Gender differences in financial risk aversion and career choices are affected by testosterone
- aKellogg School of Management, Northwestern University, Evanston, IL 60208;
- bUniversity of Chicago Booth School of Business, Chicago, IL 60637; and
- cDepartment of Comparative Human Development, University of Chicago, Chicago, IL 60637
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Communicated by James J. Heckman, The University of Chicago, Chicago, IL, July 1, 2009 (received for review December 15, 2008)
Abstract
Women are generally more risk averse than men. We investigated whether between- and within-gender variation in financial risk aversion was accounted for by variation in salivary concentrations of testosterone and in markers of prenatal testosterone exposure in a sample of >500 MBA students. Higher levels of circulating testosterone were associated with lower risk aversion among women, but not among men. At comparably low concentrations of salivary testosterone, however, the gender difference in risk aversion disappeared, suggesting that testosterone has nonlinear effects on risk aversion regardless of gender. A similar relationship between risk aversion and testosterone was also found using markers of prenatal testosterone exposure. Finally, both testosterone levels and risk aversion predicted career choices after graduation: Individuals high in testosterone and low in risk aversion were more likely to choose risky careers in finance. These results suggest that testosterone has both organizational and activational effects on risk-sensitive financial decisions and long-term career choices.
Footnotes
- 1To whom correspondence should be addressed. E-mail: dario{at}uchicago.edu
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Author contributions: P.S. and L.Z. designed research; P.S. and L.Z. performed research; P.S., L.Z., and D.M. analyzed data; and P.S., L.Z., and D.M. wrote the paper.
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The authors declare no conflict of interest.
