Wednesday, September 17, 2008

T and Financial Risk   posted by Piccolino @ 9/17/2008 05:17:00 PM

Here is a nice follow-up to the Herbert and Coates study on London floor traders where they study the profitability of traders and testosterone levels. In this new paper, "Testosterone and Financial Risk Preferences", available on the website on one of the authors, a Harvard-led team of researchers report that men with higher T make more financially risky decisions. They are careful to note that it is merely an association. But it is a start. The slam dunk paper that remains to be written is one with exogenous administration of testosterone (and placebo). That would hopefully settle the causality issue (and might therefore excite the imaginations of some economists!). There are some interesting ideas in the manuscript about financial-risk taking as a form of male-male competition.

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