MOTIVATED BY MONEY: New evidence on the personalities of people who choose to work in finance

12 Apr 2021

New research finds that financial professionals have higher risk preferences and monetary motivation compared with the population as a whole. The study by Max Deter and André van Hoorn, which analyses on data on 465 banker in Germany surveyed over 2,000 times between 2000 and 2018, shows that these preferences for risk and money are already present before they start to work in finance and are not socialised in the sector.

The results indicate a business norm in the financial sector that attracts professionals who think in a riskier and more income-focused manner. Average risk preferences of financial professionals were highest in the immediate years before the global financial crisis in 2007/08.


The financial sector plays a crucial role for the economy by managing risk, providing price signals and promoting economic opportunities. Why then is the sector perceived as highly selfish and even dishonest among professions (Ashraf and Bandiera, 2017)? Compared to medical doctors, for example, many financial activities, such as wealth management, are associated with much higher (perceived) private than social returns (Zingales, 2015).

Since the financial crisis in 2007/08, the financial sector came publicly under fire with lawsuits involving the causes of the crisis, the Libor manipulation, tax evasion and money laundering. Political blame has often been attached to a ‘failure of professionalism and ethics’ (British Parliamentary Commission on Banking Standards, Economist, 2014). But do financial professionals think and behave in a way that might have contributed to the scandals?

Many studies have sought to assess the values and culture among professionals in finance. Experiments with bankers show that they behave more dishonestly (Cohn, 2014), but other researchers are reluctant to reach the conclusion that the business culture of bankers is particularly problematic (Vranka, 2015; Hupé, 2018).

Holmen et al (2021) find in an experiment that bankers behave only less pro-socially and riskier because of different group characteristics, such as a higher share of male and more educated professionals. Van Hoorn (2015) shows in cross-sectional survey studies that pro-social values of financial professionals are only negligibly lower when holding personal characteristics constant.

This study adds to the literature on banking culture the dimension of observing professional bankers over time. With large-scale data from Germany (GSOEP) on 465 banking professionals that are surveyed 2,391 times between 2000 and 2018, the researchers can analyse their self-stated preferences of risk and monetary motivation before, during and after financial employment.

Moreover, they can compare preferences to almost 300,000 observations of the general population during that period. This way, it is possible to differentiate between a selection effect – that is, whether individuals with certain preferences are more likely to start working in finance – and a socialisation effect – that is, whether preferences stem from an indoctrination during work in finance.

Holding personal characteristics, such as age, education, qualification and the duration in the current employment status constant, we find that individuals with a higher risk preference and monetary importance have a significantly higher probability to start working as a financial professional.

More precisely, individuals entering finance show a 40% of a standard deviation higher risk preference, and a 12% higher monetary motivation, compared with the general population.

Concerning the question of whether economic preferences are shaped because of a pre-existing business culture, bankers who already work in finance have a similar risk premium, but a 20% higher monetary motivation, an indication for a socialisation of monetary importance during the time in the sector. Looking at economic preferences over time there is a peak in the average risk preferences in the years preceding the financial crisis in 2007/08.

The results are important since they indicate a business norm in the financial sector that attracts professionals who think in a riskier and more income focused manner. Risky behaviour can lead to welfare losses (Barber, 2001) and a low pro-sociality can cause weaker contract enforcement (Porta, 1996).

The researchers conclude that changing the culture in the finance industry requires a concerted effort involving not only recruitment and retention but also upending extant socialisation processes.

Economic Preferences and the Decision to Become and Stay a Financial Professional: Panel Evidence (Max Deter and André van Hoorn)


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Cohn, A., Fehr, E., & Marechal, M. A. (2014). Business culture and dishonesty in the banking industry. Nature, 516: 86-89.

The Economist (2014) ‘Saints and sinners’

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Max Deter