Why would Senators bill for travel and expenses they should cover on their own dime? Why would a journalist start a sideline business that might blur the lines with professional contacts? (As an aside, for my purposes here, I’ll treat both as instances of alleged wrong-doing and nothing in the text below is intended as commentary on the facts of either the recent media reports on the Senate or a senior journalist at the national public broadcaster). My twitter feed was pretty gummed up last night with things that essentially boiled down to the following: ‘why do people in positions of power cheat?’, repeated in varying tones of anger, confusion or dismay.

The field of behavioral economics may have useful ideas. It seems like there are roughly three variables that come up regularly in the literature: 1) under-supervision; 2) financial versus intrinsic rewards; and, 3) social referencing.

The first (supervision) is kind of intuitive but raises some tough questions for us about governance of public or quasi-public institutions. If you don’t think anyone is watching or that you won’t get caught, you are more likely to cheat. For example, you might slack off at work, under-report on your taxes or crib the answers on a test if you think the reward you’ll get from cheating is bigger than the risk of getting caught and the penalty you’d pay. So, does this finding support the idea of independent oversight of Senators’ expense claims or more public reporting by CBC? Maybe. But only if a) those new mechanisms can actually detect wrong-doing and b) lead to real consequences (costs). Also, oversight and reporting are administrative approaches to supervision that tend to be rule and report-based. Rule-based approaches to supervision are really, really costly. Reporting-based mechanisms still rely on an expectation that someone will read the public disclosure report and holler if they see something amiss. There is no shortage of public reporting on public expenditures. Sometimes it makes for easy if thin copy (Breaking: Auditor General paid for annual employee luncheon worth $10 per head!). But is a bad media story costly enough to act as a real deterrent? If a disclosure report is made and no one reads it, does it count as ‘supervision’? The supervision question really comes back in many ways to us as members of the public. How much are we willing to invest of our own tax dollars and our own civic engagement to supervise our own public institutions? ….. click here.

Financial incentives and intrinsic rewards are instead more about how to encourage people to work. What motivates you at your job? Is it the paycheck? Is it that you feel the work is important and that you’re part of something bigger than your cubicle? The literature on the effect of the paycheck is pretty mixed, in large part because doing these kinds of studies is really tricky, methodologically speaking. The literature on intrinsic rewards of work is much clearer: people who like their work and think it is important are much less likely to cheat or slack off on the job. The lesson for management has been that you should work really hard to find people who want to do the job you are hiring for, whatever the pay range you are offering. But this is less helpful when it comes to explaining the actions of people in highly-valued positions like the Senate or national journalism. Part of the public outrage is that these are jobs we expect many other eligible candidates would gladly take, and that those fortunate to win the patronage or competitive contest have always had an opportunity to turn down these choice jobs if they don’t really want them.

To many Canadians, the financial rewards of a Senate position that starts at $142,400 as a base salary (which puts someone comfortably in the top 10% by personal income)[i] should be a no brainer. But, is this ”˜enough’ to keep them motivated at work? By comparison, US Senators earn a base salary equivalent to rough CAD $215,000. On the other hand, members of the UK House of Lords don’t get a salary at all (unless they have a ministerial role) but can claim a per diem of up to CAD $570 for each day they punch-in on the clock.[ii]

Or instead is there something to the idea that we should screen candidates for publicly-paid offices to makes sure they REALLY want the job being offered to them for the right sorts of reasons? What if, in the case of public appointments, there may have been some fogginess in how ”œthe job being offered” has been described to candidates?

Those comparisons to better-salaried or independently-wealthy international counterparts also points to the third variable – social referencing. Social referencing is psych-lingo for ”˜looking at others to figure out where you stand and what you should do’. Here the literature[iii] is a lot clearer. People are more likely to cheat if they think they can gain prestige, even more than a financial gain and even if they already like their job. And people are more likely to cheat if they can compare their compensation to people they see as peers and come to believe they are (relatively) underpaid. So, if the social norms of the environment you work in tell you there are brownie points to be had (but not more dollars) by bending the rules, you are more likely to cheat. Similarly, if you keep score with co-workers (and score-keepers by the way are predisposed to be less content) and conclude you are under-paid, you are more likely to cheat. Even when you are in an elite position in a well-compensated job, odds are that there is always someone more senior, more powerful and better paid then you. Taken together, this creates an upward comparative pressure. Unfortunately, the same public disclosure we call for as supervision can accelerate that score-keeping tendency.

And why is that social referencing so powerful? Well, Dan Ariely thinks that cheating is really hard if you can’t somehow justify it to yourself. As much as we’re motivated to fit-in and keep up with those we want to have around us, we’re also motivated to see ourselves as basically good people. If your social reference points tell you that cheating is ok, your self-respect can more easily remain unscathed.

And here’s where things get even trickier. Francesca Gino has done a pile of work that shows that people in elite positions develop pretty inflated senses of themselves. As you rise up a hierarchy, it’s easy to tell yourself you got the job because you deserve it: you are smarter, better, or special in some way. You earned this job (”˜cause luck feels like rickety explanation) and YOU are entitled to your entitlements! As a result, says Gino, people in positions of power are less open to advice, especially about their own behavior (on which they feel some expertise). This is Lord Acton’s maxim about the inevitable and corrupting effects of power. The social reference points of people in elite jobs will tend become more and more restricted and elites become less and less willing to listen to external voices outside their peer group.

So, we’re left with several but rather incompatible conclusions about what to do to prevent boondoggles and promote accountability in public institutions.

We could impose more supervision but only if we’re willing to pay the true costs in taxes and our own time as citizens. How much personal time are you REALLY willing to volunteer to reading proactive disclosure reports?

We could try to do a better job of hiring people with the ‘right’ kinds of motivations for the job but only if we’re willing to be completely truthful about the nature of ‘the job’ and cut-out any double-speak or knowing winks about unwritten job descriptions. And how would we ever be able to know for sure given the necessarily confidential nature of the pre-appointment vetting process?

Or we could devalue the social desirability of jobs in these public institutions in an effort to ‘let the bums know their place’. But that approach also requires us to devalue those same public institutions that we say ‘ought’ to motivate office-holders to do better out of respect for the position they hold. Devaluing the offices just makes it harder to attract qualified people based on intrinsic value or to justify the cost of adequate supervision (who wants to pay taxes to oversee offices we think are useless?). And then the downward spiral continues…

If we keep going as we currently are, we may have already made our choice.

[i] Statistics Canada, CANSIM, table 111-0008.

[ii] Based on roughly 82 sitting days per year over the last 3 years, we’re talking about $46,700. Don’t forget that the UK model expects that many Lords will be peers with independent sources of income.

[iii] If you want to read more, you should look at publications by people like Dan Ariely, Francesca Gino, David Pascual-Ezama, Leslie John and George Lowenstein to name a few.

Photo by Sharon Drummond / CC BY-NC-SA 2.0 / modified from original