Cognitive dissonance undermines our ethical values

Jon Cudby

When I was growing up in the 1980s everybody hated Maggie Thatcher. Well, obviously some didn’t, but they hardly dared voice such an opinion in public.

The only people you ever heard from, without exception, despised the Iron Lady. Everybody competed to pour more scorn and vitriol on her. They all couldn’t wait to vote her out and used every by-election and opinion poll to underline how unpopular her government and policies were.

Then a general election would come round, and the people would keep hating her right up to the moment they got into the polling booth, where I can only assume they panicked, terrified by the unknown, and voted Tory after all.

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Mrs Thatcher never lost a general election, only being forced from office after a mutiny among key members of her cabinet achieved what the electorate had spent a decade deciding not to do.

This sort of cognitive dissonance fascinates me.

People will behave in ways contradictory to what they apparently believe or know to be right. You’ve probably heard that smoking can be bad for you. I’m pretty sure the 10m adults in the UK who smoke have heard that too, but they continue with their habit regardless.

And so it is with ethical investment. Consumers will grumble about the practices of investment banks and chase some mythical ideal of balancing profits and morality, but as soon as their own money is at stake I suspect most are not that bothered where it is invested. Or at least they are more bothered about how much it is returning.

The general public will say they want to embrace ethics; they will make all the right noises about actually caring. But when it comes to the crunch, as long as they see profits they will be happy to turn a blind eye to whatever injustice has been perpetrated in the cause of funding their retirement, school fees or whatever.

We asked advisers for their priorities when it comes to choosing funds in our Intelligence survey last month. Not one said ethical credentials.

When we asked whether their clients were bothered where their money was invested, only about one in five said they were.

The rest were split between not being concerned at all, not having thought about it or – the most popular answer – ‘they are concerned but they prefer to prioritise profits’. A handful did not even ask their clients’ opinion.

This indifference shouldn’t come as a surprise, but given the attention devoted to socially responsible investment, it might. Ethical investing enjoys a disproportionate amount of column inches in both the press and product marketing and even gets its own dedicated week, giving it the same importance in the calendar as British sausages, and seven times the significance of disability awareness, which only gets one day.