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Consider the following thought experiment. You reach a classroom or a conference and discover that you forgot to bring a pen along. You already arrived late, do not want to disturb the decorum, so you take an unattended pencil that's lying on the desk in front of you.

Now consider a different situation. You are at a hospital, tending to a loved one in the middle of the night. You walk up to a vending machine to get yourself a bag of chips, and deposit hundred rupees. The machine returns your money because it does not have sufficient change. But in addition to your hundred, it also spits out a twenty-rupees note; just what you needed to purchase the bag of chips. It 3am, and no one will be the wiser. It may not be too fanciful to imagine that most people would feel comfortable taking the pen but feel guilty about taking the money or avoid taking it altogether. Notice that in both cases, we (would) end up using resources that do not belong to us, yet our responses to the two situations may widely vary.

A workshop on 'ethics and professionalism in workplace' organized jointly by PBC's Centre of Excellence in Responsible Business, ACCA, CFA Society, and British Deputy High Commission in Islamabad considered these dilemmas with respect to workplace. The trainer suggested that participants should regularly subject themselves to the 'mirror test', which roughly translates into actively engaging in self-reflection, whenever faced with a morally dubious set of choices. Yet the proponents of self-regulation seem to discount the power of what behavioural scientists refer to as 'flexible cognitive psychology'. Roughly simplified, this refers to human ability to rationalize cheating, and discount long term consequences of dishonest behaviour.

The rationalization involved in the example of missing pen is purposefully obvious. In taking that pen, the subject may believe his action is justified as it avoids causing further nuisance to the discipline of the classroom.

Social scientists have discovered a variety of similar ways in which humans may rationalize casual rule breaking. One very common example is herd behaviour. Experiment results show that people cheat more when it is socially acceptable; and concurrently avoid cheating altogether, when they perceive it as a trait of 'others' and 'outsiders'.

If self-regulation may not always work, does that mean traditional lessons of reward and punishment hold? Yes and no. Rational choice theory, which perceives all human behaviour as outcome of weighing perceived costs against perceived benefits, proposes that undesired behaviour may be discouraged by increasing costs of such actions maximally, so that (most if not all) rational agents are deterred. Yet, murders, robberies, and financial corruption in public office - crimes that usually carry the most severe punishments still happen routinely, indicating that not all people consider the long-term consequences of their actions. Does that mean people who avoid taking money out of vending machines - in absence of surveillance - are innately good, or may even act so out of fear of God? May be so. But research shows that context matters. Even hardcore atheists have been shown to behave more honestly than average when sworn on Bible. In a more local context, an uptick in pious behaviour is not uncommon during the holy month of Ramzan. But what appears to work most effectively is how far the subjects are removed from the actual consequences of their actions.  Consider two leading sources of preventable death - smoking and obesity. Both behaviours are common despite high prevalence of public awareness, as the consequence of picking a cigarette (or that extra cake slice) today are far removed from a possibility of cancer or a coronary several years later. A more curious case involves situations where people consciously engage in rule-breaking where they consider the rule itself to be immoral or unjust. Whether it is the example of Prohibition period in USA, or well-meaning locals scoring pot because they conscientiously believe the existing law to be misguided.  Never mind that proceeds of businesses conducted outside the scope of law may go on to finance a lifecycle of criminal activity, from human trafficking to terror financing. Yet hardly any customer of bootlegging ever demands his supplier to provide proof of 'responsible business practices'.

While it may appear far-fetched to synthesize lessons from micro-level examples and apply them to macro-level public policy, but it is hard not to notice the resemblance. Consider traders who may rationalize under invoicing because they find sale tax imposition unjust.

The actors in both examples are far removed from the actions of their consequences, a bootlegger's customer just looking for 'a good time' may feel little bearing on his conscience when a suicide bomb goes off in Kandahar. Similarly, a small-time trader finds no connection when a rabies vaccine goes missing from a government hospital in Sindh, in many ways a consequence of poor public service delivery due to low tax collection.

Human beings and their actions are far too complex to reduce to any one set of economic or behavioural theory. But overwhelming stream of evidence from experimental sciences has increasingly established that when it comes to preventing rule-breaking and promoting ethical behaviour, neither self-regulation nor active surveillance (and threat of punishment) may always work.  Rule-breaking behaviour is far too common than we may wish to admit, and may change in intensity based on context, ability to rationalize, and the degrees of distance (both in time and space) between the actor and his action's consequence.  Afterall, in an age of selfies, people seem to have developed a liking for what they see in the mirror. Something to keep in mind when forming the next set of guidelines for professionals to self-regulate