Monthly Archives: July 2013

Psychology of Greed

Standard

“He who is not contented with what he has, would not be contented with what he would like to have.”
Socrates

I don’t know about you but I find myself constantly astounded by the short-sightedness of corporate greed. I find myself thinking, surely they can’t be that myopic? There is no way you can do so much damage to the planet that EVERYBODY has to share and just completely fail to care. What is going on here?

Today someone posted a link to petition against a company that is planning to build “the world’s largest coal mining complex” whose shipping lane would go right through the Great Barrier Reef in Australia. Again, my first reaction was: Surely this is a joke? Can greed overpower everything else to the point where they would be willing to destroy one of the natural wonders of the world? It’s hard for me to even fathom.

But this got me thinking: what does psychology have to say on the topic of greed? What do we know about greed?

Greed is defined as “a selfish or excessive desire for more than is needed or deserved, especially of money, wealth, food, or other possessions”.

A report by Fidelity Investments found that you “need” at least 5 million dollars to “feel wealthy”. But as we can all clearly tell, once the rich reach that magic number they don’t pat themselves on the back and retire in luxury. Instead they continue to hoard more wealth. According to Seltzer (2012), profit making or securing a deal releases dopamine and can become addictive just like other addictive behaviours. And like with those other addictions, you develop a tolerance and need more and more in order to get the same “high”. Others also suggest that power causes profound distortions in behaviour, emotions, and thinking (Robertson, 2012) resulting in a skewed perception of the world and a dull appreciation of risk, while some would go so far as to call greed a psychological disorder (Hartmann, 2010).

But the truth of the matter is that we don’t need to demonize those in the financial industry, or assume that all the rotten apples congregated on Wall Street. Studies find that greed is more common than generosity. For example, one study found that if people were the recipients of an act of generosity, they were not any more likely to “pay it forward” than to perform a neutral act. However, if they were the recipient of an act of greed, they were more likely to “pay it forward” creating a negative chain reaction. This is not surprising as psychology studies have shown over and over that negative stimuli have stronger effects on our thoughts and actions than positive stimuli. I suppose it makes sense that if you perceive everyone else around you as being greedy, you feel the need to also be greedy otherwise you will not get your share. But what a sorry implication that has for our current conundrum!

The conclusion that the above study draws is that people should focus on treating everyone equally and refraining from acts of greed. Research on social norms would support this notion as people will easily conform to what others do if they perceive it to be in their interest, thus the system works best when in addition to conformity, violators (in this case the greedy) are punished (Guzman, Rodriguez-Sickert, & Rowthorn, 2007). This is perhaps the key flaw in our handling of corporate greed – the mechanism of punishment – the law – is completely ineffective against corporate misdeeds.

The idea that we should trust banks, or anybody when it comes to wealth, to be “good” while “no one is watching” is absurd (Lammers & Stapel, 2009), because “good” becomes relative (no one is around, therefore what’s good for me = good). If you don’t want people to steal or hoard, then you have to have rules that are enforced, not live in hope that people will be model citizens. Accountability is the cornerstone of a healthy society.

References

Fidelity Investments (2012). Key Insights into the Millionaire Mind. Retrieved from: https://fidelityinstitutional.fidelity.com/fi/campaigns/mobasi/index.html

Gray, K. Ward, A.F., & Norton, M.I. (2012). Paying It Forward: Generalized Reciprocity and the Limits of Generosity. Journal of Experimental Psychology. Retrieved from: http://www.apa.org/news/press/releases/2012/12/greed-generosity.aspx

Greed: definition. Retrieved from: http://en.wiktionary.org/wiki/greed

Guzman, R., Rodriguez-Sickert, C., & Rowthorn, R. (2007). When in Rome, do as the Romans do: The coevolution of altruistic punishment, conformist learning, and cooperation. Evolution and Human Behavior, 28, 112-117.

Hartmann, T. (2010). Greed is a psychological disorder. Retrieved from: http://www.thomhartmann.com/users/natural-lefty/blog/2010/10/greed-psychological-disorder

Lammers, J. & Stapel, D.A. (2009). How power influences moral thinking. Journal of Personality and Social Psychology, 97(2),  279-289. doi: 10.1037/a0015437

Robertson, I. (2012). Bankers and the neuroscience of greed. The Guardian. Retrieved from: http://www.guardian.co.uk/commentisfree/2012/jul/02/bankers-greed-brain-changes

Seltzer, L.F. (2012). Greed: The ultimate addiction. Retrieved from: http://www.psychologytoday.com/blog/evolution-the-self/201210/greed-the-ultimate-addiction

Advertisements