Over at the Daily Beast, Alexandra Penney describes what it feels like to lose all of your money to a Wall Street Ponzi scheme:
Last Thursday at around 5 p.m., I had just checked on a rising cheese soufflé in my oven when my best friend called.
"Heard Madoff's been arrested," she said. "I hope it's a rumor. Doesn't he handle most of your money?"
Indeed, he did. More than a decade ago, when I was in my late 40s, I handed over my life savings to Madoff's firm. It was money I'd been tucking away since I was 16 years old, when I began working summers in Lord & Taylor, earning about $65 a week. Not a penny was inherited. Not one cent was from my divorce. I earned all of it myself, through a long string of jobs that included working as a cashier at Rosedale fish market in New York City in my 20s, and later, writing bestselling sex books.
When I hung up with my friend, I turned on the TV and began to scour Google for news until the message became nauseatingly clear: Forty years of savings--the money I'd counted on to take me comfortably through the next 30 years--had likely evaporated in Madoff's scheme.
It's an awful story, and I can't imagine how terrible Penney must feel. And yet, I read her entire tale without feeling any genuine sympathy. Sure, she lost all of her money, but so what? It's her own fault for investing with Madoff in the first place. If she hadn't been so greedy then none of this would have happened. That was my callous first reaction. (And, if my friends are a representative sample, I'm not the only one who felt such heartless feelings.) I blamed the victim.
Such cold-hearted thoughts are actually a basic feature of human nature. Consider this experiment, performed by the social psychologist Melvin Lerner. Several volunteers are told that they are about to watch, on closed circuit television, another volunteer engage in a simple learning paradigm. They see the unlucky subject - she is actually a graduate student, working for Lerner - being led into the room. Electrodes are attached to her body and head. She looks frightened.
Now the fake experiment begins. Whenever the subject gives an incorrect answer, she is given a powerful shock of electricity. The witnesses watching on television see her writhe in pain and hear her scream. They think she is being tortured.
One group of volunteers is now given a choice: they can transfer the shocked subject to a different learning paradigm, where she is given positive reinforcements instead of painful punishments. Not surprisingly, the vast majority of people choose to end the torture. They hate watching her suffer and quickly act to rectify the injustice. When asked what they thought of the "learner," they described her as an innocent victim - "She seems like a good person" - who didn't deserve to be shocked. That's why they saved her.
The other group of subjects, however, isn't given a choice. Instead, they are told a variety of different stories about the victim. Some were told that she would receive nothing in return for being tortured. Others were told that she would be paid for her participation. And a final group was given the martyr scenario, in which the victim submits to a second round of torture so that the other volunteers might benefit from her pain. She is literally sacrificing herself for the group.
How did these different narratives affect their view of the victim? All of the volunteers watched the exact same video of torture. They saw the same poor woman get subjected to painful shocks. And yet the assorted stories powerfully influenced their conclusions about her character. The less money she received in compensation for her suffering the more they disliked her. The volunteers explained the woeful injustice by assuming that it was her own fault: she was shocked because she wasn't paying attention, or was incapable of learning. The martyrs fared even worse. Even though this victim was supposedly performing an act of altruism - she was suffering for the sake of others - the witnesses thought she was the most culpable of all. Her pain was proof of her guilt. Lerner's conclusion was unsettling: "The sight of an innocent person suffering without possibility of reward or compensation motivated people to devalue the attractiveness of the victim in order to bring about a more appropriate fit between her fate and her character."
This is known as the Just World Hypothesis, but it's really about how we tend to rationalize injustices away, so that we can maintain our naive belief in a just world. This, I believe, is what happened when I read Penney's woeful story - my just world mechanisms kicked into gear, and I started by blaming the victim, coming up with reasons why she deserved to get swindled. The end result was a complete lack of sympathy.
The irony of the Just World Hypothesis is that it demonstrates how our faith in justice leads directly to injustice. Because we trust that the world is fair, and that bad things don't happen to good people, we naturally skew our judgments of individuals to align with this unrealistic assumption. The truth, of course, is that bad things happen to good people all the time. The world isn't fair. Alexandra Penney deserves my sympathy.
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if you think we're gonna believe for a minute that you actually gloated over poor ms. penney, you're seriously underestimating your readership's faith in the PURE GOODNESS OF YOUR CHARACTER
Though the election is over, Gov. Sarah is being attacked by the leftist-humanists because they fear her re-appearance on a future ballot. They are afraid and rightly so! She is a perceptive excellent candidate to represent the Founders Principles and our American way of life with intelligent courage.
Additionally, since no one is smarter than their criteria, the collectivists are working from a pre-chosen mediocre (and worse) set of man-made carnal-ruled opinions that delimit perception of consequences-of-choice prior to choosing. In other words they lack Vision. Based on a universe-sized ignorance, such devices are self-imposed, thus, the lefties can accurately and historically be defined as unintelligent.
On the other hand, Sarah and her chosen criteria, which is far superior to any man-made system of opinion, and reasonably scares those who possess no practicing standard greater than mediocrity. Their collectivist opinion rises no higher than eyebrows - or belly-button.
Sarah lives life governed by God's superior principles as found in The Holy Bible. Judeo-Christian principles are the founding precepts of the greatest nation in human history; America! Including, but not limited to, Human Defined: Earth's Choicemaker, Unique Individual Value, Personal Rights and Responsibility, and Representative Government. Add: The Creative Process is a choice-making process and functions best in Freedom.
Sarah is recognized by friends and admirers a worthy representative of all that is wonderful about America. 2012 will be here shortly. Keep your eye on this courageous intelligent leader - and pray!
MERRY CHRISTMAS and a Happy 2009 AD!
Jim Baxter
Santa Maria, CA
semper fidelis
Sgt. USMC
WWII & Korean War
a point-man/follower of The Lion of Judah
www.choicemaker.net/
The just-world hypothesis is at least as old as the biblical story of Job, and probably much older. However, I think that you underestimate its power to motivate people for justice.
As U.S. President John Kennedy said long ago, "On earth, God's work must be our own." It is their innate craving for justice that has driven people throughout history to improve the lot of their fellow human beings.
The distribution of moral conscience is like that of most other traits: a standard bell-shaped curve. At the right end of the curve are people of great moral sensitivity and wisdom; at the left end are sociopaths. In the middle are the vast majority, people who are neither particularly bad nor particularly good. They'll go whichever way they're pushed. Given the right leadership, they can be good and compassionate individuals. It's the job of people at the right end of the curve to give them that leadership.
Your reaction to Penney's story reflects also, I think, a remarkable absence of experience with the world. Perhaps the whole Just World Hypothesis does so. It seems to me the wisest people I know are the ones who understand the overwhelming role chance plays in our lives. I don't have the neuroscience behind it.
As a lawyer, I witness injustice routinely when victims do not have the means or opportunity to pursue justice. Perhaps I have become more aware of the fact that many people are truly innocent and that rationalizing some understanding of fairness is naive. However, I would assume this perspective would be achieved by anyone who reads the paper or watches the nightly news, and not just lawyers that understand that fairness and justice are the exception and not the rule. I wonder if the experiment in any way accounted for the participants' backgrounds in shaping their assumption of a just world.
Jonah
I really admire your intelligence, and your wisdom well beyond your chronological years,and give you more credit still for the way literature, art,music and even the culinary arts leaven your scientific thinking in Proust was a Neuroscientist, but I am not willing to give you the blanket immunity Shannon extends. However, there is a middle ground which allows you to beat yourself up far less.
If you sympathized with poor Alexandra Penney, it would require you on some level to be secure with the fact that you too through no real fault of your own might have someone defraud you of your life savings,and that is scary stuff. I am not a psychiatrist/psychologist or scientist but do have to consider how jurors reach decisions as a trial lawyer. Your experience is what jury consultants want to call defensive or protective attribution. See also http://en.wikipedia.org/wiki/Fundamental_attribution_error Whatever you call it, a lawyer who wants a jury to empathize with a victim's loss well knows, or should well know the power of defensive attribution . Just world makes it sound lofty and idealizes it, but in an accident or medical case where clear fault causes death or injury, some if not many jurors will be swayed consciously or not with a much more primal Reptilian fear: If this poor patient/driver/passenger or whatever wound up maimed or dead through no fault of their own that means "it could happen to me, or my loved ones, but if it was her fault, me and my loved ones are safe." That is why it was so much easier to cut off any empathy between you and Alexandra Penney. It's not personal to her, but it's primal to your own ease of mind, and much more likely where you are like her in some way and could otherwise identify with her.
Some focus trials of tire failures, for example have elicited the incredible assertion in some mock jurors that the driver was at fault because " I bend down and feel and check each tire every time I drive." While obviously incredible and untrue, such statements are protective and save that juror from accepting the risk that a defective tire could blow out and kill her? The same thing happens in medical cases where focus group jurors have told me "that Doctor was so bad, I would have got a second opinion and not been harmed, so its the patient's fault." In the same way,it was far easier for you and your friends to originally discount natural empathy for Alexandra because if you tried to "do justice" to her situation (figuratively)then you would also have to consider your own risks or vulnerabilities from injustice and perhaps worry about your own 401k or question something or someone you otherwise take on faith.
The replies raise 2 other issues , and forgive short responses. Quite opposite from Terrence, my experience as an active trial lawyer is that juries rigorously try to "do justice" to serious disputes involving serious physical or financial harms and justice is never or rarely ever the exception in intent and more often than not even in result. However, sometimes you have to lead juries past conceptual mine fields like defensive attribution to get to a just result.See also Tilly, Credit and Blame. Maybe if Sgt. Baxter examined his own conscience a little he might possibly consider concluding that not everyone who doesn't care for his icon is an evil, narrow lefty, but political discourse these days is far more contentious and personal and blind than almost any other field of thought. However, there is also offensive attribution and the Sgt's real zeal and personal talents are only in himself and not in his star politician, who is an Empress with no clothes.See also the late David Foster Wallace's discussion of political rhetoric in , "Authority and American Usage, in CONSIDER THE LOBSTER AND OTHER ESSAYS. Whatever your political beliefs, the "authority" in Sgt Baxter's discourse is all self appointed, autocratic, true believer stuff, and makes no attempt at rhetoric in the constructive sense of being an attempt to influence or persuade from real knowledge or experience, Wallace, supra, at page 122. Happy Holidays, Dennis
I think there is another reason to feel less than complete sympathy for those who, like Alexandra Penney, invested the bulk of their assets with Madoff. They failed to heed the most basic rule of investing--diversify.
Madoff's supposed strategy involved buying S&P 100 stocks, along with S&P 100 options to limit both gains and losses. He did NOT promise to put his investors' money in a broader mix of U.S. stocks, international stocks, bonds and other assets to average out returns and protect capital.
No one should have put all his or her assets--or even half of them--in this kind of single-strategy fund. 10 minutes of basic research on the web (or newspapers or magazines) would have told an investor that. (Leaving aside that no strategy can actually produce the consistent 10% returns in all market conditions that Madoff claimed.)
I am truly sorry for the investors losses, and Madoff is a crook. But there is a reason that any investment plan begins with diversifying the types of investments.
Son, you just put a bullseye on your back when the Revolution starts.
Viva la Revolution.
Great post.
I guess I feel some empathy for the victim. But what I don't understand is the utter stupidity. It wasn't stupid to entrust money to Madoff. It was MONUMENTALLY stupid to entrust ALL your money to Madoff.
You were right to have little to no sympathy- read again what she says she lost:
I began to think about my options: Id have to sell the cottage in West Palm Beach immediately. Id need to lay off Yolanda. I could cancel the newspaper subscriptions and read everything online. I only needed a cell phone. Id have to stop taking taxis. And who could highlight my hair for almost no money? And how hard was it to give yourself a really good pedicure?
wear a classic clean white shirt every day of the week. I have about 40 white shirts. They make me feel fresh and ready to face whatever battles I may be fighting in the studio to get the best out of my work.
How am I going to iron those shirts so I can still feel like a poor civilized person? Even the no iron ones need touching up.
Ive lived a great and interesting life. I love beautiful things: high thread count sheets, old china, watches, jewelry, Hermes purses, and Louboutin shoes. I like expensive French milled soap, good wines, and white truffles. I have given extravagant gifts like diamond earrings. I traveled a lot. In this last year, I've been Laos, Cambodia, India, Russia, and Berlin for my first solo art show. Will I ever be able to explore exotic places again?
Yesterday, I took my first subway ride in 30 years. Dennis came with me to show me how to get a MetroCard. The world looks very different from a crowded Lexington Avenue No. 6 train.
Are you kidding me? She lives in the stratosphere apart from most Americans. So she has to live a normal, ratty life like the rest of those who take the poor subway. She worries about a pedicure? I worked with kids who ate, if they were lucky, one meal a day. Or a kid so abused his father raped him anally with a screwdriver. Or a deaf couple who lived in a trailer with no heat most of the year.
Your response was perfectly normal. She has a life left. She has food. She has 40 white shirts. She'll be okay. Maybe she can give her cottage to the deaf couple I worked with who have nothing.
You have nothing to be ashamed about.
Great post on a fascinating topic. I'm not a neuroscientist but I am a psychotherapist, and see this dynamic often.
I think the Just World hypothesis makes sense, but I also think people vary in how much they need to believe in a Just World--or, to put it another way, how painful it might be for them personally to accept the world's imperfections.
I'll bet that, if anyone were to study the emotional tendencies of the research subjects, there'd be some interesting correlations between victim-blaming and a person's tendency to identify--as opposed to empathize--with others' feelings. My guess is that people who can empathize with others in bad straits are those who have found a way to make peace with their own vulnerability, while those who need most to blame victims are most threatened by their own need and vulnerability as well, and most likely to feel identified with others, as opposed to empathizing with them.
I think Ms. Bowen is right: there are shades of sympathy and there are shades of loss, and the two can be related.
Ms. Pennington lost a tremendous amount, and it's not really her fault. She didn't deserve it -- she got swindled. She entirely deserves sympathy.
But that said, losing "a small SoHo space awash in light and sun and energy and hope," or having to iron your own white shirts, is not the same as being thrown into the street or, say, dying of cholera. Her happy retirement may be ruined, but we also get the feeling that she will survive in some manner -- perhaps on Social Security, perhaps through the graces of her son.
I would never say "She deserved it!" But I think it's possible to feel less sympathy for her as a practical matter, without it being a psychological defense mechanism.
sohbet
thank`s.
Its an interesting thing - I don't feel as much sympathy for these investors as I could. They were being offered a deal "too good to be true" with a man who NEVER lost money on the stock market ever. Madoff only had 3 down months in 20 years of investing, through good times and bad. Never lost more than 0.5%.
The one thing almost nobody mentions is that a large portion of the $50 Billion amount they use never existed (say 90% of it was paper profits and not real cash changing hands). People only lost their original investment, not the inflated "account balance" that Madoff was reporting.
So if I invested $100 20 years ago, and it's now worth $1054 through 12.5% a year compounded. I only lost $100 not $1054. And if perchance I was able to withdraw more than $100 over the years, then I really lost nothing.
How many of these long-term investors, Ms Penney say, have already withdrawn almost all of their original investment? So they lost very little.
Rick, surely that's all completely irrelevant? The investors didn't lose out because Madoff wasn't spreading their risk, they lost out because he was stealing their money. If he had actually been investing with his claimed strategy then his investors would surely have lost money, but not lost everything.
And if all the analysts and regulators in Wall Street failed to spot that he was a total crook, then what chance does the poor solo investor have?