But an article in "Science Translational Medicine" offers a simpler hypothesis consistent with lowered inhibitions, excessive risk-taking and impaired judgment: Wall Street was three (spread)sheets to the wind.
Now I'm not suggesting that investment bankers were drinking at work... at least not more than usual. But 100-hour workweeks are not uncommon on Wall Street, and as Bloomberg quotes the study, "Staying awake for 24 hours straight equals having a blood alcohol concentration of 0.10 percent, beyond the 0.08 percent legal limit for driving in the U.S."
You wouldn't give your car keys to a sleep-deprived, cognitively-impaired twenty-two year old, but bet a billion dollars (levered 10:1) on the AAA-rated tranche of a 30-layer, collateralized debt security that he modeled at four in the morning? No problem.
I like this, but 100 hour workweeks have been common, especially for the junior staff, for years. What changed? Or is it a cumulative effect?
ReplyDeleteCheap jokes and lame puns aside, according to the abstract of the article, you can't "catch up" from sleep deprivation, which has some scary implications for overworked students, medical residents and yes, junior investment bankers.
ReplyDeleteLaura -
ReplyDeleteOne of the pithiest explanations of "what changed" is this NYT article by Calvin Trillin.
It harks back to Tom Wolfe's description of Wall Street bond desks in the pre- and post-Volcker eras (see Bonfire of the Vanities) but it nicely explains how over-confidence and under-competence can tragically intersect.