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What Price Will We Pay for Greed?

Why greed may be our undoing

"Greed is good," Gordon Gekko trumpeted in the movie Wall Street. And don't the past few years provide plenty of evidence for that assertion? But while popular stereotypes often depict poor people as the most likely to lie and steal, new research shows that it's actually the wealthy who tend to behave unethically.

A study by Dr. Paul Piff at the University of California, Berkeley, published in the Proceedings of the National Academy of Sciences, contends that wealthy people are more likely to lie, cheat and break the law for personal gain without compunction. The study concluded, "upper class individuals unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed."

Seven experiments such as aggressive driving of a car, lying in a negotiation and cheating to win a prize, using different kinds of measures in different situations, comprised the study. One part of the study involved observing a large number of cars at a pedestrian crosswalk. The researchers found that almost 50% of the "higher-status" cars such as a Mercedes did not yield to pedestrians, while almost all of the "lowest-status" vehicles did yield.

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Stephane Cote of the University of Toronto's Rotman School of Management, who co-authored the study with Piff concluded, "we found a trend that upper class individuals—people who have the most money, the most income, the best education and the most prestigious job—have a tendency to engage in less ethical behavior."

While there examples of wealthy people who are generous and seemingly not motivated by greed—such as Warren Buffet, Bill Gates and George Soros—money seems to have a damaging effect in most cases, Piff concludes.

Piff also cited a 2008 study of shoplifting that found upper-income and more educated participants were more likely to have reported shoplifting in their lives. This finding is reflected in the the book, The Steal, by Rachel Shteir, who cites the increased incidence of "ethical stealing" during the recession is due to the fact that people feel less guilty about stealing when they see the excess of celebrities and other wealthy people. Shteir cites a study that finds Americans with incomes of $70,000 a year shoplift 30% more than those earning $20,000 a year.

Another piece of research that examines the capacity for compassion and empathy of wealthy people compared to less wealthy people, is relevant here.

Michael Kraus, a researcher at the University of California, whose study was published in the journal Psychological Science, concludes that wealthy people are less adept at reading others' emotions in comparison with uneducated and poor people. Krause concluded that people from lower economic backgrounds often have to rely on others, whereas wealthy people don't ask for help often. Krause argues that wealthy people may be "less concerned and less perceptive of other people's needs and wishes. They show a deficit in empathetic accuracy."

The study's co-author Dacher Keltner, of the University of California says, "we are living in a period of historically high inequality [and] people in positions of power are not going to see [the inequality]. They are going to be blind to it and that has enormous implications for how we educate leaders, why they may not see what's obvious and why they may not even understand the suffering of the people below them."

The research cited is consistent with the studies that show wealthy people give less to charity than poor people. In a study by Paul Piff and his colleagues at the University of California and published in the Journal of Personality and Social Psychology, they found that lower class individuals were prepared to devote a much greater share of their income to support charity than wealthy people. This study is supported by the Social Capital Community Benchmark Survey, which shows that people at the lower end of the income scale give almost 30% more of their income in comparison with the middle class and wealthy.

At the same time, the wealthy may have developed an attitude of aggressive entitlement. Economist Paul Krugman, writing in the New York Times, argues that "self-pity among the privileged has become acceptable, even fashionable," and "a belligerent sense of entitlement has taken hold."

The problem of ethically challenged behavior of the wealthy may become worse because income inequality is growing in America.

The U.S. is the most economically stratified society in the western world. The Wall Street Journal reported a recent study that the top .01% or 14,000 American families hold 22.2% of the wealth and the bottom 90% or over 133 million families, hold just 4% of the nation's wealth. The U.S. Census Bureau and the World Wealth Report of 2010 both indicated wealth increased for the top 5% of households even during the recession. Based on Internal Revenue Service figures, the richest 1% has tripled their cut of America's income pie in one generation.

The gap between the wealthiest Americans and the middle-and-working-class Americans has more than tripled in the past three decades according to a 2010 report by the Center on Budget and Policy Priorities. New data shows the gap in after-tax income between the richest 1% of Americans and the middle and poorest parts of the population in 2007 was the highest it's been in 80 years, while the share of income going to the middle 1/5 of the Americans shrank to its lowest level ever.

The Pew Foundation study, reported in the New York Times concluded, "The chance that children of the poor or middle class will climb up the income ladder, has not changed significantly over the last three decades." The Economist's special report, Inequality in America, concluded, "The fruits of productivity gains have been skewed towards the highest earners and towards companies whose profits have reached record levels as a share of GDP."

But it's not just income disparities that create problems, it's the accompanying social inequalities in health, education and other social indicators. Between 1983 and 1999, men's life expectancy decreased in more than 50 U.S. counties, according to a study by the Harvard School of Public Health. For women, the news was even worse; life expectancy decreased in more than 900 counties—more than a quarter of the total. The U.S. no longer boasts anywhere near the world's longest life expectancy. It doesn't even make the top 40. In this and in many other ways, the richest nation on earth is not the healthiest.

Research indicates that high inequality reverberates through societies on multiple levels, correlating with, if not causing, more crime, less happiness, poorer mental and physical health, less racial harmony, and less civic and political participation. Tax polices and social welfare programs, then, take on importance far beyond determining how much income people hold onto.

The level of inequality we allow represents our answer to a "very important question," says Nancy Krieger, of Harvard University, and that is, "what kind of society do we want to live in?"

There are clear disturbing indicators from the research of Piff, Keltner and others, that the dominance of the wealthy, along with their apparent disposition for greed and unethical behavior, will feed the trend of income inequality, at the cost of well being for millions of Americans.

Ray Williams is the author of Breaking Bad Habits and The Leadership Edge.

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