Posted by Jaspreet Kaur on August 25, 2009

Luigi Zingales, who worked on the study said, “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.”

A research team from the Northwestern University and the University of Chicago took into account 550 MBA students at the University of Chicago. All these students were made to undergo testosterone tests for which they had to give their saliva.

The length of the fingers of all these students was also measured as it is an indicator of a person’s testosterone exposure in the foetus.

However, the researchers did not find any direct relationship between length of fingers and levels of testosterone in the saliva.

The findings of the study
It was found that the female MBA students possessing high levels of the male hormone testosterone had a higher probability of opting for a career in finance, such as investment and banking. This is in comparison to those who had lower testosterone levels.
Zingales explained, “It could shed some light on gender differences in career choices. Future studies should further explore the mechanisms through which testosterone affects the brain."

The researchers followed all the students after they completed their graduation. They were able to see the careers chosen by 379 students. Women who had higher testosterone levels went for risky career options, the research team found.

“Individuals high in testosterone and low in risk aversion were more likely to choose risky careers in finance,” the researchers wrote in the Proceedings of the National Academy of Sciences.

Women averse to risk-taking vis-à-vis men
Northwestern’s Paola Sapienza, was quoted as saying, “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.”

She added, “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.”

Testosterone production in human body
Testosterone is produced in the bodies of both men and women. Mostly, the production of this hormone is higher in the bodies of men.

High levels of testosterone are associated with characteristics such as aggressive behavior and a liking for risky things.

The researchers are still not sure whether testosterone is the reason behind such kind of behavior. There could be other possible factors that make a person like taking risks, they said.

While risky investment may be the preference of those with higher testosterone levels, advanced investment strategies need not be out of reach for those interested in diversification. Reputable firms like GoldenTree Asset Management and others can help you learn more about hedge fund investments.





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