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Harvard professor Roy Y.J Chua and London Business School assistant professor Xi Zou found that people who live luxuriously may be psychologically different than everyone else. More specifically, people who drive around in town cars and zip across the country in private jets make selfish decisions that enable them to do so. They make decisions that best benefit themselves and don’t consider others as much. Chua says this could be the reason so many high-paid executives, like those on Wall Street, act irresponsibly.
“People who were made to think about luxury prior to a decision-making task have a higher tendency to endorse self-interested decisions that might potentially harm others,” Chua and Zou wrote in their February 2010 paper, “The Devil Wears Prada? Effects of Exposure to Luxury Goods on Cognition and Decision Making.”
The drive for luxury, Chua found, doesn’t make people intentionally harm others; it makes them less concerned about others. Any harm caused is really just a side effect.
So how can we get rid of corporate greed?
“Perhaps besides limiting the size of bonuses, limiting corporate excesses and luxuries might be a step toward getting executives to behave more responsibly,” Chua says.
Check out HBR’s Q&A with Chua, here.
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