American Psychological Association - January 2009
As the world slipped into economic meltdown, the nation started talking about greed: greedy lenders, greedy Wall Street executives, greedy CEOs and greedy Americans who used credit to finance untenable lifestyles.
Greed may very well have driven much of the economic crisis, says University of Rochester social psychologist Richard Ryan, PhD. But does the blame fall on the individual, or on our increasingly materialistic culture?
"America has an economic system set up to create the kind of mess we've seen recently," says social psychologist Tim Kasser, PhD, of Knox College in Galesburg, Ill. "Our form of capitalism encourages materialistic values, and the research shows that people high on materialism ... are more likely to engage in unethical business behaviors and manipulate people for their own purposes."
In fact, American corporate capitalism—the highly competitive economic system embraced by the United States as well as England, Australia and Canada—encourages materialism more than other forms of capitalism, according to a study by Hebrew University of Jerusalem psychologist Shalom Schwartz, PhD. He compared the values held by people in countries with more competitive forms of capitalism with the values of folks in countries that have a more cooperative style of capitalism, including Austria, Germany and Norway. These countries rely more on strategic cooperation among the various players in the economy and society to solve their economic problems, such as unemployment, labor and trade issues, rather than relying mostly on free-market competition as the United States does.
As expected, citizens who live in more competitive free market systems cared more about money, power and achievement than people who live under more cooperative systems. Research also supports the notion that the more people care about money and power, the less they care about community and relationships. A study by Kasser, University of Victoria psychologist Fred Grouzet, PhD, and colleagues, for example, asked students in 15 countries about the goals they value most, including community feeling, financial success and physical health. They found they could chart those values onto a kind of pie with some values—money versus community and relationships, for example—in direct competition with each other.
"Of course we can care about community and money," Kasser. "But as money becomes important—the bigger its slice of the pie—the desire to help other people tends to become less important."
University of Minnesota psychologist Katherine Vohs, PhD, demonstrated this idea in a series of studies in which she primed participants to think about having large amounts of money. Compared with a group of students who were primed to think about neutral concepts or insufficient funds, participants with wealth on their minds were less helpful at, for example, picking up spilled pencils, and were less generous, for instance, donating less to charity. These participants were also more insular, choosing to sit farther away from a colleague or work independently rather than in a team.
Money and community are inherently incompatible because they tap into two fundamentally different motivational systems, says Kasser. Helping the community and forming personal relationships satisfy intrinsic psychological needs while financial success satisfies extrinsic needs of rewards and praise.
And for those motivated by rewards, America's corporate incentive system may even encourage unethical behavior, says Ryan. Investment banks, mortgage companies and other industries that fueled the economic downturn reward employees for specific outcomes—say, selling more mortgages or obtaining high quarterly profits—rather than other aspects of job performance. Research shows that the people who are offered these types of rewards take the shortest route to reach their goal, whether it's ethical or not, Ryan says.
"Rather than rewarding good practices, we've been rewarding outcomes, however they're attained," says Ryan. "And that's driven a lot of greedy behavior from folks who wouldn't normally act that way."