W.Economics students who are less trustworthy later work more often in the financial industry. This is the conclusion of a study in which financial scientists from the University of Mainz were involved. So do bankers rightly have a bad reputation?
The global financial crisis in 2011 gave the impetus for his research in this area, says Andrej Gill, Professor of Corporate Finance at Gutenberg University. “We wanted to understand how the scandals in the financial sector – at least in part – come about.” The scientists focused on the question of which people are attracted to this industry and what role personality plays in choosing a career. This point has so far been neglected in the discussion about banking regulation, says Gill.
Together with colleagues from the Universities of Cologne, Bonn and Leuven, he conducted a long-term experimental study to investigate the trustworthiness of economics students and future employees. In 2013, the researchers first asked 265 business students at the University of Frankfurt about their career aspirations, social preferences and personality traits.
“Trust Game” with a stake of eight euros
The students then took part in a behavioral economics experiment – a so-called trust game. One participant received eight euros and could pass on an amount between zero and eight euros to a second person. “We tripled every amount sent,” explains Gill. The second person could now decide how much to give back to the first person. According to the professor, it was crucial that the students knew about all the steps of the experiment at all times and that the amount was actually paid out to them at the end of the experiment. This ensured that the subjects behaved as realistically as possible.
The decisive factor was the behavior of the second person: Students who returned a higher amount were considered more trustworthy. “What we found in the first step is that people who want to work in the financial industry give far less back and are therefore less trustworthy,” says Gill. Their confidence level was 30 percentage points lower than that of the students who had other professional goals.
Worthwhile look at personality
In a second step, the scientists surveyed the same students again in 2019 and 2020 – most of them had already found a job by then. Gill’s conclusion: “The people who actually started out in finance are the ones who turned out to be less trustworthy in the experiment at that time.”
In September, the scientists published their study as a discussion paper. The results should be treated with caution, emphasizes Gill; they could not provide an all-inclusive explanation for scandals in the financial world. However, it has shown that it is worthwhile to take a look at the personalities that this industry attracts.
The scientists have also come to the conclusion that it is precisely the high income that is decisive for young professionals in the financial industry. A first step in attracting more trustworthy employees in the future could, in Gill’s opinion, therefore be to think about different pay in the industry.