Comments on: Testosterone-fuelled traders make higher profits

By: NinjaDebugger

NinjaDebugger — Tue, 15 Apr 2008 19:40:02 +0000

You get the chance when people have finally put aside judging you by your likelihood of being good at your job with judging you by how well you do your job. It’s not going to happen in our lifetimes, but that doesn’t mean we can’t strive towards it. Yes, this means the end of sexism, and racism, and all other means of judging people that aren’t simply judging them on the merit of their work. Equality isn’t easy, but things worth doing rarely are.

By: Ed Yong

Ed Yong — Tue, 15 Apr 2008 19:09:06 +0000

Max, from the paper:
“We looked into the direction of the relationship between testosterone and P&L [profit & loss]. To do so, we analyzed a trader’s 11am testosterone levels and the P&L they made after this sampling time… On days of higher 11am testosterone, the traders made a P&L for the rest of the day that was significantly greater than on the lower testosterone days… Because the days of high 11am testosterone were different for each trader, thereby ruling out any general market effects on both testosterone and P&L, our results suggest that high morning testosterone predicts greater profitability for the rest of the day.”
I agree with Mitch’s point up above that more samplings at different time points would help to produce a more convincing analysis.

By: Max

Max — Tue, 15 Apr 2008 18:40:03 +0000

I still don’t understand if there is anything in this post that describes actual direct causality. If you look at the sports example, anticipation of a big game produces testosterone and winning a big game produces testosterone, but in neither case is testosterone shown to cause the game to start or cause one team to win. Same thing here: does testosterone actually cause traders to perform better, or do traders who perform better create more testosterone, or does something else entirely cause both? If it’s the second, then I would assume that testosterone producing ability would not alter mens’ vs womens’ ability to perform well, and if it’s the third then we really haven’t learned anything from this other than a marker for success that only works in men.

By: Jerzy

Jerzy — Tue, 15 Apr 2008 17:51:58 +0000

I guess such traders make higher profits in normal days, but are also more likely to fatally miscalculate when stocks fall. Testosterone correlates with taking risks, and risks are, naturally, risky.
Or, even more likely, traders who have good day and have perspectives for a success at work, develop high testosterone as result. Good mood raises testosterone.
It is this nasty question which kills 3/4 of evolutionary biology and evolutionary psychology. If research shows that some individuals enjoy more success than others (from
high-testosterone traders to long-tailed peacocks), why worse ones weren’t eliminated by evolution long ago?

By: magetoo

magetoo — Tue, 15 Apr 2008 17:45:31 +0000

You’re confusing “women who do excel” with “all women”.

Not at all — but apparently I’m coming at the question from a different angle. How do you get the chance to prove yourself in the first place, if people “know” that you’re less likely to be good at the job than another candidate?
You say “all things being equal …” and I suspect that they’re not.

By: NinjaDebugger

NinjaDebugger — Tue, 15 Apr 2008 13:59:53 +0000

They will have, because women who excel will have either elevated testosterone levels (compared to other females) or will have some other factor that compensates for the lower testosterone. You’re confusing “women who do excel” with “all women”. The two are in no way equivalent.
If it turns out that women really are less suited biologically to a profession, that doesn’t mean there won’t still be some women who are well suited to it, just that there won’t be all that many.

By: magetoo

magetoo — Tue, 15 Apr 2008 13:44:00 +0000

What matters with regards to sexual equality is that those women who DO excel have equal CHANCES to excel.

Which they won’t have, if testosterone levels turn out to predict performance in the way this suggests. I think that’s what Ethylene is asking.
For a controlled experiment, well, are there any transsexual traders to speak of? That might give you an opportunity of comparing the effexts of different “dosage”.

By: Ed Yong

Ed Yong — Tue, 15 Apr 2008 07:54:50 +0000

“Ideally you would want to castrate the trader”
Lol. We must do this. For the good of science, you undertstand
And regarding the equality issue, I think Ninjadebugger has got it spot on. The reason, by the way, that the study only looked at men was that the trading floor that was used was almost entirely male.

By: Mitch Harden

Mitch Harden — Tue, 15 Apr 2008 05:43:33 +0000

Yeah but, Testosterone (Ts) levels are higher in sports teams that win. And in Chess players that win. It’s not very surprising that when traders ‘win’ a profit that their Ts goes up.
Not to mention that the pulses of Ts throughout the day can vary both in timing and intensity. So measuring once in the morning, isn’t really a good measure to show causality.
Ideally you would want to castrate the trader, and then give him a steady dose of Ts, then compare high-Ts groups to low-Ts Groups. But of course I normally work with rats. Still a possibility if we teach the rats to bar-press for buy and sell. Hrm…

By: NinjaDebugger

NinjaDebugger — Mon, 14 Apr 2008 23:54:10 +0000

Sexual equality means that given all else being equal, a woman has the same likelihood of success in a given field as a man. That “all other things” includes whatever effect testosterone has on the profession. If it turns out that the average woman simply isn’t as good at the job as an average man, then there will (and should) be an imbalance. What matters with regards to sexual equality is that those women who DO excel have equal CHANCES to excel.
The same will obviously be true where some aspect of being female results in superior performance in a job.
The only reason that using a 50/50 split as a metric is at all reasonable is because it’s not really possible, at this point, to tell when an equally qualified person is receiving equal chances.