Students should think twice the next time they blindly follow advice from their academic advisors.
A recent study conducted by Sunita Sah, a post-doctoral associate at the Fuqua School of Business, and George Loewenstein, Herbert A. Simon professor of economics and psychology at Carnegie Mellon University, found that advisors with conflicts of interest are more likely to give biased advice when the identity of a recipient is unknown and when there are multiple advisees instead of just one.
“The main goal was to look at whether advisors take care to suppress bias from conflict of interest in a situation which affects more people,” Sah said.
Sah said she derived her inspiration to research this issue from the conflicts of interest she observed between physicians and pharmaceutical companies.
The findings are not surprising, she added.
“I hypothesized these results due to prior research that showed that people are more empathetic towards a single identified victim,” Sah said. “But the results are indeed surprising since it is the exact opposite of what logic dictates we should do.”
She said logic would dictate that people would invest greater care in the quality of advice offered when such recommendations affect more people.
Richard Larrick, professor of management and organizations at Fuqua, affirms said he agreed with the emphasis on supporting individuals over the logically-prescribed route of supporting general welfare. From a psychological perspective, these findings are reflected in charity situations where the donors tend to contribute more generously to one person rather than a group, he said.
“We feel an immediate emotional connection when it’s one person,” Larrick said. “But when it becomes a group we don’t feel that same personal connection—it becomes more abstract. When it’s one other person we feel like we’re harming that one person, but when it’s a group, individuals become faceless.”
The study—published in Social Psychological and Personality Science—involved two experiments with 660 test subjects. In both cases, Sah and Loewenstein said they established conflicts of interest in the advisors—random test subjects assigned another test subject to advise—by offering the advisors money for biased advice.
In the first experiment, advisors were either informed of their advisees’ names and ages, or they remained ignorant. By manipulating knowledge about advisee identity, Sah and Loewenstein said they sought to determine whether relative familiarity affected biased advising.
The second experiment tested whether the number of advice recipients affected biased advising.
Biased advice can greatly impact our daily lives and decisions in areas such as physician medication prescriptions and public financial recommendations, Sah said.
Patty Carter, financial advisor at Edward Jones, said she thought there is potential in the financial industry for conflicts of interest. She added that mutual fund companies who vie for clientele could be an example.
“There are so many mutual fund companies to choose from,” Carter said. “They are all trying to woo you to subscribe to them.”
Yet while the industry was very biased-driven when she first entered the field, it has since progressed to become more client-centered, she said.
“You must put the needs of their clients first,” she said. “If you don’t, then your career will be short-lived. Financial advisors should live by the golden rule and ask themselves, ‘Would I do this to my mother?’”
Despite the movement of the industry towards client prioritization, Sah said she urges consumers to be cautious.
“From a consumer point of view, you shouldn’t assume that public recommendations are of better quality than advice received in a one-to-one situation,” Sah said. “Most importantly, you want to determine if the advisor has a conflict of interest and try to seek un-conflicted advice wherever possible. If not, make yourself known to the advisor.”
For some students receiving academic advising, the implications of the study’s findings may be cause for concern, said senior Kaveh Danesh, Duke Student Government vice president for academic affairs. He added that he sees the results as further encouragement to foster relationships between students and mentors.
“In many ways, this research affirms the importance of getting to know people who we admire, whether our professors, advisors or administrators,” Danesh said. “A casual friendship with a more seasoned member of the community is something that every student at a university deserves.”
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