Testosterone & Financial Risk
Posted in Biochemistry, Cognition, Demographics, Economics, Genetics on September 1st, 2009 by sam – Be the first to comment
Research by Paola Sapienza & Luigi Zingales (”Gender differences in financial risk aversion and career choices are affected by testosterone“) suggests that testosterone levels may explain why men dominate risky financial professions.
The researchers measured the amount of testosterone in the saliva of aspiring bankers (MBA students from the University of Chicago). They also estimated the students’ exposure to the hormone before they were born by measuring the ratios of their index fingers to their ring fingers (a long ring finger indicates high testosterone exposure) and by measuring how accurately they could determine human emotions by observing only people’s eyes, which also correlates with prenatal exposure to testosterone.
The students had to decide between a 50:50 chance of getting $200 or a gradually increasing sure payout, which ranged from $50 up to $120. The point at which a participant decided to switch from the gamble to the sure thing was reckoned a reasonable approximation of his appetite for risk.
Women and men with the same levels of testosterone generally switched at the same time, demonstrating similar risk preferences. Women who had more testosterone were more risk-loving than women with less, while the data for men at the lower end of the spectrum displayed a similar relationship. Curiously, the relationship between testosterone and risk taking was not as strong for men with moderate to high levels.
The correlation was strongest when the salivary measure of testosterone was used.
The researchers then followed the subjects’ progress after they graduated, to see what sort of careers they entered. Men were more likely than women to choose a risky job in finance but the difference was accounted for entirely by their levels of salivary testosterone.

