Those greedy bastards!
Thursday, November 15, 2012 at 08:55PM
Skeptic in Executive pay, Favorites, Free market fundamentalism, Sub-prime Mortgage Melt-down

The recent Presidential election campaign involved much rhetoric from the right about "makers" and "takers." A paper published in February by UC Berkeley researchers gives us another way to think about who the "takers" are. The reported studies found that upper-class individuals had more favorable attitudes toward greed and were observed to be more likely to take what isn't theirs according to broadly accepted norms.

From the press release:

In seven separate studies conducted on the UC Berkeley campus, in the San Francisco Bay Area and nationwide, UC Berkeley researchers consistently found that upper-class participants were more likely to lie and cheat when gambling or negotiating; cut people off when driving, and endorse unethical behavior in the workplace.

The increased unethical tendencies of upper-class individuals are driven, in part, by their more favorable attitudes toward greed," said Paul Piff, a doctoral student in psychology at UC Berkeley and lead author of the paper published today (Monday, Feb. 27) in the journalProceedings of the National Academy of Sciences.

The abstract of the paper published in the Proceedings of the National Academy of Sciences:

Seven studies using experimental and naturalistic methods reveal that upper-class individuals behave more unethically than lower-class individuals. In studies 1 and 2, upper-class individuals were more likely to break the law while driving, relative to lower-class individuals. In follow-up laboratory studies, upper-class individuals were more likely to exhibit unethical decision-making tendencies (study 3), take valued goods from others (study 4), lie in a negotiation (study 5), cheat to increase their chances of winning a prize (study 6), and endorse unethical behavior at work (study 7) than were lower-class individuals. Mediator and moderator data demonstrated that upper-class individuals' unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed.

So, it seems the rich really are different from you and me, not in the way F. Scott Fitzgerald imagined, but in the way Oliver Stone presented Gordon Gekko and, of course, in Ayn Rand's Atlas Shrugged hero John Galt and in her The Virtue of Selfishness. George Monbiot discusses Rand's poisonous and currently fashionable ideas in a Manifesto for Psychopaths.

Excessive greed and lack of empathy bordering on psychopathy could explain much of what goes on in the world of high finance and in public company CEO compensation, could it not? Clive R. Boddy develops that idea in The Corporate Psychopaths Theory of the Global Financial Crisis in the Journal of Business Ethics. About 1% of the population consists of psychopaths (20% in the prison population) and it could be that Wall Street traders are selected in part for their remorseless greed, likely making the population of these types in leadership positions atypically large in some organizations, instead of being weeded out as one might hope.

From an earlier paper by Boddy, Ladyshewsky, and Galvin, The Influence of Corporate Psychopaths on Corporate Social Responsibility and Organizational Commitment to Employees:

Leaders who are Corporate Psychopaths often create the illusion of being successful leaders. However, they are attracted to these positions of leadership because of the access to rewards and power that are vested in these senior management positions.

One implication of these ideas is that the rest of us may be at the mercy of powerful people who can only be controlled by strict laws and vigorous enforcement, and not, as Alan Greenspan erroneously thought, trusted to police themselves or subjected to subtle adjustment of incentives.

Hat tip to Yasmin Anwar at Real-World Economics Review Blog, where most of the Berkeley press release is quoted.

Update on Wednesday, November 21, 2012 at 09:13AM by Registered CommenterSkeptic

In the first comment below, Jazzbumpa supplies a YouTube link to an RT segment aired yesterday and a good summary of its content.  For convenience, I've embedded the video here:   

You can follow JzB's blog here.  

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