Organizing effects of testosterone and economic behavior: not just risk taking.
Recent literature emphasizes the role that testosterone, as well as markers indicating early exposure to T and its organizing effect on the brain (such as the ratio of second to fourth finger, [Formula: see text]), have on performance in financial markets. These results may suggest that the main eff...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Public Library of Science (PLoS)
2011-01-01
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| Series: | PLoS ONE |
| Online Access: | http://europepmc.org/articles/PMC3248440?pdf=render |
| _version_ | 1819172933286756352 |
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| author | Pablo Brañas-Garza Aldo Rustichini |
| author_facet | Pablo Brañas-Garza Aldo Rustichini |
| author_sort | Pablo Brañas-Garza |
| collection | DOAJ |
| description | Recent literature emphasizes the role that testosterone, as well as markers indicating early exposure to T and its organizing effect on the brain (such as the ratio of second to fourth finger, [Formula: see text]), have on performance in financial markets. These results may suggest that the main effect of T, either circulating or in fetal exposure, on economic behavior occurs through the increased willingness to take risks. However, these findings indicate that traders with a low digit ratio are not only more profitable, but more able to survive in the long run, thus the effect might consist of more than just lower risk aversion. In addition, recent literature suggests a positive correlation between abstract reasoning ability and higher willingness to take risks. To test the two hypotheses of testosterone on performance in financial activities (effect on risk attitude versus a complex effect involving risk attitude and reasoning ability), we gather data on the three variables in a sample of 188 ethnically homogeneous college students (Caucasians). We measure a [Formula: see text] digit ratio, abstract reasoning ability with the Raven Progressive Matrices task, and risk attitude with choice among lotteries. Low digit ratio in men is associated with higher risk taking and higher scores in abstract reasoning ability when a combined measure of risk aversion over different tasks is used. This explains both the higher performance and higher survival rate observed in traders, as well as the observed correlation between abstract reasoning ability and risk taking. We also analyze how much of the total effect of digit ratio on risk attitude is direct, and how much is mediated. Mediation analysis shows that a substantial part of the effect of T on attitude to risk is mediated by abstract reasoning ability. |
| first_indexed | 2024-12-22T20:15:03Z |
| format | Article |
| id | doaj.art-5a422187f2044a768e75831291638058 |
| institution | Directory Open Access Journal |
| issn | 1932-6203 |
| language | English |
| last_indexed | 2024-12-22T20:15:03Z |
| publishDate | 2011-01-01 |
| publisher | Public Library of Science (PLoS) |
| record_format | Article |
| series | PLoS ONE |
| spelling | doaj.art-5a422187f2044a768e758312916380582022-12-21T18:13:58ZengPublic Library of Science (PLoS)PLoS ONE1932-62032011-01-01612e2984210.1371/journal.pone.0029842Organizing effects of testosterone and economic behavior: not just risk taking.Pablo Brañas-GarzaAldo RustichiniRecent literature emphasizes the role that testosterone, as well as markers indicating early exposure to T and its organizing effect on the brain (such as the ratio of second to fourth finger, [Formula: see text]), have on performance in financial markets. These results may suggest that the main effect of T, either circulating or in fetal exposure, on economic behavior occurs through the increased willingness to take risks. However, these findings indicate that traders with a low digit ratio are not only more profitable, but more able to survive in the long run, thus the effect might consist of more than just lower risk aversion. In addition, recent literature suggests a positive correlation between abstract reasoning ability and higher willingness to take risks. To test the two hypotheses of testosterone on performance in financial activities (effect on risk attitude versus a complex effect involving risk attitude and reasoning ability), we gather data on the three variables in a sample of 188 ethnically homogeneous college students (Caucasians). We measure a [Formula: see text] digit ratio, abstract reasoning ability with the Raven Progressive Matrices task, and risk attitude with choice among lotteries. Low digit ratio in men is associated with higher risk taking and higher scores in abstract reasoning ability when a combined measure of risk aversion over different tasks is used. This explains both the higher performance and higher survival rate observed in traders, as well as the observed correlation between abstract reasoning ability and risk taking. We also analyze how much of the total effect of digit ratio on risk attitude is direct, and how much is mediated. Mediation analysis shows that a substantial part of the effect of T on attitude to risk is mediated by abstract reasoning ability.http://europepmc.org/articles/PMC3248440?pdf=render |
| spellingShingle | Pablo Brañas-Garza Aldo Rustichini Organizing effects of testosterone and economic behavior: not just risk taking. PLoS ONE |
| title | Organizing effects of testosterone and economic behavior: not just risk taking. |
| title_full | Organizing effects of testosterone and economic behavior: not just risk taking. |
| title_fullStr | Organizing effects of testosterone and economic behavior: not just risk taking. |
| title_full_unstemmed | Organizing effects of testosterone and economic behavior: not just risk taking. |
| title_short | Organizing effects of testosterone and economic behavior: not just risk taking. |
| title_sort | organizing effects of testosterone and economic behavior not just risk taking |
| url | http://europepmc.org/articles/PMC3248440?pdf=render |
| work_keys_str_mv | AT pablobranasgarza organizingeffectsoftestosteroneandeconomicbehaviornotjustrisktaking AT aldorustichini organizingeffectsoftestosteroneandeconomicbehaviornotjustrisktaking |