Behavioral economics has been described as a “revolution” that has taken over economics over the past three decades. It has been controversial, but it is now regarded as providing a framework for investor behavior.
In this Yale lecture from spring 2011, economist Robert Shiller, winner of the 2013 Nobel Prize in Economics, describes behavior finance and how people often take advantage of weaker people and how some people and corporations have an impulse to exploit them. He then asks: How can some people turn this exploitation to their own advantage?
Economic victimization is an important human weakness to identify. Yet, while some people will exploit others at any opportunity, the majority of people will not.
Shiller said, “the business world does not exploit people terribly.” Most corporations and people consider ethics and reputation to be essential to their long-term advantage, so exploiting people on a consistent basis destroys brans and relationships.
Evolutionary biology also posits that people are moral, so exploitation is kept in check. But there are exceptions.
In this lecture, Shiller notes that Adam Smith, a professor of moral philosophy (this was before the discipline of economics was created) wrote in 1759 in his Theory of Moral Sentiments, about morality, selfishness and
altruism and its effects on human interactions. It was later, and in his more famous book, The Wealth of Nations, (original version published in 1776) that Smith presented his theory that came to be the basis of modern economics.
In his first book, Smith addressed whether people are really selfish. But he also wondered how an economy would work if people were totally selfish. Smith concluded that people were not inherently self-possessed, but if they were selfish, any economy would fail to function.
But there are some major exceptions.
Not all people will avoid exploiting others. One personality type Shiller describes comes from the The Diagnostic and Statistical Manual, published by the American Psychiatric Association, that describes personality types and mental illnesses by personality types.
In the lecture, he notes that 3% of the world’s males present Anti-Social Personality Disorder (APD), encompassing both psychopathy and sociopathy.
Shiller defines a male who has APD as showing the following symptoms: (These points are made at 14:40 in the lecture.)
- They show a lack of remorse,
- They frequently lie,
- They show superficial charm,
- They possess shallow emotions,
- They engage in a constant search for new sensations,
- They have a distorted sense of self,
- They are manipulative,
- They engage in deception.
And not surprising, and hopefully as an indication of Trump’s future, Shiller cited a subsequent study that found that 40% of prisoners were diagnosed with APD.
It is important to note that Shiller never mentions Trump’s name, politics, or Congress in the lecture. He cites specifically from The Diagnostic and Statistical Manual and does not mention anyone’s name.
Shiller mentions APD in the context of behavioral finance and how people who exhibit this behavior can wreak havoc in any economic system.
Trump’s Actual Record as the APD Businessman and President
My addition to his description is that Trump has a background that capitalizes on the benefits of his APD during his business career and his six bankruptcies.
He also has a list of lawsuits covering such issues as sexual misconduct and assault, financial manipulation and employee payment, and financial and tax information.
According to Wikipedia: “An analysis by USA Today published in June 2016 found that over the previous three decades, Donald Trump and his businesses have been involved in 3,500 legal cases in U.S. federal courts and state court, an unprecedented number for a U.S. presidential candidate.
“Of the 3,500 suits, Trump or one of his companies were plaintiffs in 1,900; defendants in 1,450; and bankruptcy, third party, or other in 150. Trump was named in at least 169 suits in federal court. Over 150 other cases were in the Seventeenth Judicial Circuit Court of Florida (covering Broward County, Florida) since 1983. In about 500 cases, judges dismissed plaintiffs’ claims against Trump. In hundreds more, cases ended with the available public record unclear about the resolution.”
In his personal life, Trump has been married three times and has five children. At least 25 women have accused President Donald Trump of sexual misconduct since the 1970s.
Robert Shiller’s complete Yale lecture is available at https://www.youtube.com/watch?v=chSHqogx2CI