now.

This, by the way, is a common problem that arises every time we make decisions in one state of mind about consumption that will take place in a different state of mind.

Here is what I recommend. In order to make a better decision, tonight at 9 p.m. put in some laundry and spend the next two hours sitting on the washer and dryer (this is to simulate the fun of flight, and if you want to really go all out, supply yourself with a package of peanuts and a ginger ale). When you “land” at 11 p.m., look around for some missing socks (to simulate looking for your luggage) and then, properly conditioned to think about the actual trip, log into the travel website and see what is more important to you: saving a few bucks or getting to bed sooner.

Plus, imagine how you would look in the wedding pictures after a long night of uncomfortable traveling.

Good luck in your decision and “mazel tov” to your friend.

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Dear Dan,

I was wondering how you allocate candy during Halloween to make sure kids don’t dishonestly take more than they should. I’ve thought of handing each of the children their candy, but that way the kids can’t pick what candies they like best. Also, this method takes more time, which I don’t have, and makes things less pleasant for me.

But if I leave a bowl of candy out without any oversight, I know what will happen: They’re all going to take more than their share until the bowl is empty.

—Mary

Beyond Halloween, this is a general question about honesty. One of the things we find in experiments on honesty is that if people pledge that they will be honest, they will be—and this is the case even if the pledge is nonbinding (or what is called “cheap talk”).

Given these results, I would set up a table with a large sign reading “I promise to take only one piece of candy [or whatever amount you want them to take] so that there is enough left for all the other trick-or-treaters.” Below the sign, place a sheet of paper for your visitors to write down their names (and, given that it is Halloween, use red paint and ask them to sign in “blood”). With this promise to take only one candy, the public signature in blood and the realization that if they take more candy they will deprive their friends of having any, I suspect that honesty will improve dramatically.

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Dear Dan,

Do you have general advice for how to approach difficult decisions? I’ve been thinking about which car to get for a very, very long time, and I just can’t decide.

—John

The poet Piet Hein gave this sage advice some time ago, and I think it will work in your case:

“Whenever you’re called on to make up your mind

And you’re hampered by not having any,

the best way to solve the dilemma, you’ll find,

is simply by spinning a penny.

No—not so that chance shall decide the affair

while you’re passively standing there moping;

but the moment the penny is up in the air,

you suddenly know what you’re hoping.”

See the original article in the Wall Street Journal here.

I’m excited to share the RSA Animate version of my latest book. I love this approach to sharing research, first and foremost because I love the visual metaphors the artist uses to demonstrate ideas (particularly the blend of Sherlock Holmes as the Rational Man, and fairy tales as the opposite). Many of them are just brilliant. Second, who wouldn’t prefer to watch a cartoon version of a person (in this case, me) explain something rather than the real thing? It’s so much more engaging, and who doesn’t miss Saturday morning cartoons?

I was pretty thrilled to make the cut to be in an RSA: I hope you enjoy it as well.