Risky business (Image: Yellow Dog Productions/Getty)
CONJURE up an image of a financial risk-taker, and you'll probably picture an aggressive Wall Street trader, testosterone surging as he closes the deal. But new research suggests that people with low levels of the male sex hormone are also likely to take financial risks.
Previous studies have linked high levels of testosterone to certain risk-seeking behaviours. To investigate whether financial risk-taking follows a similar pattern, Scott Huettel at Duke University in Durham, North Carolina, measured the testosterone levels of 298 people, who then took part in trials in which they chose between a fixed known reward or a gamble between getting a payout - mostly larger than the fixed reward - or nothing.
Overall, the volunteers generally preferred the known return than the gamble, even if they would have been better off, on average, by taking a chance. Surprisingly, the biggest risks were taken by people with very high or very low testosterone, compared with the average levels for their gender (Psychological Science, DOI: 10.1177/0956797611401752).
Other researchers are perplexed by the finding. "This is very counter-intuitive for me," says Anna Dreber Almenberg at the Stockholm School of Economics in Sweden, who previously found a simple correlation between higher testosterone and greater risk-taking in a similar game among male university students.
Huettel suspects that financial risk-taking may vary with context. He now wants to investigate whether low-testosterone and high-testosterone individuals will continue to match each other for risk-seeking when put under time pressure to make decisions, or whether the high-testosterone people will then surge ahead.
Economists want to predict who is likely to be successful at playing financial markets, says Dario Mastripieri at the University of Chicago. "It's legitimate to ask if biology is going to have an effect."
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