Thursday, 29 March 2012

The Real Need for Autistic Board Members to Avoid Excessive Risk-Taking

The past few weeks have featured several articles replaying the old sex-war narrative around capitalism, on the line that a more balanced representation of women in the boardroom would have reduced risk-taking behaviour that led to the financial crash.

The Times’s Business Section, yesterday (Wednesday 28th March) suggested that this is a na├»ve, simplistic view, referencing Bundesbank research which suggested that “women board members were more likely to take risks with a bank’s finances than their male counterparts”.  Swimming against the traditional sex-war narrative, the report concluded that “women determine corporate governance of banks significantly and are not marginalised by a male-dominated board culture”.
Interestingly, it was noted that risky behaviour was generally increased by the lower age of board members, but that PhD-holders brought greater stability.
Reading Michael Lewis’s brilliant “The Big Short” on the epidemic of stupidity that drove the sub-prime disaster, a key feature of those who could see what was about to happen was their shared relative autism. That is, they all shared elements of autistic behaviour common to innovative people, as one of the key protagonists discovered when his son was diagnosed with Aspergers’s syndrome, for which the typical behaviours included a lack of:
1.       Ability to read non-verbal behaviours and eye-contact.
2.       Interest in developing peer relationships and interest in socialising with other people.
Allied with a strong tendency to:
3.       Find computers and the internet appealing because they avoid 1 & 2 above,

4.       Have hobbies and interests which are often solitary, idiosyncratic and dominate their time and conversations.

What made Dr. Michael Burry unusual was that “only someone who has Asperger’s would read a subprime mortgate bond prospectus [and understand what was actually going on]”.
In conclusion, I would suggest that we need a new model for rationality when it comes to decision-making in financial institutions (and others). We need to include people who are asocial enough to apply logic in the face of social groupthink pressure to conform, and empower them to ask the real, systemic questions that the group is avoiding.