Psychology of Fraud: Why Good People do Bad Things – a well-considered presentation let down by weak solutions

Chana Joffe-Walt and Alix Spiegel, “Psychology of Fraud: Why Good People do Bad Things” (National Public Radio News / All Things Considered, 1 May 2012)

A very interesting multi-media presentation that consists of an online article, a podcast and a comic strip, this joint effort combines recent psychological research on unethical behaviour and why apparently good people commit fraud and engage in immoral activities with a real-life case in a way that’s easy to read and identify with for the general public. The podcast and the article can be heard and read separately or in isolation as each doesn’t add anything that the other doesn’t already have.

The podcast is in two parts: the first part features both Joffe-Walt and Spiegel talking about Toby Groves who in 2008 was sentenced to two years in prison for carrying an incredible bank fraud that US$7 million and which drove several companies out of business, cost one hundred people their jobs and sent a company president to jail also. Groves himself also appears on the podcast, talking about how he slipped into making one unethical decision after another despite having had a moral upbringing and having promised his father as a young college student that he would never copy his older brother and go to jail for fraud.

The second part deals with Joffe-Walt and Spiegel discussing the psychological research that tries to explain why people like Groves and his employees willingly fell into criminal behaviour. Psychologists like Ann Tenbrunsel of Notre Dame University explain that when we are faced with problems, we are usually in a particular cognitive frame of mind that influences how we deal with the problems; this cognitive frame of mind itself may be influenced by our physical surroundings, the networks of people in them and the information we are receiving and how it is structured.  An example is an experiment Tenbrunsel carried out with two groups of people: one group was told to think about a business decision, the other to think about an ethical decision. The groups produced mental checklists and then were given an unrelated task to distract them. Tenbrunsel presented the groups with an opportunity to cheat. The group that had thought about the business decision was more apt to lie than the other group.

The article on was structured in six chapters with a comic strip illustrating the relevant parts of Toby Groves’s case in each chapter. The psychology lesson first appears in Chapter 3 and comes to dominate subsequent chapters. What is really intriguing about Groves’s case is how readily people helped Groves do what they clearly knew was illegal, simply because they liked him a lot, thought he was a decent person and so wanted to help him solve his financial problems. This of course means that human beings do unethical and even criminal things, not because they are essentially immoral or amoral but because they want to be helpful, especially to people they like or look up to. Empathy for people who may be like us or who have been dealt unfairly overrides abstract considerations of right versus wrong, of the long-term cost to some vague concept such as the global environment versus the short-term cost of cheering up the person right in front of you.

The major weakness of the overall presentation was in the solutions suggested to combat this problem of how our decision-making and other cognitive processes may be influenced too much by situational factors. One solution that is suggested is forcing businesses to change auditors every two years to address the problem that close relationships with auditing firms developed over the years may corrupt audits themselves. This solution could be extended to many other aspects of company operations and processes: companies perhaps should change their accountants and lawyers every few years to avoid the corruption of their financial reporting and legal work. In practice, this might disrupt company operations and may even waste company resources. Other issues to consider include the business organisation’s culture and how it shapes people’s attitudes and loyalties: are people encouraged to speak their minds, to hold heterodox opinions and to challenge themselves or does the company demand conformity, loyalty and insularity? Are employees allowed to mix with outsiders and to discuss company issues with people outside the firm? What juicy company secrets might be spilled and passed on to competitors and the press?

There is also the situation, exemplified by News Corporation, in which senior management and other employees may try to guess what their managing director or his/her equivalent is thinking or would think and subtly communicate through body language and corporate customs, conventions and rituals what is required and what is discouraged. People, especially new employees, eager to please may fall into committing fraud and other illegal activities without even realising that what they are doing is wrong.

It’s not enough to conclude as Joffe-Walt and Spiegel do that right is right, wrong is wrong and people should know the difference: people like Toby Groves know that already yet still go ahead and do stupid things; and there are times also when what’s right and what’s wrong aren’t always clear and people may need standards and guidance to determine what to do. Companies can assist in this regard by encouraging staff to attend internal and external ethics courses, instill ethics and standards into the work culture so they become as natural as breathing, and provide back-up, counselling and legal advice in cases where individuals are in danger of making grave mistakes or have already done so. People also need a proper work-life balance so that they are able to pursue individual and other group-oriented interests and become well-rounded beings rather than hollow workaholics lacking a moral and spiritual dimension.

Ultimately companies don’t operate in a social vacuum; if companies and/or their employees behave in a less-than-moral fashion, that’ll be because our society sanctions their behaviour. What is it about business decision-making intrinsically that can encourage people to make bad moral decisions? It boils down to values and assumptions about doing business generally, about competition and how we define it, and about success and how we define that, that we hold and which we should examine: how did these values and assumptions originate and why, and the historical context in which they arose.

The article can be accessed here.

The Art and Science of Face Perception: looking at faces is more complicated than it … looks

“The Art and Science of Face Perception” – Symposium held in conjunction with 39th Australasian Experimental Psychology Conference, Saturday 14th April 2012 (Art Gallery of NSW, Sydney)

As part of the Archibald Portrait exhibition and together with the 39th Australasian Experimental Psychology Conference, the Art of Gallery of NSW hosted a symposium of four talks on facial recognition and various topics related to it. Two speakers were academics from the University of Western Australia and the other two speakers came from the United States and Canada. The symposium lasted just over three hours after a late start (usual when the audiovisual equipment decides to play up at the last minute) with a short break between the second and third talks.

The first speaker, Professor Michael A Webster (University of Nevada, Reno) presented an amusing talk on how we recognise faces and the stimulus requirements our brains and eyes need to see faces in visual noise. Turns out the requirements are very minimal: the noise must be bilaterally symmetrical with a vertical axis of symmetry; light and dark spots must be close to the axis; and a pair of dark spots straddling the axis is usually all that is sufficient for people to see a pair of eyes. Once the spots are interpreted as eyes, the rest of the noise is then pulled into the “face” so perhaps lighter spots below the eyes instantly become cheeks. We see faces as whole images (holistic processing) and we also use norm-based coding (how we recognise individual faces, what cues we use as anchors for “normal” faces). Our visual systems are highly adaptable, evidenced by optical illusions and after-images of images stared at for long periods, and our brains are constantly re-calibrating and judging the information supplied by our eyes of people’s faces.

The talk turned on what controls the brain’s adaptations when it sees faces and, no surprise at all, life experience controls adaptaions: so, a person who grows up in a desert filled with red, yellow and orange backgrounds will notice green in a savanna landscape whereas a person who grows up in a tropical forest region will notice yellow in the same savanna landscape.

Second speaker Professor Gillian Rhodes (University of WA) presented “Hot or Not? The psychology and biology of beauty”, originally tailored to undergraduate university students but relevant to everyone as the topic turns on what characteristics of faces make some more “beautiful” than others. These characteristics include symmetry, sex-linked characteristics and mathematically graded average characteristics: mathematically averaged faces are found to be more attractive than the faces the averages are composites of. The issue then turned on what is an “average” face, what influences our perceptions of average faces and whether we can change our experiences to change our perceptions. Studies on this and related topics demonstrate that exposure to facial distortions can and do change preferences and aesthetic judgements, and that experience “tunes” preferences. Interestingly faces of mixed-race averages are rated most attractive, suggesting that people unconsciously seek biological factors such as good genes and genetic diversity in potential mates.

James T Enns (University of British Columbia) presented “Rembrandt and modern vision science: following the eyes of the masters”, an investigation into how the 17th century Dutch painter exploited selective details of his subject – often a self-portrait – to guide the viewer’s eye into looking at his painting for longer. Enns contrasted the use of blur and sharpness not only to guide viewers’ eyes to look at certain objects in pictures such as photographs but to influence viewers’ opinions on the personalities of people whose faces are featured in the pictures. The psychological phenomenon known as Fundamental Attribution Bias, where we overestimate personality traits but underestimate the situational context when we observe people’s behaviour (so a person who trips over a rock is automatically labelled a clumsy doofus; when the observer trips over the same rock, s/he blames the rock), was shown to have quite an influence on viewers’ opinions of pictures of people.

Romina Palermo (University of WA) presented “Face blindness: the inability to recognise identity from the face” as a straight lecture on prosopagnosia, the inability to recognise familiar faces including one’s own face and those of celebrities. Palermo gave examples of people unable to recognise human faces but able to recognise animal faces or very similar objects as individual. There are different types of prosopagnosia: acquired (caused by brain trauma or dementia) and developmental which can be inherited or can sometimes (but not always) be associated with autism. Palermo concluded her talk with methods and strategies psychologists and doctors have used to teach face recognition skills to people with the disability.

Each talk was entertaining, often humorous (the American speaker especially was self-deprecating, a quality not usually associated with Americans!) and featured very striking visual aids. The time passed so quickly that the audience was rather sorry when the last talk finished and everyone had to leave. As the symposium started late and had to finish on time, question-time at the end of each talk was very hurried and limited to two simple questions. For me the symposium was an eye-opener into just how complex face recognition issues can be and how preferences for particular faces or the “average” face can be shaped so easily: an illuminating example of how situational factors influence our choices and desires far more than we realise. Of course, this knowledge can be used for propaganda purposes and to mould public opinion against people’s better interests.