Who’s to blame for the financial crisis?

Who’s to blame for the financial crisis? May 10, 2010

Astute observers will have noticed that there’s been something of a crisis in the financial world over the past couple of years. The EU’s just coughed up €500 billion in the latest effort to stem the panic… or, in the alternative perspective, to fend off the predators!

And that gets to the heart of the matter. Is the crisis just one of those things – part of a natural economic cycle that is beyond anyone’s ability to predict or control? Or is it a result of moral or intellectual failures among those who are are in charge of all the money.? Everyone has their own opinion, but what do most people think?

David Leiser and Rinat Benita, of Ben Gurion University, with Sacha Bourgeois-Gironde of the Institut Jean-Nicod, put this question via internet questionnaires to 1,707 people in France, the US, Russia, Germany, Israel, and sub-Saharan Africa.

[A note on how the study was done: The questionnaire was quite complex, but they used factor analysis to boil it down to two groups of questions that seemed to sort out two different groups of people – those who thought the crisis is a “systemic, global, unintended phenomenon” and those who thought it was a “local, individually and intentionally motivated one”]

On average, people were more inclined to go for the ‘individual failure’ explanation, rather than the ‘unintended consequence’ explanation:

… most people appear to construe an intentional, especially moral, reading of the crisis rather than conceive of it in terms of independent causal mechanisms. Purposiveness, be it under the guise of an intelligent design in nature or that of the secret interests of a vaguely identified group of businessmen, is the default explanation which seems to satisfy a primitive need for closure

People who are wealthier, or who are trained in in economics, were less likely to believe in the ‘human failure’ theory. People who had been personally affected were more likely to.

But what about religious people? If, like me, you assumed that religious people would be more likely to put moral failings at the root of the crisis, you are in for a surprise.

Because it turns out that although the religious are more likely to blame moral failures, they are also more likely to subscribe to the ‘economic storm’ theory. As it happens, they actually were more likely than the non-religious to agree that “The current crisis comes as a punishment to all those who misbehaved in the past few years”, but even here the difference was not huge

In other words, what marks out the more religious is not that they have different views on the crisis, but that they hold them with more conviction!

It isn’t clear what should drive such an association. Conceivably, it reflects a preference for clarity over ambiguity that is often seen in people attracted to the more fundamentalist religions. Perhaps the religious are simply less comfortable with admitting “I don’t know”.

Leiser, D., Bourgeois-Gironde, S., & Benita, R. (2010). Human foibles or systemic failure—Lay perceptions of the 2008–2009 financial crisis Journal of Socio-Economics, 39 (2), 132-141 DOI: 10.1016/j.socec.2010.02.013

Creative Commons License This article by Tom Rees was first published on Epiphenom. It is licensed under Creative Commons.

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