Study Links Testosterone to Profits

May 25, 2008 01:43 PM
by findingDulcinea Staff
Researchers suggest that the higher a financial trader’s testosterone levels in the morning, the more money he’s likely to earn during the day’s trading.

30-Second Summary

Higher levels of testosterone could mean higher profits.

According to a University of Cambridge study of 17 London traders aged 18 to 38, “a male trader's daily testosterone level is higher on days when he makes more than he would in an average day,” reports Time magazine.

But high testosterone levels can only carry people so far, said John Coates, the study’s lead researcher and a former Wall Street trader. Persistently elevated levels of the hormone can blur perceptions of risk, suggesting that “several rounds of winning means testosterone so high [traders] start taking stupid risks,” Coates said.

Testosterone may also have other financial benefits. Another small study led Harvard researcher Terry Burnham to hypothesize that more testosterone “produces a greater aversion to unfair deals because the hormone is linked to dominance-seeking behaviors,” New Scientist reported last July.

Despite its apparent economic benefits, too much testosterone can also cause memory problems, according to researchers at the University of Illinois at Chicago. After a group of older men received 200 milligrams of testosterone every other week for 12 they showed “a moderate decline in short-term verbal memory,” Reuters reported in December 2007.

Powers of recall aside, Tom Fowler of the Houston Chronicle wonders whether the trading floor study means that the U.S. economy has “fallen victim to the chemically induced behavior of the trading community.”

And Dave Bath at the blog Balneus thinks the study suggests a need for more female traders: “If society desires market stability, a higher proportion of female traders might be a very good thing.”

Headline Link: “High Testosterone Means High Profits”

Opinion & Analysis: Has testosterone contributed to the downturn?

Related Links: Too much testosterone affects fair play, memory


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