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Feb 3, 2010
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Exposure to luxury can alter decision making

By
Reuters
Published
Feb 3, 2010


By Ros Krasny

BOSTON, Feb 2 (Reuters Life!) – For the good of us all, step away from the Rolex.

The mere exposure to luxury goods can have a corrosive effect on decision-making that pushes individuals to put their interests over the interests of others, according to a Harvard Business School study.

Researchers Roy Y. J. Chua, of Harvard, and Xi Zou, an assistant professor at London Business School, examined the psychological consequences that luxury goods can have on people in their research paper, “The Devil Wears Prada? Effects of Exposure to Luxury Goods on Cognition and Decision Making.”

They concluded that luxury seems intrinsically linked to self-interest.

The researchers studied students who were randomly assigned to either a “luxury goods” condition or a “non-luxury goods” condition, and viewed photographs of associated consumer products such as shoes and watches. The students were then asked to imagine various scenarios that might arise if they were CEO of a firm.

The students who viewed luxury goods were significantly more likely than the second group to endorse production of a new car that might pollute the environment, launch a new software with bugs, or market a video game that might induce violence, according to the study.

“Results … suggest that when primed with luxury, people endorsed self-interested decisions that could potentially harm others,” the researchers said in the study.

“Luxury-primed individuals tend to make decisions that are self-interested and arguably unethical.”

A second, word-association experiment suggested that luxury does not necessarily induce “nasty” behavior toward others, but more indifference toward them.

The findings are sure to touch a nerve in an era of mega-sized corporate bonuses and the parallel currency of limousines, private jets and other pricey perks.

After all, it was John Thain’s lavish $1.2 million (£750,000) office renovation, including an infamous $35,000 antique commode, that is remembered more than his salary in the final days of the brokerage firm Merrill Lynch.

The researchers said that, in practical terms, the same business meeting could reach different decisions when held at a fancy resort as opposed to in a modest conference room.

“Working in a business setting surrounded by money and luxuries might well have an effect on cognition and decision making,” said Chua and Zou.

“Perhaps limiting corporate excesses and luxuries might indeed be a step toward getting executives to behave more responsibly.”

(Reporting by Ros Krasny; Editing by Patricia Reaney)

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