A friend of mine used to work at a bank doing numbers stuff. One of the things banks have to do is determine how likely people are to repay their debts. And because actual money is on the line, they ignore politically-correct pieties. If the numbers say one nationality is more likely to repay than another, that goes into the algorithm.
My friend, who is not German, said it’s well-known all across the banking world that Germans are more likely to repay their debts than almost any other group on the planet. Nobody knows exactly why, but this stereotype is so reliable that banks even figure it into their algorithms and lending policies. I asked her which nationalities had a worse reputation for repaying her debts, but she politely declined spill the beans, since this information is strictly for internal consumption.
Having a high overall rate of debt repayment doesn’t just benefit borrowers, it benefits everybody, all the time. It’s easier to get loans, and you get them at a lower interest rate. Therefore, there’s more money in productive circulation. Everyone is slightly more prosperous.
Social trust works in the background all the time, making certain countries so much more pleasant to live in than others.
Which brings me to a fascinating comparative international study of honesty, summarized by James Thompson here. Demographically similar cohorts were recruited in a number of countries, from Germany to Morocco to Tanzania, and invited to play dice game which had real monetary rewards. They were allowed to play the game alone, unobserved, and reported their results on the honor system. The result:
According to the study, Germans and Slovaks have the highest estimated proportion of honest people of all the countries studied. And this has many beneficial knock-on effects, as the study’s authors point out:
Good institutions that limit cheating and rule violations, such as corruption, tax evasion and political fraud are crucial for prosperity and development. Yet, even very strong institutions cannot control all situations that may allow for cheating. Well-functioning societies also require the intrinsic honesty of citizens. Cultural characteristics, such as whether people see themselves as independent or part of a larger collective, that is, how individualist or collectivist a society is, might also influence the prevalence of rule violations due to differences in the perceived scope of moral responsibilities, which is larger in more individualist cultures.
If cheating is pervasive in society and goes often unpunished, then people might view dishonesty in certain everyday affairs as justifiable without jeopardising their self-concept of being honest. Experiencing frequent unfairness, an inevitable by-product of cheating, can also increase dishonesty. Economic systems, institutions and business cultures shape people’s ethical values, and can likewise impact individual honesty.
As Thompson wryly noted in 2016: “Avoid Tanzania and Morocco and head for Germany and Slovakia (which many of the citizens of Tanzania and Morocco are seeking to do).”
The authors of the original study, Simon Gächter & Jonathan F. Schulz, attributed the differences to cultural matters. But Thompson and Heiner Rindermann took the study data and found that the correlation between national-level IQ and honesty was even stronger than for the cultural factors the authors’ initial study pointed to.
Whatever the reason, living in high-trust, high-honesty societies is just another of those blessings which Germans take for granted, unless and until they move to a society which doesn’t work like Germany does.