Now as for Presidents and Prime Ministers...

Traders' testosterone 'makes them take financial risks' 

Rearchers simulating the financial trading floor in the lab have found that traders' hormone levels in the stressful, competitive environment are raised, making them invest in more risky assets.

The study, published in Scientific Reports, found that when given doses of either cortisol or testosterone, the participants buying and selling assets among themselves invested more in risky assets.

They measured the volunteers' natural hormone levels in one experiment and artificially raised them in another.

"Our view is that hormonal changes can help us understand traders' behavior, particularly during periods of financial instability," said Dr. Carlos Cueva, PhD, one of the lead authors of the study, from the department of economics at the University of Alicante, Spain.

Cortisol is elevated in response to physical or psychological stress, increasing blood sugar and preparing the body for a fight-or-flight response.

The authors suggest their findings could help with the development of more stable financial institutions.

The paper's conclusion is:

"Our results suggest that changes in both cortisol and testosterone could play a destabilizing role in financial markets through increased risk taking behavior, acting via different behavioral pathways."

Dr. Ed Roberts, from the department of medicine at the UK's Imperial College London and one of the lead authors of the study, says: "Our aim is to understand more about what these hormones do. Then we can look at the environment in which traders work, and think about whether it's too stressful or too competitive.

"These factors could be affecting traders' hormones and having an impact on their decision-making."

Huh.  So, time to ban men from the trading-desk for the sake of the global economy ?


But no, the study didn't actually speak to the idea that testosterone levels in men might lead to financial crises.  Would anyone actually suggest...

Hormones such as testosterone are responsible for driving young male traders to take increasingly ill-calculated risks that turn bull markets into bubbles and even financial crises, according to neuroscientist and former Wall Street trader John Coates.

Coates, who is now a Senior research fellow in Neuroscience and Finance at Cambridge University, told the audience at DLD Women that biology had a major contribution to the global financial crisis. He said: "Every blow-up in a bank of $1 billion or more occurs at the hands of a trader at the end of a multi-year winning streak. You become euphoric, delusional and overconfident. You take way too much risk and there are terrible risk-reward trade-offs."

...

Testosterone gets released into the body at points of competition, risk-taking and victory. In the animal kingdom, this leads to the " winner effect". This is where a male that wins a battle generates higher levels of testosterone, which in turn helps him to win again in the next fight. However, after a while, the animal surpasses the optimal level of testosterone and starts to become impaired and over-confident. "Animals go out in the open, pick too many fights, patrol areas that are too large and there are increased rates of predation. Risk taking becomes risky behaviour. That's exactly what is going on in Wall Street," Coates said.

Guess so.


Still, it's worth the risk right, because most of the time, men reap better results ?

The female-favoring trend the Journal identified stems from research suggesting that companies run by women simply do better.

...

But the benefits of investing in female-led financial endeavors go even further than the Journal has it: Hedge funds run by women tend to outperform other hedge funds. A report put out in early 2013 by the accounting firm Rothstein Kass indicated that between January 2012 and September 2012, an index of 67 hedge funds owned or managed by women had a return of 8.95 percent—significantly more than the 2.69 percent return generated by an index “designed to be representative of the overall composition of the hedge fund universe.”

Whoops.  So, yeah...of the many things at which men suck and probably shouldn't be trusted with, such as, er geopolitics, we can apparently add trading on the stockmarket to the list.