By Nancy Mandell
While popular sociologists have been busy assigning responsibility to the planets, researchers at Northwestern University’s Kellogg School of Management and at the University of Chicago’s Booth School of Business and its Department of Comparative Human Development have been exploring the biological route. Their findings were published recently in a paper plainly titled: “Gender differences in financial risk aversion and career choices are affected by testosterone” that appeared in an edition of the Proceedings of the National Academy of Sciences (PNAS).
While existing research has demonstrated links between testosterone and enhanced competitiveness, dominance and even such risky behaviors as gambling and alcohol abuse, the new study is the first to measure the impact of the hormone on financial risk-taking and the choice of riskier careers such as investment banking and trading.
Using an economic-based measure of risk aversion on some 500 MBA students—clearly a business-oriented group— at the Booth School of Business ensured that the unusually large study sample was already familiar with financial risk. Testosterone levels were measured in saliva samples as well as in markers of prenatal testosterone both before and after a computer “game” designed to evaluate financial risk aversion.
“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 Paola Sapienza, associate professor at the Kellogg School and one of the three researchers of the study. Moreover, the risk differential virtually disappeared in women whose testosterone levels were similar to men’s.
Dario Maestripieri, a fellow researcher in the U of Chicago’s Comparative Human Development Department, summed the findings up this way:
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.
So much for Mars and Venus!