I’d guess closer to 100%.

The Shocking Statistic About Psychopaths On Wall Street

By Sam Ro

February 28 — The March/April issue of the CFA Magazine has a fascinating article titled “The Financial Psychopath Next Door.”

A shocking statistic jumped out at us. From the article:

Studies conducted by Canadian forensic psychologist Robert Hare indicate that about 1 percent of the general population can be categorized as psychopathic, but the prevalence rate in the financial services industry is 10 percent. And Christopher Bayer believes, based on his experience, that the rate is higher.

Bayer is a well-known psychologist who provides therapy to Wall Street traders.

The type of psychopath the author is writing about is characterized by compulsive gambling. And the Wall Street psychopath doesn’t necessarily show up to his or her first day of work in this condition. From the article:

Taken to the extreme, some traders become compulsive gamblers. The behavior is often latent–neither they nor anyone else knows they have this propensity. They hide small losses and keep doubling their position to try to eliminate them. When those trades turn sour, they dig themselves into a deeper hole and deny ay wrongdoing or failure. They rationalize by telling themselves that poor investment decisions are an occupational hazard. They lie to family members or others to conceal the extent of their involvement with gambling and commit forgery, fraud, theft, and embezzlement to support their habit.

A little more color on these particular types of psychopaths:

These “financial psychopaths” generally lack empathy and interest in what other people feel or think. At the same time, they display an abundance of charm, charisma, intelligence, credentials, an unparalleled capacity for lying, fabrication, adn manipulation, and a drive for thrill seeking.

A financial psychopath can present as a perfect well-rounded job candidate, CEO, manager, co-worker, and team member because their destructive characteristics are practically invisible. They flourish in fast-paced industries and are experts in taking advantage of company systems and processes as well as exploiting communication weaknesses and promoting interpersonal conflicts.

Unfortunately–writes the author–the best candidates for many Wall Street jobs exhibit the traits of a financial psychopath.

34 Responses

      1. @Save America, They buy them because the return on investment potential is higher. US Treasury rates are low, and indication of safety, not risk.

      2. @FXTradeX6, I am so dumb, of course, why does a central bank need to worry about investment potential in a foreign firm in a foreign currency, they do have this technology called a printing press right? Marking up and down ones and zeroes in shekel spreadsheets right?

  1. this is a frequent meme on max keiser’s show and something that i have felt for quite some time now.

    i occasionally go to a club that’s frequented by financial industry types and have had the misfortune of dating girls in the financial industry and i can say that, apart from military people or people in the entertainment business, they are some of the sickest people i’ve ever met. and the higher up the “ladder” you go, the sicker they tend to be.

    i offer my humblest apologies if i have offended anyone, but i’m just simply relating my own personal experience, as well as the experience of others i’ve talked to.

    anyhow, it’s really sad, b/c i feel like the financial industry press has a near lockdown on the discourse about the economy and they condition the politicians to make the stupid choices they make and then condition the public to accept them.

    1. @Yuu Kim,
      “have had the misfortune of dating girls in the financial industry”

      Wow what a sexist comment that brushes with broad strokes! I think many female readers here would consider you a male chauvenist pig and more sensitive male readers would too! Warren’s new policy is for “balanced” debate, even if the collective experience of the borg userbase is one-sided. Who will be the champion of the spoiled rich princesses our society’s wealth has created and counterbalance you? I hear lady gaga just hit 20 million followers on Twitter, she has an army to destroy you, be careful citizen!

      For that reason I want to steer you here: http://www.bogleheads.org/forum/viewtopic.php?f=2&t=91463&newpost=1320836

      The bogleheads forum, (of john bogle vanguard fame) where many stoic and old financial soothsayers hang out in thier relative bond boredom not reacting wildly to financial porn, but rather “staying the course” If you will take note, many of these rich old bogleheads are against marriage ( for financial survival), and in this particular thread, against this relationship, as MANY posters note in that thread, they have come to this conclusion after many decades of empirical evidence and testing, and this bunch is rather academic at times.

      Perhaps dating and marriage as your forefathers experienced it has died and you should move on with the rest of us progressives….

      Look warren just had to go into a Liverpool nightclub and spend 300K dollars on his bartab to get a few ladies to come over (who took notice after the 125K euro bottle of nebechenezzar wine)


      In what could be the largest (known) bartab in history, an unknown gentleman spent £203,948.80 ($323,483 at the closing GBPUSD spot rate) at Liverpool nightclub PlayGround – a purchase which included a £125,000 bottle of the world’s most expensive champagne, Nebuchadnezzar of Armand de Brignac Midas, as well as a whole lot of other drinks, including among them 42 instances of “Pu***” at a low price of £3.00 (the Dire Straits definitely had that part right). The man “was there with about ten friends on a private table but after the big bottle came in they were mobbed by gorgeous girls.”

      As the computer said to mathew broderick at the end of Wargames, sometimes the only way to win Yuu Kim, is not to play….

    1. @Dimm,
      Sounds like the Peter Principal at work in steering the financial markets toward increasingly greater levels of systemic risk.

  2. Let’s bar all the exits and windows at GS except for the very top floor, then paint a big bulls-eye on the street below.

  3. Lloyd Blankfein: “So, why do you think you’re qualified to be a trader here at Goldman Sachs?”

    Max Cady: “Well, firstly, I’m insane. Second, I…”

    Blankfein: “You’re in.”

  4. Another very good book on sociopaths and the effect they have on society is Political Ponerology


    Inherited and acquired psychological disorders and ignorance of their existence and nature are the primal causes of evil. The magic number of 6% seems to represent the number of humans who either carry the genes responsible for biological evil or who acquire such disorders in the course of their lifetime. This small percent is responsible for the vast majority of human misery and crime, and for infecting others with their flawed view of the world.

    The scope of evil does not respect any boundaries of race, doctrine, or ideology. All races carry the genes, and all schools of thought are susceptible to their influence. These pathological factors that influence behaviour form a complex web. It is only in such a web that the “environmental evil” wherein circumstances can influence a normal person to commit harmful acts can be understood.

    Of 5000 psychotic, neurotic and healthy patients, Lobaczewski identified 384 (7.7%) who caused serious harm (physical and/or emotional) to others. Some of these had been penalized for their actions and some had been protected by Communist government of the time. Contrary to the common moralistic interpretation of evil actions (“evil consists of making evil choices”), and also contrary to legal systems which views psychopaths as sane and thus responsible for their actions, the vast majority (85%) of these 384 individuals showed psychopathological factors influencing their behaviour. It is likely that, without these factors present, the harmful actions would not have taken place. These psychological factors limit the subject’s ability to control their actions. In this sense, a moralistic interpretation to psychopathic behavior is fundamentally flawed.

  5. Paul Ormerod, in the Death of Economics:
    John Maynard Keynes considered the same question in the 193os, and expressed the view that on the whole the rewards of those in the financial sector were justified. Many individuals attracted to these markets, Keynes argued, are of a domineering and even psychopathic nature. If their energies could not find an outlet in money making, they might turn instead to careers involving open and wanton cruelty. Far better to have them absorbed on Wall Street or in the City of London than in organised crime.

    1. @BFG,

      “Far better to have them absorbed on Wall Street or in the City of London than in organized crime.”

      Hmmmnnn…seems almost like a difference without a distinction. Maybe we would all be better off if they were in organized crime, because more of them might end up in jail.

    2. @BFG,

      Omerod: “If Their Energies Could Not Find An Outlet In Money Making, They Might Turn Instead To Careers Involving Open And Wanton Cruelty. Far Better To Have Them Absorbed On Wall Street Or In The City Of London Than In Organised Crime.”

      As Bill Black documents, the psychopaths dealt with this way predictably turned Wall Street and the City into organized crime syndicates and the financial sector into a criminogenic environment.

      1. @Tom Hickey,

        As I understand it, 1 in 5 either have or have had a mental illness. Seems like we could use a better way of dealing with this. We don’t seem to have a good answer, at the moment. Perhaps we’re not asking a good question.

      2. @Unforgiven,

        Most people are in denial about mental illness in themselves and those close to them, let alone in others. It is a knotty problem with a lot of issues involved. A lot of people get selected out or self-select out and fall through the cracks, while many others get selected in due to the design of the selection process. As a country, we are not dealing at all well with a wide-ranging problem that affects many levels. But it is a very knotty problem that involves many issues, which is why there is so much denial related to it. Even more dismally, a lot of the focus on treating mental illness now is through psychopharmacology, which is simple and relatively inexpensive to administer, but there is no easy way out of many of these problems.

        However, at the very least, it should be possible to put a better selection process in place in important areas so that psychopaths don’t get selected in precisely because of their illness rather than in spite of it.

      3. @Tom Hickey,

        Indeed, at the very least.

        And indeed a knotty problem.

        Obviously our handling of the problem results in considerable mayhem, even IF it’s an improvement on years past. The impact on unemployment alone is huge and that’s only one measure.

        Still, all in all, it’s a blessing that there is much room for improvement.

  6. @Tom Hickey,

    “However, at the very least, it should be possible to put a better selection process in place in important areas so that psychopaths don’t get selected in precisely because of their illness rather than in spite of it.”

    This is one of the reasons Dr. Robert Hare cites for creating his checklist. Many of the traits that psychopaths possess are the same traits that you would look for in leaders. They are fast-talkers, charismatic, intelligent, self assured with strong opinions, your typical sounding politician.

    Psychopaths cannot be cured and the ones that go through with treatments become better at what they do and have a higher incidence of repeat offence.

    This brings up the question whether power corrupts or do corrupt people seek power?

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