How To Stop Cheating
By TAN Kee Wee
(MediaCorp 938LIVE’s Money Talks, Thursday, 2 October
2008, 7.50 am and 7.20 pm)
Another scandal from China has gripped us. This time
it’s tainted milk. In their bid to increase profits, some
Chinese companies added melamine into the milk they
They must know that tainted milk can harm. Then why
did they do it? It’s easy to make the sweeping statement that
Chinese businessmen like to cheat us because they do not have
morals. And that’s because they are the products of a communist
system that has no religion, and nothing that teaches them
right from wrong.
But then how do we explain the unscrupulous behaviour
of some Wall Street banks behind the sub-prime mess? They come
from a nation rich with numerous religions whereby the teaching
of morals is widespread. They should know that their tainted
investment products will make people lose money.
Economists are also interested in understanding why
people cheat. Those cheating others consider only the benefits
to themselves. But the costs they impose on the whole economy
are very large.
Studies have shown that people do not cheat because
they do not have any morals. People cheat because the benefits
of cheating exceed the costs.
Two economists in particular, Cliff Nowell and Doug
Laufer, in a 1997 paper, demonstrated this behaviour with an
experiment on 300 college students. The students were given
multiple-choice tests that were collected and secretly
The originals were returned to the students soon
after. The students were then told to mark their own tests and
report their scores to the examiner. The examiner would then
check the actual scores with the scores the students gave
Did the students cheat? Unfortunately, the results
showed that about 25% of the students cheated. The experiment
found that students with the highest expected benefits, and the
lowest expected costs, were most likely to cheat.
And it has nothing to do with morals. In other similar
studies to see whether the teaching of morals would discourage
cheating, the students were told to be honest before the tests.
The examiners appealed to their conscience and integrity. Even
after all that, the level of cheating did not drop.
In other words, cheating is a normal part of human
behaviour. Human beings make rational choices about when and
where to cheat. If that’s the case, how do we stop
How about, let’s say, imposing heavy punishments on
the students who are caught cheating? This could be in the form
of an expulsion, a heavy fine, or a public shaming. Apparently,
studies show that such punishments have little impact on
reducing the level of cheating.
In the real world, it’s not easy to impose punishments
without working through rather cumbersome legal procedures.
There’s a lot of paperwork, and court hearings take an
emotional toll on both parties. And if only minor damages are
at stake, the cost of administering punishments may not be
Studies show that the best way of reducing cheating is
to make it difficult for people to cheat in the first place. In
the student tests, for example, more examiners were recruited
to police the students. And the students were told that their
colleagues would look over their shoulders. When such measures
were taken, cheating was reduced drastically.
This means to say that if we want to stop another case
of tainted milk in China, or another case of tainted investment
products from Wall Street, it’s useless to teach them
What we must do is to impose strong regulations on
Chinese factories and Wall Street banks. Of course, these
regulations must be strictly enforced, and bribery must be
Only then will it lead to an improvement in the
quality of Chinese-made goods. For Wall Street, we’re seeing
the end of a long prosperous era of American laisser-faire
capitalism. It’s the beginning of an era of government
intervention and re-regulation. For all of us, this may be a