Why Smart People Are Dumb

The most intelligent people are often the most likely to fall for a scam. 60 Minutes' Morley Safer talks to con experts and their victims about the slippery science of gullibility.

If there is indeed a sucker born every minute, there are at least three con artists born every 30 seconds destined to take him for a ride. We are going through an epidemic of Pigeon Fever—"Ponzimonium," one government regulator calls it, variations on the scam initiated by Charles Ponzi almost a century ago.

Of course, Bernard Madoff makes Mr. Ponzi look like a nickel-and-dime grifter. Even the mini-Madoffs, like Marc Dreier, were dealing and stealing in the hundreds of millions. The Texas financier Allen Stanford stands accused of a mere $7 billion racket. The FBI says that since the Haiti earthquake they’ve uncovered 170 “Help Haiti” charity scams.

Think pigeons are a great investment? The folks in this 60 Minutes segment sure did.

All of which begs the question: Why are we so gullible? I asked that question of Ricky Jay, that master of sleight of hand and student of cons and con men through the ages. For one thing, he says, the smarter we are, or the smarter we think we are, the easier we are taken. "For me, the ideal audience would be Nobel Prize winners… their egos tell them they can't be fooled,” he says. “No one is easier to fool."

A look at the list of the Madoff victims would seem to confirm his contention.

I also asked the man who wrote the book on gullibility—literally. Stephen Greenspan, a psychologist and the authority on gullibility, is the author of Annals of Gullibility: Why We Get Duped and How to Avoid It. Before he answered, he confessed that two days after receiving the first finished copy of his book from the publisher, he learned that he had lost $400,000 of his retirement nest egg to none other than Bernard Madoff.

Professor Greenspan—by the way, no relation to Alan Greenspan, one of the unwitting godfathers of the financial meltdown—says our defenses against conmen are compromised by anxiety, by that awful feeling that we are losing out, that others, friends, family, are getting fabulously rich while we are just getting by.

In other words, it is the anxiety of envy and greed that drives us into the welcoming arms of Madoff, et al.

A psychologist and authority on gullibility lost $400,000 of his retirement nest egg to none other than Bernard Madoff.

And then there are the Pigeons. Both the winged feathered kind, and the earthbound humanoids, waiting to be plucked.

It starts with Arlan Galbraith, who hails from the northern reaches of Ontario, Canada, a plain-faced, salt-of-the-earth fellow who favors Iron Boy overalls. Mr. Galbraith traveled the breadth of Canada and rural America marketing a scheme that he said would make hard-pressed farmers rich. He exuded that charmless charm of Canadians, that excessive politeness and probity that drives them to say please and thank you to ATM machines.

Pigeons would be the salvation of the family farm. Pigeons for the dinner table. A pigeon in every pot, a balance in every bank account.

Galbraith claimed he had contracts for millions of birds for Asia and the Middle East. The Saudis were salivating for North American birds, and Mr. Galbraith's Pigeon King enterprise would satisfy the hunger.

It turned out there were no contracts, but Galbraith had taken in the neighborhood of $40 million from American and Canadian farmers in exchange for what he called breeding stock, pairs of pigeons he sold them before Pigeon King went bankrupt.

I asked Aaron and Joline Humbert, Ohio farmers who had borrowed a quarter of a million dollars from their bank to get in on the pigeon bonanza, if they felt guilty or stupid about the investment.

"Yeah," Aaron said, "I shoulda gone to Vegas and put it all on red."

Morley Safer's report airs on 60 Minutes this Sunday, Feb. 14, at 7 p.m. ET/PT.

Morley Safer has been a 60 Minutes correspondent since December 1970. Prior to joining CBS News in 1964, Safer was a correspondent and producer with the Canadian Broadcasting Corporation. He began his career as a reporter for a variety of newspapers and wire services in Canada and England.