I just finished reading the Bernard Madoff biography Wizard of Lies that, in part, details how Madoff ingratiated himself with and defrauded a significant chunk of the East Coast Jewish community. Of course that sparked my thinking about parallels in our own religious community, as it has become sort of a truism that Latter-day Saints are particularly susceptible to fraud. Consequently, I decided to dive into the numbers. I couldn’t find anything empirically testing whether high Latter-day Saint areas tend to be more fraudulent, so I did my own analysis. The 2010 American Religious Census has an indicator for number of Latter-day Saints for thousand in a county, and the Uniform Crime Reporting System shows the number of frauds committed in each county in the year 2010.
I merged the two datasets by their fips code, generated a “fraud per thousand” measure using the county population numbers in the UCRS, looked at whether Latter-day Saints per thousand is associated with frauds committed per thousand, and found that more Latter-day Saints= fewer frauds. (As always, my code is on my github).
The graph is below (sorry I didn’t take time to make it pretty; I’ve already spent too much family time on this).
For the wonks, the correlation was -.07, so it’s not much, but it was statistically significant (I’d log the values in the graph, but for our purposes here I’m trying to keep things simple). From a regression approach, each additional Latter-day Saint per thousand= -0.0006 fewer frauds per thousand (p<.01).
So, as far as I know there isn’t any empirical justification for the canard that Latter-day Saints tend to be either more susceptible to or commit frauds more. In fact, the evidence points to the other way, with Latter-day Saint heavy areas showing less fraud overall.
However, “fraud” is a very broad category, and maybe we’re particularly susceptible to a special type of confidence crime type fraud involving church affiliations, and particularly leadership positions. I doubt there’s any data on “confidence crimes” in general, but others have curated excellent data on Ponzi schemes, and the story told when we look specifically at those crimes that are rarer but often quite damaging in dollar terms may support the narrative, so stay tuned for part II.
Maybe this is where you are heading, but it seems to me that lds folk get drawn into the type of fraud that isn’t technically illegal and thus not reported – mlm’s to be specific.
Yes, that’s exactly where this is headed.
Was thinking the same thing. UCR only gives you crimes that are reported. Many confidence schemes go unreported, for many reasons – but there’s no particular reason why LDS would be less likely to report than others. However, I’m suspicious of how well many LDS define fraud. Ponzi schemes are clearly fraudulent. Pyramid schemes, not so much. And these are rampant in communities with high concentrations of LDS members. In fact, many members with high standing perpetuate these and exploit fellow members. The sums of losses may be smaller, and thus less likely to be reported. But they may also involve prominent members of their faith communities, which may lead to lower levels of reporting (either because they’re fearful of reporting, or because they have been taught to be forgiving). And, again, losing money in these schemes may not be viewed by the victims as fraudulent.
I might be missing something, but I thought only the person at the top of the scheme is likely to be charged with fraud. This suggests that using fraud charges as an indicator of how many fraud victims there were might rest on an assumption of uniformity. In other words, each person charged with fraud would have roughly the same number of victims. But what if LDS networks are more susceptible to recruiting individuals to these kinds of schemes? Would that mean LDS communities have a below average number of people charged with fraud and an above average number of people victimized by fraud?
A Turtle Named Mack: Yes, agree completely that pyramid schemes, even if technically legal, fall under a “scam,” and that it’s an atrocity that a lot of high status members are involved in promoting such businesses; I’ll be addressing those specific cases later.
Sterling: Not all frauds are pyramidal though. For example, if I call up old senile retirees and try to convince them to give me money because I’m a long lost relative that needs it, that’s fraud even if it doesn’t involve recruiting others. If we include fraud in all its legal iterations Latter-day Saint presence is negatively related, but there may be something particular about Mormonism and confidence crime that is often pyramidal in structure.
You could also discuss the overpriced supplement and magic oil businesses that make unsubstantiated promises about their products. They line I-15 and were protected from the FDA by then Senate Hatch.
The answer is YES, Mormons are terribly prone to falling victim to financial frauds, including each and every one of the MLMs that originates in Utah.
Stephen, I’m not sure I buy the take (not necessarily your take) that LDS areas have higher levels of fraud, as long as you don’t use the legal definition of fraud and prefer anecdotes to statistics.
@Jonathan: Yes, in the next little bit I’m going to try to address Ponzi schemes and MLMs from a more objective, quantitative perspective that might show a narrower issue with those *particular kinds* of fraud, but I think here I’ve shown that fraud overall tends to be lower in Mormondom. Of course, until we get access to the universal dataset in the sky, there will always be assumptions, but I’ll see how close we can get to directly empirically testing the “Latter-day Saints are into pyramid schemes and Ponzi schemes” thesis. (I’m not being coy about talking in the future tense; I haven’t run the numbers yet, but I wouldn’t be surprised if we do have an issue–but I’m almost certain we do with MLMs at least).