Gender differences in financial risk aversion and career choices are affected by testosterone

TLDR

Women are generally more risk averse than men. The study examined whether variations in financial risk aversion across genders are linked to differences in salivary testosterone and prenatal testosterone markers among more than 500 MBA students. The authors assessed this by measuring salivary testosterone levels and prenatal markers in the sample. Higher circulating testosterone correlated with lower risk aversion in women but not men, with a nonlinear effect that eliminated gender differences at low testosterone levels, and similar patterns were seen with prenatal markers; moreover, higher testosterone and lower risk aversion predicted a greater likelihood of choosing risky finance careers, indicating both organizational and activational testosterone effects on financial decisions and career paths.

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.