Karlijn Hoyer researched greed. Is greed “good” for the economy? Is it contagious? And what effect does it have on human relationships?

“Greed is good,” said Gordon Gekko (played by Michael Douglas) in his famous speech in the film Wall Street (1987), Oliver Stone’s iconic production about the growing immorality of the financial world in the late eighties. The film was meant as a biting critique of runaway capitalism, but despite Stone’s intentions, Gordon Gekko’s philosophy actually became a model for a new generation seeking careers in finance in the 1990s. Corruption, avarice, and immorality increased rapidly, with the collapse of the financial markets in 2008 as the ultimate result of all that “corporate greed.” At least, that’s how I’ve come to know the story.

Karlijn Hoyer, economic psychologist and postdoc at the University of Amsterdam, is not so sure my version is entirely accurate. She did her PhD research on greed at Tilburg University, and I met her during the IAS Academy — a day where young researchers can get to know the Institute for Advanced Study (IAS) and its interdisciplinary approach to research.

When Hoyer began her research, corporate greed was a hot topic, she explains. The collapse of the financial markets was blamed on bankers and the greed of the financial world. That was the dominant narrative. But was it actually true? That question intrigued her, and so she didn’t hesitate when a PhD position opened up that allowed room for research on this theme. “It was research at the intersection of psychology and economics, and that’s what made it so interesting for me.”

Her supervisor, Terri Seuntjens, had previously developed the Dispositional Greed Scale (DGS) — a scale for measuring greed. It has since become the generally accepted standard in the field. According to the test, Hoyer herself turned out to be a bit greedy. “Not too much, though. But I think it’s mostly because I’m very ambitious and always looking for new experiences. In that sense, I’m greedy. Or, for example, if I’m in Albert Heijn [a supermarket chain] and they’re giving out collectible stickers, I’ll always take them — even if I’m not collecting them.” The DGS doesn’t just measure money-related or materialistic greed, as Hoyer’s response suggests. (You can measure how greedy you are with the test at the bottom of this article.)

Hoyer divided a group of students into two groups: one with low greed scores and the other with high DGS scores. She then let both groups trade on artificial markets. Her research showed that greedy people were generally more rational: their markets were less prone to economic bubbles (often driven by emotional ideas about future events), and the value of their markets was less speculative and closer to actual value. “Of course, I can't claim from this that the 2008 crisis wasn’t caused by corporate greed. A lab with students is something entirely different from a complex real-world trading situation. But the results do suggest that we should take the conclusions about greed and the financial crisis with a grain of salt.”

Does that mean greed can actually be “good” for the economy in some way? Does Adam Smith’s “invisible hand” ultimately ensure that greedy individual choices yield positive effects for society as a whole? Hoyer thinks this is partly true. Especially economists and biologists tend to emphasize this positive side of greed. “Greed has evolutionary advantages, after all. It motivates you to build up reserves, increasing your chances of survival. It also gets people moving — it drives ambition, innovation, entrepreneurship.” Interestingly, earlier research at Harvard University found a link between economic education and greed: the more economic education someone receives, the greedier they tend to become.

How do these findings relate to our traditional view of greed as a negative, even sinful trait? Isn’t greed, by definition, nothing to be proud of? In Christianity, greed is one of the seven deadly sins, and Buddhists consider it a kind of “poison.” Hoyer’s research also revealed negative consequences of greed — mainly for the greedy individuals themselves. They were found to have fewer children, more sexual partners, and higher household incomes. Whether these are positive or negative outcomes is debatable. But what stood out to Hoyer most was the loneliness experienced by greedy individuals. “They’re less happy in their relationships, objectify their friends, and are less satisfied with life.” I can imagine that. If you meet up with friends always looking to gain something, it doesn’t just affect those friends — it impacts your own happiness too. All your relationships suffer. Hoyer is especially interested in researching this further. “The study of relationships and greed is still in its early stages.”

Hoyer is also interested in how greed might be contagious. Some professions show significantly higher levels of greed than others. People working in industries dealing with natural resources (like oil companies), in finance, or in insurance tend to have higher average greed scores. In contrast, fields like education and healthcare tend to attract less greedy individuals. That’s not entirely surprising, of course — but how do these differences arise? “That’s unclear. It could be a self-selection effect — greedy people may simply choose certain careers more often. But it could also be a cultural contagion. If you see your neighbor has a big car parked in front of their house, you may be more likely to want one too.”

Soon, Hoyer will begin a new study looking at the relationship between greed and rule-following. Do greedy people break the rules more easily? Greed is often linked to immoral behavior — small transgressions like fare-dodging or cheating, for instance. But there are also studies linking greed to corruption. Greedy people, for example, are more easily bribed. “So there is clearly a link to unethical behavior.” Apparently, greed is considered a sin for a reason.

At the intersection of economics and psychology, we’re always dealing with two different dimensions: the market (economics) and the individual (psychology). Especially in classical economics, the mantra “more is better” is still very much alive, Hoyer explains. It’s no wonder that in this paradigm, greed still carries a mostly positive connotation. And that applies not just to the market, but to the full spectrum of human behavior. As Gordon Gekko’s speech in Wall Street continues: “Greed is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.”

In psychology, however, the focus is more on the emotional consequences for the individual. And generally speaking, the individual is not made happier by greed. Just look at Leonardo DiCaprio in The Wolf of Wall Street and you’ll see where greed can lead in psychological terms. Not only does the protagonist suffer — all his victims do too. The Wolf of Wall Street ends up lonely, delusional, and completely disconnected from the world around him. It’s no surprise that Hoyer wants to do more research into greed and human relationships.

Test How Greedy You Are

Naturally, I was curious to see how I’d score on the DGS. Here are the test questions. Your score depends on how much you agree with each statement. Add up your points and divide the total by 7. The DGS follows a fairly normal distribution, with an average score of about 2.5 (on a scale of 1 to 5).

1. I always want more

2. I am actually quite greedy

3. You can never have enough money

4. As soon as I get something, I already think about the next thing I want

5. It doesn’t matter how much I have, I’m never really satisfied

6. My life motto is “more is better”

7. I think I can never have enough stuff

Scoring:
1 = Strongly disagree
2 = Disagree
3 = Neutral
4 = Agree
5 = Strongly agree

Author: Sanne Bloemink 

Published in De Groene Amsterdammer on July 2, 2024. Translated by the Institute for Advanced Study.