Vagina Dentata

The reporting of a particular study in the last couple of days sounded more like an ad for a kinky fetish party. “Risky women are ‘hungry for sex’” panted the Press Association over the newswires of the world. “’Traders’ testosterone’ fuels female financial flutters” was Nature’s lame attempt. “Even female investors juiced by testosterone” was Daily Finance’s rather damp contribution.

And I’m just generally baffled as to why The Med Guru felt the need to use a picture of Scarlett Johansson with this story.

So yes “researchers” have “found” that women with greater levels of testosterone are “greater risk takers” (notice my subtle highlighting of certain words there). And of course testosterone is a SEX hormone so some journalists thought it would be a good idea to talk about SEX a bit as frankly SEX is more interesting than financial trading which is what the study was actually about.

The “researchers” were in fact an Associate Professor in Finance, a Professor of Entrepreneurship and Finance and a Professor of Comparative Human Development and Evolutionary Biology (who lists press cuttings and press releases on web page rather than journal articles, but that’s just a particular prejudice of mine which has frequently been supported by evidence).

They used the results from a cohort of 460 (320 male, 140 female) MBA (management qualification) students at Chicago University of their levels of testosterone and compared this to their risk aversion and the careers that they went on to do after graduation (which were rated as ‘risky’ or not on the basis of whether they were in the financial sector).

Now, I’m not in a position to judge the accuracy of the testosterone testing (saliva collection and digit ratio), so I’ll assume they’re sound.

The risk aversion test and career choice data have huge confounding factors. The risk aversion test was a computer simulation where participants were asked to choose between a fixed cash amount (from $50 to $120) or to ‘gamble’ for a lottery prize or either $200 or zero. I do not believe that this is a credible test because it was 15 questions in a non-real life example, where participants were selected as ‘professional financial decision makers’ and were not intended to be representative.

Students are a specific type of people, MBA students are even more specific, and MBA students having their risk aversion measured when fully aware of the concepts of risk aversion and financial decisions are likely to give specific answers. (BTW you can actually re-read the above sentence substituting the word ‘specific’ for the word ‘wanky’ and it is still true).

Secondly, the career data was collected two years after the test with no follow-up interview. Therefore, it was assumed that graduates chose certain “high risk” professions (in the financial sector) because they were risk-takers and the risk-averse would take low risk jobs outside of the sector. In fact, there may have been many reasons why certain jobs were taken; offers, opportunities, location, having children, redundancy, not wanting to be surrounded by trading wankers, etc. That is not a measure of risk aversion, for me it would be a measure of bullshit tolerance.

So I don’t think the research was great, but the reporting of the research was atrocious. None of the problems with the research were alluded to, they tried to sex it up by using words like ‘gambling’ and ‘excessive drinking’ and, er, ‘sex’. And they just made false and misleading statements:

Daily Telegraph: “[The study] found that testosterone-driven women who liked to gamble went on to choose careers in finance”

Press Association: “Women with an appetite for risk may also be hungry for sex, a study suggests.” (No, it really doesn’t)

I am most concerned by this quote from one of the researchers:

“This is the first study showing that gender differences in financial risk aversion have a biological basis, and that differences in testosterone levels between individuals can affect important aspects of economic behaviour and career decisions,” said Professor Dario Maestripieri.

Now I have met enough academics who have been misquoted in the press to treat quotes with some suspicion. However, what is important is that this study DOES NOT show that gender differences in financial risk aversion have a biological basis. Even if the methodology was perfect it is still a small study on a select group of individuals who are members of an elite in a Western capitalist society. That is a long way from establishing a ‘biological basis’ for individual attitudes and behaviours.

This also feeds into the argument that women are not making it into top financial or commercial sector jobs because they are risk averse and non-competitive: only women with unusual ‘male hormones’ can make it to the top and the fact that men are over-represented is “natural”. This is wildly reductionist. There are huge environmental and social determinants of managing and evaluating risk and humans are notoriously bad at doing it.

So sorry to those who had hoped that scientists had found a bunch of sex-fiend, testosterone-fuelled women (you know who you are), you’ll probably find they’re too smart to be working in finance.

Thanks to the ever-wonderful Dr Petra for the tip-off on this.