In my last blog entry, I discussed Melissa Korn’s recent Wall Street Journal article entitled “Does an ‘A’ in Ethics Have Any Value?” I argued that business schools should teach ethics because, first, schools should teach what they think is important. Second, I argued that B-schools should train those students who do wish to act ethically how to best live up to their own moral standards. And, we should educate our managers to know what works and does not work in incentivizing and supervising employees to act legally and ethically. Even some large companies can literally blink out of existence when their employees’ unethical acts lead to huge legal sanctions.
Just as important as the symbolic value of teaching ethics is the need to teach ethics as effectively as possible. Traditionally, ethics education has focused on moral reasoning as taught by philosophers and character-building as taught originally from church pulpits. While I think it is valuable for students to be able to reason through an ethical dilemma and I believe that character-building absolutely has to help, there is no strong evidence that people who score an “A” in ethical reasoning will actually act more ethically than people who score a “B.” And there is lots of evidence that context can overwhelm character, leading good people to do bad things. Therefore, the teachings of behavioral ethics should, in my view, be emphasized when business ethics is taught.
Behavioral ethics research addresses the real factors that can cause people to mess up. It helps us understand why people make ethical and unethical decisions and can educate firms regarding the best ways to motivate employees to do the right thing.
Evidence from behavioral psychology indicates that people are strongly anchored by the status quo. Therefore, much empirical evidence indicates, by simply changing default rules, governments can move the level of organ donation from almost nobody to almost everybody (Johnson & Goldstein) and dramatically increase the amount of money that people save for their retirements (Madrian & Shea; Benartzi et al.). Professor Cass Sunstein, who with Richard Thaler wrote the influential book Nudge, directed the Obama White House’s Office of Information and Regulatory Affairs with the primary purpose of improving policy by paying attention to how humans actually make decisions. The UK has installed a similar office. (Sunstein, 2012). If governments can use principles of behavioral psychology to change people’s volunteering choices, savings choices, and buying choices, then there is strong reason to believe that people can use these same principles to improve their own ethical decision making.
Studies of behavioral psychology also provide substantial evidence about how people respond to various types of incentives and other contextual factors. Studies show, for example, that by prompting students to think about the Ten Commandments before they take a test, cheating can be greatly reduced. Others studies have focused upon what works and what doesn’t work in implementing a corporate code of conduct. Organizations can use these principles to improve their employees’ ethical decision-making and conduct. Perfection cannot be achieved, but improvements can be made.
Many of our “Concepts Unwrapped” videos address principles of behavioral psychology, as do many of our short features that accompany the “In It To Win” video about Jack Abramoff. These videos serve as a good introduction to the field of behavioral ethics, which applies the well-established principles of behavioral psychology to the narrower field of ethical decision-making.
[See Shlomo Benartzi et al., Choice Architecture and Retirement Savings Plans, in The Behavioral Foundations of Public Policy 245, 246 (Eldar Shafir, ed., 2013)
Eric J. Johnson & Daniel G. Goldstein, Do Defaults Save Lives?, 302 Science 1338 (2003)
Melissa Korn, Does an ‘A’ in Ethics Have Any Value?, Wall Street Journal, Feb. 7, 2013, at B4
B. Madrian & D. Shea, The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior, 116 Q. J. Econ. 1149 (2001)
Cass R. Sunstein, “The Storrs Lectures: Behavioral Economics and Paternalismvb,” at 5 (2012)
Cass Sunstein & Richard Thaler, Nudge: Improving Decisions About Health, Wealth, and Happiness (2008)