Why do you work in finance? You might think you're master of your own destiny and that you chose the industry as a free agent who could just as easily have become a teacher of physics, but how wrong you are.
You are, in fact, working in finance because you fell into the psychological funnel at an elite school and an investment banking analyst program become a near inevitability. It was either that or working in consulting or tech. So says a new study of elite students by academics in the US.
The study, published in the Journal Sociology of Education, found that elite students end up choosing elite careers as a result of three covert psychological 'mechanisms' at work on elite campuses. The authors studied students at Harvard and Stanford universities. As we reported earlier this week, they also found students' career aspirations were influenced by social class, gender and race.
The academics claim that the first reason elite students choose careers in finance or consulting, and, increasingly, technology, is 'pliable naivety,' or their unfamiliarity with these career paths before they start university. "Of our 56 interviewees, only two respondents — the children of parents who worked on Wall Street — had any basic knowledge of the world of finance as they entered college, and none had any prior knowledge of consulting," they note.
This all changes after a few months on an elite campus.
"I thought careers in finance were like being a bank teller, being an accountant, or something," said Louis, an 'upper-middle-class senior at Harvard concentrating in computer science'. "And all of a sudden people are talking about investment banking and sales and trading, and I have no idea what any of these things are! So I was kind of interested to see what this was all about." Louis became interested enough in finance to become an officer in one of Harvard’s main investment clubs: ‘‘All of a sudden you’re like networking with [bankers] and having people who work there coming to talk to you. And having these relationships with these organizations is pretty cool.’’
Once students have become familiar with the sorts of finance opportunities on offer to them, they watch with interest and an increasing sense of competitiveness as their peers are seduced to work for banks and other financial services firms.
The academics spoke to Kevin, a white, upper-middle-class Harvard alumnus, who was flown out ‘‘to New York like every other day’’ for banking job interviews, and who called it a ‘‘wild experience’.’ They spoke to Nathan, a Harvard alumnus who said there was a, "stampede to start applying, and it wasn’t [my] conscious decision to pursue banking. It was more, I guess, I mean, I hate to use the term 'fear of missing out'." They also spoke to Blair, another Harvard alumnus, who described himself as a very competitive person and said that: "When all of your smartest friends start applying for these jobs, you sort of wonder if maybe you could do those jobs too."
Lastly, the academics found that people at elite universities choose finance careers because finance plays to the 'expectations of greatness their university placed upon them.' It also signals prestige to peers, and (rightly or wrongly) is seen as offering career security.
‘‘If you can get an investment banking job...like that’s an easy way to determine whether or not you’ve had success in the job search process," said Kris, a student Harvard. "You can’t just be a teacher after graduating from Stanford," another student noted.
Interestingly (and worryingly for banks), the academics found that elite students' aspirations to work in finance and consulting could just as easily be transferred to jobs in the technology industry. They found that Stanford students are already fetishizing tech alongside banking and consulting, and predicted that Harvard students will start doing the same very soon.
The academics also pointed to a recent survey of Harvard graduating students which suggested that much as elite students want the security and prestige of a banking or consulting career right after they graduate, they have totally different career plans long-term. When asked what they wanted to do now, 17% of Harvard's graduating students said they wanted to work in finance and 14% said they wanted to work in consulting. When asked what they wanted to do in 10 years' time, only 6% wanted to work in finance and consulting combined. - Their preferred long term careers were health, academia, and entrepreneurialism. This explains why banks complain about students quitting finance after only a few years in the industry.