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Moral equilibrium

Charitable donations and other good deeds might be indicators of fraud

Doing good deeds is generally recognized as positive. However, these gestures sometimes can be part of a psychological process to license and compensate for aberrant behaviors. A fraud examiner who’s aware of the potential psychological ramifications of these deeds might be able to proactively interdict fraud schemes and mitigate losses of these schemes.

Whether it’s by giving your time, money or other resource, how would you rate your generosity on a scale of 1 to 10 if 1 represents little or no generosity, and 10 represents being generous almost all the time?

Now that you have your number, can you recall an act of kindness you performed in the past week? Can you also recall a time in the past week when you had the chance to do something generous for a family member, friend or even a stranger but chose not to? Considering these new memories, would you maintain your same generosity rating, or would you now change your figure? Is it possible that deciding to show or withhold generosity could have an impact on whether you or someone else would commit fraud?

Moral equilibrium is a psychological phenomenon that’s best described as a behavioral mental accounting ledger, according to the writings of Robert Prentice, J.D., professor in the McCombs School of Business at the University of Texas at Austin (UT). Do something good and add a point to your positive column. Do something bad and add a point to your negative column. Making decisions every day adds or subtracts points to either column in your mental ledger. Your brain will naturally seek equilibrium between the two columns, which can lead to positive or negative behaviors — though you might not always be conscious of how these decisions affect you. Problems can arise when your ledger becomes unbalanced.

If you’re like most people, you likely believe that you’re an inherently good person. While that might be true in most instances, the brain has cognitive limitations. Recall a time when you said something you regretted to a loved one, friend or colleague. Your moral equilibrium became unbalanced, which created a conscious or unconscious need to return to equilibrium. Chances are that you either apologized to the offended person or had a conversation (with another person or in your head) rationalizing your behavior by determining that the offended party did something to justify the harsh comment. Whether you realized it or not, such a conversation would’ve helped to restore your moral equilibrium.

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