- Some research has shown psychopaths do well in some positions of power due to their personality traits.
- However, a new study has found being a hedge fund manager isn’t one of them.
There are some benefits to being a psychopath. As well as their negative traits, such as lack of empathy, psychopaths are often fearless, charismatic, and have a cool head under stress.
Knowing this, it might be fair to assume that if someone is psychopathic – and also good with numbers – their lack of conscience would make them ruthless, willing to capitalise off the misfortune of others, and good at making high-risk choices.
However, according to a new study, hedge fund managers with psychopathic tendencies tend to make less money for their clients.
The research, published in the journal Personality and Social Psychology Bulletin, looked at video interviews of 101 hedge fund managers who were with firms managing between $40 million (£30.5 million) and $1 trillion (£763.4 billion) in assets.
The team used non-verbal identifiers of Dark Triad personality traits (psychopathy, Machiavellianism, and narcissism) in order to pinpoint which of the interviewees possessed these behaviours.
Psychopathy was identified by erratic facial expressions, while signs of Machiavellianism included a dominant positioning of the jaw and posture, and signs of narcissism included flashy senses of style and excessive attention on themselves.
The study found that Machiavellianism appeared to have no impact on a manager’s performance, while narcissistic managers made riskier decisions to make the same returns, which could be seen as volatile behaviour.
The real difference, though, was seen with the psychopaths. Highly psychopathic managers earned 15% less over the course of 10 years of their investments than those who displayed less psychopathic behaviours.
Psychopaths usually don’t take advice from others.
While the study didn’t reveal why psychopathic managers didn’t perform as well, one theory is that psychopaths do not often take on advice from other people.
Psychopaths have something called a “resilience to chaos,” meaning they sometimes purposefully create mayhem because they know other people will find it difficult. As effective financial decisions often take teamwork, if a manager is the unsympathetic, chaos-inducing type, they may not get the most out of their teams in terms of collaboration.
The brain of a psychopath is also very immature, according to neuroscientist and psychiatrist Tara Swart, who gave a talk about psychopaths in leadership positions last July. Rather than pausing in situations to think about other people, she said psychopaths are more likely to make rash, impulsive decisions.
Other research has also pointed to people in powerful positions having “damaged” brains. Dacher Keltner, a psychology professor at Berkeley, looked at years of research and found that power can influence people to react more impulsively, be less risk-aware, and less able to see things from someone else’s point of view.
Taking this into account, it’s not difficult to see how someone who thrives on disruption could make risky financial decisions that might not always pay off.