Fraud at Chinese Companies Raise Questions of Transparency and Oversight
Ethics Sage -- Expert on Ethics Issues

Michael Douglas says Gordon Gekko was wrong -- greed is not good

Do the Rich Act More Greedy than those Less well-off?

You may have heard that Michael Douglas came out earlier this week and confessed that greed is not so good after all. Some believe that two memorable lines from the 1987 movie “Wall Street” helped usher in an era of self-serving behavior by investment fund managers that led to the economic collapse in 2008 -- Greed is good and greed is right.

So, what are we to make of the fact that Douglas who played Gordon Gekko, a corporate raider who cheated innocent investors out of their savings in the original movie and 2010 sequel, has discovered the error of his character’s ways? No doubt it is a reaction to the difficult economic times and massive decline in wealth due in large part to the greedy actions of corporate managers and Wall Street investment bankers. But, in the real world do the rich act greedy in their own personal dealings or is it just play-acting portrayed in the movies?

A new study shows that while the poor might seem to have the most reason to cheat and steal, the rich are more likely to be dishonest. In a series of experiments, University of California at Berkeley researchers showed again and again that upper-class individuals were more prone to unethical behavior than people from more deprived backgrounds, according to the study published in the Proceedings of the National Academy of Sciences.

Paul Piff, a doctoral candidate and the study's lead author, says he was surprised at how little incentive it took to get high-income people to cheat.

In one study, for example, people were asked to play a game of chance online. The 195 volunteers were told that a die would be rolled for them five times and that the participants with the highest scores from the five rolls would get more credits toward a drawing for a $50 certificate. The researchers also told the volunteers to keep track of their own scores.

But Piff and his colleagues had designed the game so all players would end up with a score of 12. As it turns out, “the upper socio-economic status people were way more likely to report a score above 12,” says Piff. “It was fairly remarkable. You wouldn’t think that people reporting incomes of $150,000 per year and up would be so motivated to win this prize.”

In another study, the researchers asked 108 volunteers to fill out a survey online. Along with questions about their backgrounds, the volunteers were asked to imagine that they were employers who needed to hire someone at the lowest salary possible. In the hypothetical, they would get a bonus if they negotiated a low enough salary. The job was one that would last just six months.

Then they were asked what they would do if a candidate came in who was willing to work for less if he could be guaranteed the job would last two years. “Thus, if participants (acting as employers) were honest about the six-month limit of the job, chances are they wouldn’t be able to negotiate a very low salary,” Piff says. In this scenario, the wealthier participants were more likely to act unethically to get a reward.

Piff suspects that a combination of factors, including greed and a heightened sense of entitlement, are what spur the wealthy to cheat. While there are examples of rich people who are especially generous such as Warren Buffet and Bill Gates, money seems to have a deleterious effect on ethics in most cases, Piff says.

Now that I’ve explained some of the test procedures and findings, let me tackle the problem of greed in our society. I do believe we have morphed into a greedy, self-serving society. I have blogged about this issue many times before. It has become routine for people to think of themselves first and then, oftentimes only after already acting, to think about how their actions affect others.

I believe the cause of greed that is endemic in our society can be traced back to the 1960s, well before Gordon Gekko came on the scene. It was the era of the hippie movement fueled by the mantra to “do your own thing.” Hippies were not concerned with the way they were viewed by conventional society. This may sound good in principle but doesn’t work very well in practice because we are accountable to others. We do have a civic duty to act in ways that improve society by enabling others who may be less fortunate to get ahead.

Does this mean that the 1%ers are uncaring, greedy, and indifferent to the plight of others as many in the “Occupy” movement would have us believe? Some criticize Presidential hopeful Mitt Romney for just such behavior. For example, about a month ago he responded to a question about helping the poor by saying: "I'm in this race because I care about Americans. I'm not concerned about the very poor. We have a safety net there. If it needs repair, I'll fix it."

In theory there is nothing wrong with Romney’s message. He is, after all, a businessman first and his answer reflects a business approach. Unfortunately, it is lacking in compassion. This is a valid reason to criticize Romney and, I believe, what is behind the results of the Cal Berkeley study.

Perhaps the most interesting aspect of the study results is an online preference poll conducted by MSNBC after reporting the story. By no means are these results indicative of the entire population of the U.S. However, it is quite curious to have solicited the following responses.

Do you think rich people are more likely to cheat, steal or cut you off in traffic?

  • Yes (71%). How do you think they got rich in the first place?
  • No (4%). In my experience, rich people aren't less ethical than the poor.
  • Not sure (25%). I think it depends on the person, not on the tax bracket.

I, myself, would have answered “not sure.” I do not stereotype people. There are good people and not so good people of all shapes and sizes. Goodness is an end result sought by those who act out of virtue and includes having empathy for others.

There is an old proverb that dates back to the Cherokee tribe of Native Americans, who said “Don’t judge a man until you have walked a mile in his shoes”. Nelle Harper Lee, an American authoress, was seemingly inspired by the saying of the Amerindians in her book “To Kill a Mockingbird,” where she wrote

“You never really know a man until you understand things from his point of view, until you climb into his skin and walk around in it.”

This is the most challenging part of being an American today. We have lost touch with those who are less fortunate than us; those who are struggling to make ends meet during the most trying times; and those who need a gentle push to help pull themselves up by their bootstraps.

Blog posted by Steven Mintz, aka Ethics Sage, on March 1, 2012