Men drawn to risky business
Most of us think risk-takers are young and predominantly male. Is this stereotype accurate? Research findings may surprise you.
In terms of gender, the stereotype does hold up, although not powerfully. James Byrne and colleagues at Temple University in Philadelphia conducted a metaanalysis of 150 studies of risk-taking tendencies in adults across five age spans. They found males more likely than females to take risks. However, the ratio narrowed with age.
Self-confidence does make a difference. Norris Krueger and Peter Dickson at Ohio State University presented adult participants with information about their ability to make risky decisions — some were told they were good at it, while others were told they were less competent.
They then asked everyone to make a financial decision. Those who had been led to believe they were competent decisionmakers took greater risks.
Here, however, the match between our assumptions about risk-taking and reality ends. Anika Josef at the Max Planck Institute for Human Development, together with colleagues in Basel and Yale, carried out a 10-year longitudinal study looking at risk-taking tendencies of 44,076 German adults between 18 and 85, across a range of areas.
They found that, although risk-taking behaviour tends to decline with age, there was an increase in risk-taking among the over-65s.
The researchers also gave participants a personality questionnaire, and found those who enjoy seeking new challenges engaged in more risk-taking behaviour.
John Coates and Joe Herbert at the University of Cambridge recruited 17 male London traders and measured their levels of cortisol and testosterone twice daily for eight days, first thing in the morning and after work.
They found significant relationships between testosterone and financial returns, and between cortisol (stress response hormone) and financial uncertainty. Traders who had high testosterone levels on rising made more profit that day. A one-off high testosterone reading, is associated with greater appetite for risk.
If prolonged (as in a market bubble), it’s also linked with increased sensation-seeking, impulsiveness and harmful risk-taking behaviour.
When cortisol spikes briefly — in their study, because traders expected a volatile market that day — it’s associated with increased motivation and focus. However, when cortisol remains high, attention becomes focused on negative precedents, anxiety rises and the individual becomes risk-averse.