Dichotomy of dishonesty

Behavioral economist Dan Ariely told a story, during the ACFE’s Leadership Summit last year, about eight-year-old Johnny who came home from school with a note from his teacher that said Johnny had stolen a pencil from the kid sitting next to him. “Johnny’s father is furious,” Ariely told the summit attendees. “ ‘This is terrible! This is awful! I can’t believe you did this. You’re grounded for two weeks. Just wait until your mother comes home. And besides, Johnny, you know very well that if you need a pencil all you need to do is say something, and I can bring you dozens of pencils from the office.’ "

Ariely says we smirk at this joke because we recognize the complexity of human dishonesty that is inherent to all of us. We’re all dishonest; we all cheat; we all rationalize, Ariely says. It’s just the degree, and how comfortable we feel about it.

Where does cheating and dishonesty come from? What is the human capacity for both honesty and dishonesty? What pushes employees to become fraudsters? “And, perhaps most important, is dishonesty largely restricted to a few bad apples, or is it a more widespread problem?” Ariely writes in his book, “The (Honest) Truth About Dishonesty: How We Lie to Everyone—Especially Ourselves.”

Ariely, who is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University, is dedicated to answering these questions and others to help people live more sensible — if not rational — lives. His unusual experiments demonstrate profound ideas that fly in the face of common wisdom. Ariely’s research findings can help fraud examiners in deterring would-be fraudsters.

He’s a founding member of the Center for Advanced Hindsight, co-creator of the film documentary “(Dis)Honesty: The Truth About Lies,” and a three-time New York Times best-selling author. His books also include “Predictably Irrational, The Upside of Irrationality,” “Irrationally Yours,” “Payoff,” “Dollars and Sense” and “Amazing Decisions.”

In 2013, Bloomberg recognized Ariely on its list of the Top 50 Most Influential Thinkers. He also has a biweekly advice column in The Wall Street Journal called “Ask Ariely.” For more information about Ariely, see danariely.com.

Ariely recently spoke to Fraud Magazine. (Answers have been edited for brevity and clarity.)