Are You Born to Be a Trader?

It might depend on your level of testosterone:

A new study has found that men who were programmed in the womb to be the most responsive to testosterone tend to be the most successful financial traders, providing powerful support for the influence of the hormone over their decision-making.
“Testosterone is the hormone of irrational exuberance,” said Aldo Rustichini, a professor of economics at the University of Minnesota who helped conduct the study, being published today in the Proceedings of the National Academy of Sciences. “The bubble preceding the current crash may have been due to euphoria related to high levels of testosterone, or high sensitivity to it.”
Although it may come as no surprise that testosterone could be a big player in the mano-a-mano world of Wall Street, the research offers the best evidence yet of the hormone’s role in determining which would-be Masters of the Universe will thrive. It also supports the growing recognition that biology plays a role in complex human behaviors, and that financial choices in particular are often less rational than economists appreciated.
“We have this idea that economic agents are like Spocks — they are just rational,” said John M. Coates of the University of Cambridge in England, who led the study. “This paper suggests the traders are surviving not so much because they are rational but because they have certain biological traits.”

Yet another argument against the efficiency of markets.
BTW, I think Spock would make an excellent trader. That death grip thingy would really come in handy in the trading pits.

Posted by on January 13th, 2009 at 11:04 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.