Testosterone just can’t get a break. Some studies denounce the hormone for it’s adverse health impacts, while others hail it’s performance enhancing qualities (the less risqué variety). Most previous scientific papers have focused on how it influences our mood, physiology, or social behavior, but recent research has turned the spotlight on testosterone’s role in the world of finance. One study linked prenatal testosterone exposure to stock trading prowess, while another from the same lab demonstrated a brief “testosterone high” for investment bankers who rake in windfall profits, leading them to take greater short-term risks.
But how does the hormone affect other people? Traders are famous for their brash and competitive on-the-floor personalities, the type that is often associated with high testosterone in the first place. A new study by Paola Sapienza of the Kellogg School delves into the chemical’s effects off the trading floor, exploring how testosterone affect people’s tendencies to take on financial risks. Along with her colleagues Luigi Zingales and Dario Maestripieri, Sapienza measured both current and prenatal testosterone exposure in 460 MBA students—a sample size nearly ten times higher than previous studies. Their results show that women with low testosterone are not only the most averse to financial risk, they are also the least likely to embark on a career in finance.
Sapienza’s research was featured in in last week’s Science Friday program on NPR, the podcast of which is now available. Kellogg Insight also has an article Sapienza’s work if reading is more your thing.