I’ve heard this quote a lot, most recently in Dan Ariely’s “The Upside of Irrationality“. He went to a meeting room full of bankers and told them that high bonuses might not increase performance, in fact they might even have an adverse effect on performance due to something called performance anxiety, i.e. that the knowledge of getting a big bonus will cause them to get nervous and make bad decisions. Not surprisingly, Ariely’s comments were met with deafening silence 🙂
The implications of Ariely’s studies into the negative effects of overly high rewards certainly give further weight to the argument that bankers should not be awarding themselves massive bonuses for work which offers very little benefit to others. Their argument that high bonuses (more money) increases performance and therefore their worth, is bullshit of the highest order, and is the same specious argument that priests used in the middle ages to justify their palaces and corpulent frames.
In fact the similarities between modern bankers and medieval priests is quite striking – both claim to be gatekeepers (to spiritual or financial heaven), to have special knowledge (of how to get into heaven), that we need them, more than they need us, that they have a secret language (latin and econometrics) and use arcane symbols to obfuscate their importance (catechisms and derivatives). Bankers and Priests are both as useful as chocolate teapots. But if you try telling this to your MP, forget it because “it’s difficult to get a man to understand…etc”