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How a Numbers-Crunching Culture Can Increase Unethical Behaviour - Ideas for Leaders
Idea #504

How a Numbers-Crunching Culture Can Increase Unethical Behaviour

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KEY CONCEPT

Adopting a calculative mindset to every problem — approaching every issue, either qualitative or quantitative, in a numerical frame of mind — can lead to dishonest or immoral decisions, according to new research. 


IDEA SUMMARY

An investigation into the problems of the 1973 Ford Pinto, a car susceptible to catastrophic explosions when rear-ended, revealed that Ford’s engineers had calculated that the company could save $11 per car at a cost of 180 burn deaths.

While perhaps an exaggerated case of numbers pushing aside moral and ethical considerations, there is a legitimate fear among many that people who tend to reduce everything to numbers are more likely to make decisions that ignore the moral or ethical implications of those decisions.

A team of researchers from the City University of Hong Kong, University of Toronto’s Rotman School of Business and Northwestern University’s Kellogg School of Management, conducted a series of experiments to explore the impact of a calculative mindset on the ethics and morality of the participants. The design of the experiments was straightforward: the participants first engaged in either a calculative or non-calculative task, and then played a game that gave them an opportunity to be greedy by either keeping more money than they shared (the ‘dictator’ game), or by lying about how much money they had (the ‘ultimatum game’).

The results of these first four experiments were conclusive: the participants who engaged in a calculative task, whether it was a tutorial on Net Present Value or answering GRE (high school equivalency exam) math problems, were more likely to keep significantly more of the money if they were playing the dictator game, or more likely to lie about the available sum if they were playing the ultimatum game. The participants who engaged in the non-calculative task (either a tutorial on the Industrial Revolution or answering GRE verbal problems) were less greedy and more honest in their games.

The fifth experiment introduced two significant changes. First, researchers reminded the participants of broader social values and principles by adding a family photo component (half of the participants were shown pictures of several families and asked to pick the family they thought was the subject of the family business NPV tutorial or the family of writers who had written the IR tutorial).

The second twist in this experiment was to ask participants immediately after the dictator game about how they felt about their decision in the game, and if they regretted the decision. The goal was to see the impact of a calculative mindset on emotions.

Experiment five showed that to a small extent, the calculative dictators who did the family picture exercise were more generous (kept less of the money) than those who did not. The calculative mindset had a definite negative effect on emotions — that is, the calculative NPV dictators who kept more than half of the money said they felt positive about their decision and did not regret it; in contrast, any IR dictators who kept more than half of the money regretted their decision.


BUSINESS APPLICATION

These experiments were based on the concept of ‘priming’ — using an exercise or a task to put oneself or others in a certain frame of mind. We are also primed, however, by the tasks that we are asked to accomplish during the normal course of the day. Are executives primed to be calculative, due to an over-emphasis on numbers, data and results? Does this calculative mindset have an adverse effect on the decisions that executives are making, not only because they are applying quantitative metrics to qualitative issues, but also because the quantification of everything makes them lose track of important values and principles?

This research raises these important questions for all companies aspiring to be values-driven, socially conscious and ethical. It would go far beyond the data to declare that the acts of calculation directly lead to a loss of ethics or morals. However, pushing executives toward a calculative mindset — emphasizing a crunch-the-numbers culture, for example — can increase unethical behaviour.

At the same time, the family photographs experiment illustrate that it might perhaps be easy to ‘bring back’ executives who might have lost their ethical footing. Perhaps, organizations might start to deliberately insert a values frame of mind in decision-making (e.g. asking decision makers to think about family and friends before making any moral decisions).

At any rate, the appearance of any executive or manager who seems to be obsessed or lost in the numbers should raise a red flag, for he or she is primed to discount or ignore ethical and moral considerations in the decision-making.


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