The price of being elite

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James Wade, Asa Griggs Candler Chaired Professor of Organization & Management

Celebrities, public officials, star CEOs … what do they all have in common? While it may not be true across the board, identifying individuals belonging to any of these categories who have experienced a “fall from grace,” takes little effort.

Emory University’s Goizueta Business School’s James Wade, Asa Griggs Candler Chaired Professor of Organization & Management, studies the behavior of high status individuals. Most recently Wade and his co-researchers, Scott Graffin, Jonathan Bundy, Joseph Porac, and Dennis Quinn examined the 2009 British MP expense scandal in the 54th House of Commons and traced its impact on Parliamentary elites.

“The expense scandal presented itself as a natural experiment because all of the data was released to the public. This allowed us to compare the behavior and outcomes of higher status members with those of lower status. We measured status by identifying those members who had royal honours or front bench status in parliament,” says Wade.

Their research question is whether high status actors are more likely to engage in questionable and perhaps illegal behaviors (perhaps because of a sense of entitlement) or whether they are simply targets of greater scrutiny and expectations and, as a result, punished more severely when they do transgress.  The latter is called the tall poppy effect. Wade explains it as the desire for others to “cut down to size” those who are seen as undeserving of their high status positions.

In studying the British MP expense scandal, the researchers found that high status individuals who had royal honours or front bench status were no more likely than lower status MPs to abuse the expense system by claiming inappropriate expenses for second homes. At the same time, this behavior was widespread in that over fifty percent of the MPs charged inappropriate expenses.  The authors found, however, that high status MPs were subject to much greater scandal press coverage and were much more likely to lose their Parliamentary seats when they abused the expense system than lower status MPs. While the results suggest that high status actors may be targeted, the research findings aren’t meant to provide an excuse for wrongdoing among elites. After all, expensing a “duck pond,” “moat,” and multiple “second homes” on the public dime is less than honorable.

This research has broad implications for elites in both politics and business because it suggests that they may be punished much more severely than others for the same transgressions. Indeed, in a business context, Wade and his coauthors found that CEOs who had won many awards for their business acumen such as “CEO of the year” were much more likely to experience falls from grace at a later point in their career as compared to a random sample of CEOs who did not win any awards.

In a follow-up study the researchers are now exploring the outcomes for those who are the successors to MPs that resigned before the election. They aim to discover if successors in the same party do better or worse in the election when they replace someone of high status that resigned in disgrace.

Wade and his fellow researchers’ study has found its way into numerous media outlets, including The Economist, The Wall Street Journal’s MarketWatch, and Yahoo! Finance.

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