Study finds ‘psychopathic’ hedge fund bosses make less money

Does it pay to be nice? The answer is yes, according to a new study that suggests fund managers with psychopathic traits make less money.

The study, published Thursday in Personality and Social Psychology Bulletin, found that hedge fund managers with psychopathic personality traits delivered returns that were 15% lower than rivals over a decade.
The authors said that their findings undermine the assumption that psychopaths tend to be more successful.

“The supposition is that through bald self-interest, cool detachment to the welfare of others, and the force of manipulation and deception, psychopathic individuals achieve powerful, managerial roles and monetary wealth,” the authors said.

Psychopathic traits might help someone reach the pinnacle of their profession, the researchers said, but they often then fail to perform in top jobs.

For the study, researchers analyzed 101 male hedge fund bosses with an average of $ 4.6 billion under management.

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They were looking for evidence of what psychologists call the “dark triad” of psychopathy, narcissism and Machiavellianism. Traits include impulsive, aggressive or manipulative behavior, as well as emotional detachment or a lack of empathy.

To determine whether a particular hedge fund manager fit the bill, the researchers watched video footage for behaviors including jaw thrust, flirting actions like licking lips and the use of “I” rather than “we.”

The researchers then examined the managers’ financial performance, and found that subjects with the most pronounced psychopathic traits delivered annual returns that trailed rivals by 1%. The losses added up to 15% over a decade.

“An investor would see less money in their bank account at the end of a given time period if they had allocated their funds to a more psychopathic manager,” the researchers concluded.