Rational Choice Theory: What´s White Collar Crime?

White-collar crime is crime that typically goes by unnoticed, and receives little attention. This is because these acts of crime are nonviolent. White-collar crime is financially motivated and includes insider trading, embezzlement, fraud, tax evasion, and price fixing.

Robert Merton (1968) once wrote that, “In the American Dream there is no final stopping point. The measure of ‘monetary success’ is conveniently indefinite and relative. At each income level . . . Americans want just about twenty-five percent more . . .” (found in Simpson et al., 2013). This quote explains the American ideology that money is the motive. Material success comes above all else, and American people will do what ever it takes to attain it. Merton’s anomie theory

was updated by Steven Messner and Richard Rosenfield who conceptualized the institutional anomie theory. This is the “view that anomie pervades US culture because the drive for material wealth dominates and undermines social and community values” (Siegal, 2015: 152). In addition, they discuss the American Dream, which they describe as both a goal of achieving material success through competition, as well as a process in which one must be socialized to pursue material success. The feeling of anomie sets in when the desire to succeed weakens a community and drives people apart. The need for this material success becomes so intense it restricts other desires, such as respect. This relates to white-collar crime because these types of offenses are typically, not always, committed by the upper class. Despite already attaining a wealthy status, our society has become so revolved around money that greed takes over and white-collar crime offenders satisfy their needs for more by extralegal means.
The Enron scandal is considered to be one of the most notorious white-collar crimes in American history. Enron had lobbied for deregulation, which allowed for the reduction of government power over their company, and in turn allowed the executives to oversee company reports. Enron began lying about their profits, and concealing their debts. They did not accurately represent their losses; instead they appeared to be a rather profitable company. Using their apparent success, Enron became manipulative. They created an energy crisis in California by causing blackouts. Enron then increased the price of electricity in order to make themselves more money. After making off with millions of dollars, Enron’s top executives could no longer keep their fraud a secret. After finally revealing their $618 million dollar third quarter loss, they filed for bankruptcy. The end results were devastating. “90,000 people lost their jobs. Enron employees, who had been encouraged to invest their retirement plans in company stock, lost $2 billion into the bargain. Stockholders lost another $70 billion in the Enron scandal, and the state of California sued for $6 billion in energy losses” (Rankin 2011). Enron’s employee accurately represented Merton’s quote in which he noted the American Dream was all about monetary success and wanting more. Enron’s top employees cared so deeply about increasing their wealth that it dominated their way of life, and they displayed total disrespect for their victims. By letting this desire take control of their lives, they failed to realize the consequences and before long the fraud was more than they could handle, which resulted in the demise of Enron.
Rational choice theory states that crime is rational, and rational people are in control of their behaviors and choices.

When an individual is contemplating committing a crime, they will carefully weigh the benefits and consequences associated with that offense. Such benefits may include monetary gain, respect, and control. However, if the probability of being detected, and subsequently incarcerated is too high, it will deter them from becoming an offender. Punishments must be swift, certain, and severe enough to prevent the individual from rationalizing that committing a crime in hopes of attaining perceived benefits is the better choice. Rational choice theory is relevant in explaining white-collar crime, and the Enron scandal because the individuals are fully aware and in control of their actions. They actively and knowingly engage in illegal activates in order to reap the benefits, which in this case would be monetary gain. White-collar crime usually goes unnoticed due to its nonviolent nature. This makes it easier for these criminals to rationalize that the likelihood of them being caught and punished is exceptionally low. Due to their high status they may view any potential punishments as insignificant in comparison to the benefits they would receive. The Enron scandal was an elaborate scam that was not done in a spur of the moment way. It included mass deception hosted by highly skilled, and very wealthy men. They created a way to earn extra money that definitely

required extensive planning, which shows that they truly were rational actors.
Institutional anomie theory and rational choice theory mesh well together to create an explanation for white-collar crime, and the Enron scandal in particular.

Institutional anomie and the concept of the American Dream state that Americans continually want more. They want more material success, regardless of how much they already have. To attain their desired gains, white-collar offenders will do what ever it takes to achieve it even if it requires utilizing illegal means. Prior to committing such offenses for their own personal gain, they had to weigh the benefit and consequences of their actions. Taking into consideration their status and wealth, they were able to rationalize that they would be able to go undetected and therefore sought out to seek monetary success. Had the employees at Enron not been so intensely driven towards material wealth and had they not allowed the desire to drive them away from others and from conventional values, perhaps they could have been able to appropriately rationalize and realize that there are substantial consequences that will undoubtedly outweigh the perceived benefits. This alternative could have saved thousands of victims from one of the worst white-collar crime scandals in

history.