Would more female CEOs have prevented the financial crisis?
Biological Differences - the role of Testerone in decision-making
A Cambridge study analysed the saliva of London male traders to investigate the relationship between testerone levels and risky decision-making. The study found that a trader’s morning testosterone level predicts his day’s profitability. The researchers found that a trader’s cortisol rises with the volatility of his trading results and of the market. The results suggest that higher testosterone may contribute to economic return, whereas cortisol is increased by risk. Testosterone and cortisol are known to have cognitive and behavioral effects, so if the acutely elevated steroids 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. In other words, during a financial crisis, a male trader may make decisions that are not logical but risky and irrational.
The role of evolution in competitive male behaviour
Another study cited in Kristof's article published in the Journal of Evolution and Human Behavior, found that men were more influenced by their peers when making risky bets whereas women were not affected at all by peer pressure. They target evolution as a possible cause for this gender difference: "across cultures, women prefer high-status men, while a woman’s reproductive prospects depend much less on her social status. Thus, when men of similar status gather, they jockey for an edge and jostle for the alpha role — and try to get ahead with high-stakes gambles."
- J. M. Coates and J. Herbert, 'Endogenous steroids and financial risk taking on a London trading floor', PNAS, (April 2008), pp. 6167– 6172.