Hitting Rock Bottom: Economic Hardship and Cheating

This paper investigates whether economic hardship undermines preferences for honesty. Using incentivized, high-stakes measures of cheating for private benefit in a large sample of 5,664 Kenyans, the authors exploit three complementary sources of variation: experimentally manipulated monetary incentives to cheat, a randomized increase in the salience of one’s own financial situation, and the income shock caused by the COVID-19 crisis, using randomized survey timing to compare respondents interviewed before versus during the crisis. Cheating is highly responsive to financial incentives, and COVID-19-related economic hardship—marked by a 51% drop in monthly earnings—causes a sharp and persistent increase in cheating, with effects largest among those most economically impacted and amplified when financial situation is made more salient. While most individuals strongly prefer not to cheat under normal conditions, the results show that economic forces can explain a substantial share of variation in dishonesty, with estimated cheating rates rising from 29% under low stakes in normal times to 86% under high stakes during the crisis.