Women With High Testosterone Take Financial Risks

August 24, 2009

Higher testosterone levels may spur women to take financial gambles that might have bigger payoffs, according to a new study.

Testosterone is the principle sex hormone in males, but it's also found in naturally varying levels in women. In both sexes, testosterone enhances competitiveness and dominance, boosts confidence, and reduces fear.

(Related: "Why Men Are Sloppy Kissers.")

To see what effect the hormone has on financial risk taking, scientists asked 500 male and female MBA students at the University of Chicago's Booth Business School to play a computer game that measured aversion to financial risk.

"These are people who understand this type of game and who most likely will be players in the financial industry after graduation," said study team member Luigi Zingales, an economist at the University of Chicago.

The students were repeatedly given the choice of receiving a fixed amount of money or entering a lottery where the payout was potentially much higher.

The researchers took saliva samples to measure the testosterone levels of each participant before and after the experiment. (Watch rugby players being tested for testosterone changes before, during, and after a match.)

What the team found is that men were more willing to take risks than women. In fact, the researchers saw a kind of "ceiling effect" in men, in which differences in financial risk-taking tapered off as testosterone levels increased.

But there was no difference in risk aversion between women and men with similar testosterone levels—and both sexes with high testosterone were more willing to gamble with their money.

Follow-up surveys done after graduation showed that the same students willing to take risks in the game experiment were more likely to choose financially risky careers, such as investment banking or trading.

But having high levels of the hormone doesn't guarantee success, Zingales warned.

Past studies, for instance, have associated higher testosterone levels in men with other risky behaviors, such as gambling and alcohol use, he said.

Findings detailed in the August 24 issue of the journal Proceedings of the National Academy of Sciences.

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