3. In one experiment we sampled hormones from
17 male traders and found that their
testosterone did indeed rise with above-average
profits, and in other studies, with 54 traders, we
found that higher testosterone led to greater
risk-taking.
These experiments are continuing, but the
preliminary data was strong enough to be
published by the National Academy of Sciences.
4.
5. cortisol or hydrocortisone, steroid hormone that in humans is the major
circulating hormone of the cortex, or outer layer, of the adrenal gland .
Like cortisone , cortisol is classed as a glucocorticoid; it stimulates liver glycogen
formation while it decreases the rate of glucose utilization in body cells.
A main effect of cortisol is to reduce the reserves of protein in all body cells
except cells of the liver and gastrointestinal tract.
It also makes fatty acids available for metabolic use. Cortisol is synthesized and
secreted by the adrenal cortex in response to the stimulating substance
adrenocorticotropic hormone (ACTH).
In turn, cortisol is the major regulator of ACTH production in the pituitary gland;
it acts by negative feedback inhibition, i.e., a rise in the level of cortisol in the
blood inhibits ACTH secretion by the pituitary.
Cortisol, usually referred to as hydrocortisone when used medicinally, is more
potent than cortisone with respect to metabolic and anti-inflammatory effects.
6. We collected equally powerful data
suggesting that the molecule of irrational
pessimism — which we suspect can promote
chronic risk aversion, driving a bear market
into a crash — is the stress hormone cortisol.
7. J. M. Coates * , † , ‡ and
J. Herbert * , ‡ , §
+ Author Affiliations
*Department of Physiology, Development and Neuroscience, University of Cambridge, Cambridge
CB2 3DY, United Kingdom;
†Judge Business School, University of Cambridge, Cambridge CB2 1AG, United Kingdom; and
§Cambridge Center for Brain Repair, University of Cambridge, Cambridge CB2 0PY, United Kingdom
Edited by Bruce S. McEwen, The Rockefeller University, New York, NY, and approved November
6, 2007 (received for review May 1, 2007)
Abstract
Little is known about the role of the endocrine system in financial risk taking. Here, we report the
findings of a study in which we sampled, under real working conditions, endogenous steroids
from a group of male traders in the City of London. We found that a trader's morning testosterone
level predicts his day's profitability. We also found that a trader's cortisol rises with both the
variance of his trading results and the volatility of the market. Our results suggest that higher
testosterone may contribute to economic return, whereas cortisol is increased by risk. Our results
point to a further possibility: testosterone and cortisol are known to have cognitive and
behavioral effects, so if the acutely elevated steroids we observed were to persist or increase as
volatility rises, they may shift risk preferences and even affect a trader's ability to engage in
rational choice.
