Economic Woman

Econometrics, gender, equity and more.

Hormones on the trading floor

with one comment

A study of 17 men working on a trading floor in London, to be published this week in the Proceedings of the National Academy of Sciences, reports that “a trader’s morning testosterone level predicts his day’s profitability.” J.M. Coates and J. Herbert sampled 17 traders’ testosterone and cortisol levels during an eight day period bracketing the release of some crucial US economic numbers.

The story will play out in the mainstream media as “real men make more money” – witness this Guardian headline:“Scientists find secret ingredient for making (and losing) lots of money – testosterone.” (An aside: is this really a secret?) Science editors do love this sort of hook:

In the film Wall Street, which symbolised the excess of the 1980s, the most successful traders were odious alpha-males with aggression seeping from every pore. But stereotypes often have a kernel of truth, and researchers from Cambridge University have concluded what everyone outside the City has always suspected.

A few things:

  1. A good day is one on which the trader does better than his own monthly average. This doesn’t tell us whether a man who always has slightly high testosterone has a higher daily average than his low-testosterone counterparts, as the Guardian hook would imply.
  2. The emphasis in the actual paper is on how the endocrine system might make traders behave irrationally, not on the relationship between gender, hormones and success.
  3. I’m sceptical about the mechanism. We already know that testosterone rises with any sort of victory, so we’d expect high testosterone after a good day. The morning testosterone reading is presumably supposed to establish causality. But the morning measurement was taken at 11am. Do these traders really have no idea how they are going to do by mid-morning?

In general, the paper spins a lot of analysis out of a narrow empirical result. In the Guardian, Coates goes so far as to blame bubbles on the endocrine system.

[Coates] believes the traders, who are almost all young men, were profoundly influenced by the testosterone hit they get from the job. But, he said, primeval brain mechanisms activated by the hormone can also lead them to irrational risk-taking. “I think this molecule is partly responsible for financial instability.” […] Among lessons Coates draws is that trading floors need more women and older men who have lower testosterone levels and cooler heads.

I expect that last conclusion won’t get much play as the story spreads. But I’m not sure I like it in any case. The world is full of vague essentialist notions about the value of “a woman’s sensibility” – as if women are a handy stabilizing ingredient, like corn starch, not important individuals with all kinds of traits.


Written by Allison

15 April 2008 at 1:13 pm

One Response

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  1. It’s hard to take a study like that seriously–testosterone levels fluctuate over cycles of about 10 days and it’s usually released by your body in spurts, so techniques for measuring levels in the human body tend to be pretty unreliable. In fact, I find it kind of interesting that researchers only followed these men over the course of eight days, since that’s about how long a cycle of higher or lower hormone levels might last.

    Testosterone levels also tend to be higher and more variable in the mornings than in the afternoons which could totally confound measurements. I wouldn’t argue that this study isn’t scientifically sound (I haven’t read more than the abstract), but I think is has to be replicated with larger sample sizes and for longer periods of time before we get to declare testosterone the “secret to success”.

    I think what bothers me most about studies like this is that traits like level-headedness are applied to women in circumstances when it won’t help them (making money on the trading floors of London), and the same traits are denied in women when they’re considered valuable (holding office, for example). We’re too sensible to make the big money, but we’re too emotional to be placed in a position of power.


    15 April 2008 at 5:11 pm

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