Finance will be different after Covid-19, and not just because the economy will be in the doldrums. Social shifts that outlast the pandemic – things as simple as a reduced willingness to shake hands – will make trust a scarcer commodity. That is the last thing an already misanthropic Wall Street needs.
Handshakes bring people closer, both literally and figuratively. Sure, the five-finger salute is likely to be a pretty effective way of transmitting the coronavirus, compared with an elbow-bump, foot-tap, bow, or any number of similar greetings. But pressing the flesh instills trust. Assyrian King Shalmaneser III seems to have been an early adopter, judging by a three-millennia-old carving. Clasping digits is, if nothing else, a good way to check for daggers concealed up sleeves.
What worked for Shalmaneser III then works just as well today. A study at University of California, Berkeley’s Haas School of Business in 2018 found that when negotiators shook hands before talking turkey, they reached a more mutually beneficial outcome. In a simulated house-selling negotiation, buyers and sellers who shook hands tended to end up unwittingly splitting the profit 50-50, compared with 80-20 otherwise. Fewer handshakes, it seems, directly resulted in less goodwill.
The financial community starts at a low base. In surveys asking people how they feel about the general public, finance professionals are less trusting than the population overall, researchers at the University of Cologne found by analysing U.S. data. Their trust has fallen significantly – around 40 years ago, financiers were more trusting than the population in general.
Wall Street’s employers might not mind a world with less trust. It is in their best interest to get the upper hand in any negotiation. If fewer warm feelings mean more alpha, that’s progress. Indeed, deal-loving President Donald Trump – a self-described clean freak – in a 1997 book called the handshake “one of the curses of American society.” The pandemic might give him and other hard-nosed dealmakers something they wished for all along.