Why is Wall Street full of psychopaths?
A surprisingly high number of financiers have an "unparalleled capacity for lying," according to a new, unsettling report that's rattling the industry
One out of 10 Wall Street employees is a clinical psychopath, estimates Sherree DeCovny in CFA Magazine [pdf for purchase], compared with one out of 100 people in the general population. That statistic is "shocking," says Sam Ro at Business Insider, and, while it doesn't mean Wall Street is crawling with ax-wielding serial killers (see American Psycho), the extreme character traits outlined in DeCovny's report are certainly prevalent — and often admired — in the industry. Here, a guide to Wall Street's madness:
What are the symptoms of Wall Street psychopaths? They "generally lack empathy and interest in what other people feel or think," writes DeCovny, who bases her report on interviews with several trade psychologists. Financial psychopaths are capable of displaying "an abundance of charm, charisma, [and] intelligence," but also possess an "unparalleled capacity for lying, fabrication, and manipulation."
How does it affect their work?In extreme cases, financial psychopaths become compulsive gamblers, driven by "the chemical rush of serotonin and endorphins" that accompanies gambling, writes Alexander Eichler at The Huffington Post. Of course, "an appetite for risk can seem like a positive business trait on Wall Street, where big gambles sometimes lead to big rewards." But when bets go bad, psychopaths "dig themselves into a deeper hole and deny any wrongdoing or failure," DeCovny says. Financial psychopaths lie to others — and themselves — about the extent of their problem, and "commit forgery, fraud, theft, and embezzlement to support their habit."
Why are there so many psychopaths on Wall Street? In some cases, people with psychopathic personalities seek out jobs in the financial industry, where charisma, confidence, risk-taking, and a singular focus on self-interest are often rewarded. In fact, DeCovny finds that the best candidates for Wall Street positions often display such characteristics. But some Wall Street workers also develop these traits because of the job and its attendant pressures. DeCovny says compulsive gambling, for example, is "often latent — neither they nor anyone else knows they have this propensity."
What other psychological issues do financiers face? Quite a few. Nearly a quarter of male Wall Street brokers are clinically depressed, compared with 7 percent for the general male population, according to a 2000 study. Research also shows that bankers are prone to "insomnia, alcoholism, heart palpitations, eating disorders, and an explosive temper," writes Leslie Kwoh at The Wall Street Journal.
Editor's Note: Since this article was published, a psychologist cited by DeCovny, David Hare, has cast doubt on DeCovny's conclusion that one of 10 Wall Street employees is psychopathic.