A column in the Boston Globe asks how we insulate ourselves from conflicts of interest? The most popular solution—disclosing them—turns out not to help.
…transparency, the rationale goes, encourages those in authority to behave more ethically, and lets those relying on their guidance take the bias into consideration.
But recent research by experimental psychologists is uncovering some uncomfortable truths: Disclosure doesn’t solve problems the way we think it does, and in fact it can actually backfire. Coming clean about conflicts of interest, they find, can promote less ethical behavior by advisers. And though most of us assume we’d cast a skeptical eye on advice from a doctor, stockbroker, or politician with a personal stake in our decision, disclosure about conflicts may actually lead us to make worse choices.
“None of us are saying that transparency is a bad thing,” says Daylian Cain, a behavioral economist at Yale University. “But almost always, it fails to work as well as we think it does.” By assuming that disclosure is always a benefit, he and his colleagues argue, regulators may be failing to address the real problems caused by conflicts of interest. In fact, biases are rooted deep in our psychology, and can’t be dispelled with a simple confession. Policies of disclosure, far from being a panacea, may be drawing attention away from the much harder work of removing conflicts and making sure that people’s advice and their interests align.
What happens after people disclose their conflict of interest?
Instead of the transparency encouraging more responsible behavior in the experts, it actually caused them to inflate their numbers even more. In other words, disclosing the conflict of interest—far from being a solution—actually made advisers act in a more self-serving way.
“We call it moral licensing,” Moore says. “After having behaved honestly and virtuously, you then feel licensed to indulge in being a little bit bad.”
Does disclosing a conflict of interest enable the people receiving advice to take that information with the proper grain of salt?
As expected, most people said such a disclosure would decrease their trust in the advice. But in practice, oddly enough, people were actually more likely to comply with the advice when the doctor’s bias was disclosed. Sah says that people feel an increased pressure to take the advice to avoid insinuating that they distrust their doctor.
…“People feel pressure to behave generously even if it’s not in their best interest,” she says. In these situations, she says, “instead of being a warning, disclosure places this burden on the very people it’s supposed to protect.”
Read what you’ve been missing. Subscribe to Farnam Street via Email, RSS, or Twitter.
Shop at Amazon.com and support Farnam Street