Navigation Links
Risky Business: New Study Explores Role of Gender, Testosterone in Financial Risk Aversion
Date:8/24/2009

CHICAGO, Aug. 24 /PRNewswire/ -- The battle of the sexes rages on, this time from the trading floor. While there has long been debate about the social and biological differences between men and women, new research by the Kellogg School of Management at Northwestern University, the University of Chicago Booth School of Business and the University of Chicago's Department of Comparative Human Development explores how the hormone testosterone plays an important role in gender differences in financial risk aversion and career choice.

Prior research has shown that testosterone enhances competitiveness and dominance, reduces fear, and is associated with risky behaviors like gambling and alcohol use. However, until now, the impact of testosterone on gender differences in financial risk-taking has not been explored.

The new paper, "Gender differences in financial risk aversion and career choices are affected by testosterone," has been published in the Aug. 24, 2009 early edition of the Proceedings of the National Academy of Sciences (PNAS). The research was conducted by Paola Sapienza, Associate Professor, Kellogg School of Management at Northwestern University; Luigi Zingales, Robert McCormick Professor, University of Chicago Booth School of Business; and Dario Maestripieri, Professor in Comparative Human Development, University of Chicago.

"In general, women are more risk averse than men when it comes to making important financial decisions, which in turn can affect their career choices," said Sapienza. "For example, in our sample set, 36 percent of female MBA students chose high-risk financial careers such as investment banking or trading, compared to 57 percent of male students. We wanted to explore whether these gender differences are related to testosterone, which men have, on average, in higher concentrations than women."

The researchers, using an economic-based measure of risk aversion, found that higher levels of testosterone were associated with a greater appetite for risk in women, but not among men. However, in men and women with similar levels of testosterone, the gender difference in risk aversion disappeared. Additionally, the researchers reported that the link between risk aversion and testosterone predicted career choices after graduation: individuals who were high in testosterone and low in risk aversion chose riskier careers in finance.

"This is the first study showing that gender differences in financial risk aversion have a biological basis, and that differences in testosterone levels between individuals can affect important aspects of economic behavior and career decisions," said Maestripieri. "That the effects of testosterone on risk aversion are strongest for individuals with low or intermediate levels of this hormone is similar to what has been shown for the effects of testosterone on spatial cognition."

To investigate the relationship between testosterone and risk aversion, the authors measured testosterone levels in saliva samples (as well as markers of prenatal testosterone such as finger length) from approximately 500 MBA students at the University of Chicago Booth School of Business.

The uncharacteristically large sample--which was global in demographic scope--was familiar with financial risk by virtue of their education, and many pursued financial careers after business school. Also, the participants were relatively homogeneous in age, cultural and educational background, and socioeconomic status, thereby minimizing the effects of other non-biological variables.

As part of a mandatory MBA course, the students were asked to participate in a laboratory experiment to measure the relationship between risk and hormonal levels. Over two days in October 2006, the participants were asked to play a computer game that evaluated their risk aversion attitudes. They answered a series of questions that asked them to choose between accepting a guaranteed monetary award or choosing a risky lottery with a higher potential payout. Students had to choose repeatedly between the lottery and a fixed payment at increasing values. Two saliva samples were collected, once before the session and once after the test was completed, to measure hormonal changes over that time period.

As expected, more risk-prone participants chose the lottery more often, whereas more risk-averse individuals preferred the guaranteed payout. Overall, men exhibited significantly lower risk aversion than women in the study, and also had significantly higher levels of salivary testosterone than women.

"This study has significant implications for how the effects of testosterone could impact actual risk-taking in financial markets, because many of these students will go on to become major players in the financial world," said Zingales. "Furthermore, it could shed some light on gender differences in career choices. Future studies should further explore the mechanisms through which testosterone affects the brain."

MORE INFORMATION: To see the full study or to arrange an interview with the researchers, contact Meg Washburn or William Harms at the contact information listed below. For more information about the Kellogg School of Management at Northwestern University, visit www.kellogg.northwestern.edu. To learn more about the University of Chicago, visit www.uchicago.edu.

    MEDIA CONTACTS:
    Meg Washburn                         William Harms
    Kellogg School of Management         The University of Chicago
    Office:  847-491-5446                Office:  773.702.8356
    Mobile:  773-848-4461                w-harms@uchicago.edu
    m-washburn@kellogg.northwestern.edu


'/>"/>
SOURCE Kellogg School of Management at Northwestern University
Copyright©2009 PR Newswire.
All rights reserved

Related medicine news :

1. Crib Bumper Pads Too Risky for Baby
2. Consumers Still Buying Risky Imported Drugs Online: FDA
3. NSF grant funds research on risky decision-making in pre-teens
4. FDA to Declare Cold Medicines Too Risky, Homeopathy Offers a Safe Alternative
5. Spanking Raises Chances of Risky, Deviant Sexual Behavior
6. Risky teen behavior may not occur at home or school: but how to track?
7. Quarter of Disabled Seniors Use Risky Medications
8. Programs succeed in reducing risky sex among HIV-positive minority men
9. Fewer U.S. High School Students Engage in Risky Behaviors
10. Teenagers attending college less likely to engage in risky sexual behavior
11. Consumer Reports: Patients Overdose on Debt As Lenders, Doctors, and Hospitals Push Risky Credit to Pay for Medical Care
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:5/25/2016)... ... 25, 2016 , ... Casa Velas, an adults-only boutique hotel in Puerto Vallarta, ... its new wellness suites . The two 1,350 sq. ft. suites which debuted ... services and insuite amenities, from a custom soap selection and in-suite exercise kit to ...
(Date:5/25/2016)... , ... May 25, 2016 , ... America Walks ... Carol Reichbaum, M.S.L., M.S.P.A., of the University of Pittsburgh Graduate School of Public ... will enable Ms. Reichbaum and 24 other advocates from around the country to participate ...
(Date:5/25/2016)... ... May 25, 2016 , ... "FCPX LUT Intense allows ... your footage," said Christina Austin - CEO of Pixel Film Studios. , With ... and easily add stylish color grades to their footage. A LUT is a Lookup ...
(Date:5/25/2016)... ... May 25, 2016 , ... Consumer access to organic foods ... 2016, Kashi®, a maker of whole grain cereals and other plant-based foods, will introduce ... hard red winter wheat processed by Hesco/Dakota Organic Products. , The transitional designation ...
(Date:5/25/2016)... (PRWEB) , ... May 25, 2016 , ... Stern ... firm will be selling the device branded as Stern’s Real Time Monitoring ... to bedbugs to the hotel and motel industry, colleges for use in dormitories, shelters, ...
Breaking Medicine News(10 mins):
(Date:5/24/2016)... May 24, 2016 Een app ... zodat zij collectief patiënten kunnen behandelen, hun kennis kunnen ... idee achter de nieuwe en revolutionaire MDLinking App, ontwikkeld ... Nederlandse vaatchirurg dr. Hans Flu en oncologisch chirurg dr. ... inmiddels beschikbaar is, wordt op dinsdag 24 mei officieel ...
(Date:5/23/2016)... FLINT, Mich. , May 23, 2016 Diplomat ... the third annual Fellowship and Internship programs. The hands-on ... 12. The full-time, paid Fellowship ... Flint, Michigan . Fellows and interns are ... downtown Flint at the Riverfront ...
(Date:5/23/2016)... , May 23, 2016 ... Devices, Diagnostics and Monitoring, and Vision Care ... Which areas are going to grow at the fastest ... revenues to 2026, assessing data, trends, opportunities and prospects. ... charts, and graphs. Discover the most lucrative areas in ...
Breaking Medicine Technology: