Female money managers consistently outperform their male counterparts, according to a recent study.
Blame it on testosterone!
Men's perception of greater power in the workplace, due to higher testosterone levels, is why women outpace them when it comes to investment returns, researchers say.
Female money managers consistently outperform their male counterparts, and social scientists say this unbalanced power dynamic is one reason why. But, they add that eventually, as the power balance evens out in the workplace, women may lose some of that edge.
Video Download: Why Women Make Better Money Managers
Video Stream: Why Women Make Better Money Managers
Men's higher testosterone levels lead them to trade more and take riskier positions. "Men can become a little immune to some of the signals in this market," said Meredith Jones, a director at consulting firm Rothstein Kass. "Having more women in risk-tasking positions can help mitigate some irrational exuberance."
The Science Behind Testosterone's Role in Financial Behavior
In a simple study conducted by John Coates, saliva samples were taken from 17 male traders on eight consecutive days. These samples were analyzed for the testosterone levels of each man, and Coates found that high testosterone levels were correlated with the trader making more than his one-month daily average. Also, when testosterone levels were high in the morning, that day's profits were higher than usual.
Coates compares this correlation and male behavior with animals, such as fighting bucks. Both experience a euphoric feeling when they win – male humans, high profits, male deer, winning a fight – and both experience the “winner's effect.” Once they win, they will want to keep fighting and keep winning, which can be addictive, and will continue until they inevitably lose.
Therefore, particularly for young male investors with peak testosterone levels, they will continue to try and win, becoming less rational and more stubborn, not following their more careful strategy as before or thinking decisions through.
A firm called Financial Skills conducted a study with 700 summer trading interns and found that women were much less likely to “transgress specified trading limits” than men. It seems that testosterone causes men to take more risks, possibly getting higher investment returns, but in the long-run, careful planning may be the better method here.
Biological Differences in Testosterone Levels
As most people know, women have less testosterone than men. Typically, women have only 10% of the testosterone than their male peers. Stephan Hamann noted in his paper on sex differences that “the brain regions that differ in size between men and women also tend to be the same regions that contain high concentrations of sex hormone receptors...” One example is the amygdala, a small area of the brain that perceives threats and aggression, which is larger in men than women.
It seems that hormones can have a significant role in cognition and behavioral differences in men and women. Having less testosterone does not expose women to the “winner's effect” as much as with men.
This leaves women less likely to engage in reckless behavior and being overconfident about their decisions or arrogant about their choices.
In a study from 2001, researchers Robert A. Olsen and Constance M. Cox discovered that “women investors weight risk attributes, such as the probability of loss and ambiguity, more heavily than their male colleagues. Also, women tend to emphasize risk reduction more than men in portfolio construction.”
Jones is the author of a study that found since 2007, female-owned or female-managed hedge funds delivered returns more than six percentage points higher than hedge funds overall, and two percentage points higher than the S&P 500.
This type of research needs to continue to get more definite answers about testosterone and behavioral differences between men and women in regards to financial decisions.
But what we've discovered so far points to the fact that testosterone is a key player here and tends to make men take more risks, with potentially higher short-term rewards, whereas women tend to “play it safe” and may come out with higher long-term rewards. Exciting stuff to say the least!
If you are interested in learning more about testosterone replacement therapy (TRT) or natural ways to boost your testosterone levels, feel free to contact us using our contact form or via telephone. One of our patient coordinators will be happy to speak with you!
Contact Us Now
- Testosterone and Crime: What Can Genes Tell Us About Behavior? - Video - October 25th, 2020
- Testosterone shown to help sexually frustrated women - October 22nd, 2020
- Testosterone levels seen prior to birth in fetus' fingers, jawline - October 20th, 2020
- Tri-Blend Testosterone. Understanding the Benefits of Testosterone Oils - October 19th, 2020
- Testosterone levels in older men - October 17th, 2020
- Tlando Testosterone Clinical Trial for Low-T and Fatty Liver Disease - October 4th, 2020
- Testosterone Focus in Diabetes Study – Video - September 30th, 2020
- Testshock Review All Natural Testosterone Enhancement – Video - September 30th, 2020
- Testosterone, Anxiety, and Depression - September 30th, 2020
- Average Testosterone Levels Decreasing Over Time Among Younger American Men - August 21st, 2020
- Testosterone Creams for Low Testosterone Treatment and Andropause - August 10th, 2020
- Testosterone Therapy and Androgen Deficiency Guide - August 6th, 2020
- Testosterone's Surprising Link to Men's 'Love Hormone' Oxytocin - August 5th, 2020
- Fortesta Brand Testosterone Therapy - August 3rd, 2020
- Andropause: Age-Associated Testosterone Decline - August 1st, 2020
- How to Build Muscle Quickly by Boosting Testosterone Levels - July 29th, 2020
- Testosterone Deficiency Strongly Linked to Heart Attack Risk in New Study - July 26th, 2020
- Seven Types of Drugs That Can Inhibit Sex Drive and Libido - July 22nd, 2020
- Testosterone and Geriatric Frailty - July 21st, 2020
- Testosterone and Aggression: How T-Levels Impact Human Response to External, Social Threats - July 12th, 2020
- High-Dose Testosterone Injections May Be a Viable Palliative Late-Stage Prostate Cancer Treatment - July 12th, 2020
- Could Civilization Have Been Formed as a Result of Declining Testosterone Levels in Males? - July 6th, 2020
- Testosterone Therapy Allows Man to Have the Body That He Was Meant to Have - July 5th, 2020
- Testosterone Injections for Low-T and Andropause - July 4th, 2020
- Testosterone Replacement Therapy (TRT) Reduces the Risk of Serious Adverse Health Consequences! - June 30th, 2020
- More Sex: A Better Way to Boost Your Testosterone Levels - June 29th, 2020
- Testosterone not always to blame - Sat, 04 Aug 2012 PST - June 28th, 2020
- Five Facts About Testosterone (That Maybe You Didn't Know) - June 27th, 2020
- Manhood Washed Away: You Could Unknowingly be Annihilating Your Testosterone - June 23rd, 2020
- Testosterone: Should You Take it to Regain Your Libido and Youthful Energy? - June 22nd, 2020
- Testosterone Replacement Therapy Boosts Aerobic Capacity - June 15th, 2020
- Physiology of Testosterone - June 9th, 2020
- The Truth Behind Common Male Sex Myths - May 26th, 2020
- Are Athletes Using Green Tea to Mask Testosterone Doping? - May 7th, 2020
- Some Animal Research Suggests that High Testosterone May Increase Prostate Cancer Risk - May 5th, 2020
- Eleven Foods that Can Drain Your Libido - May 4th, 2020
- Testosterone Can Make Us Generous, But Only When We Do Not Perceive a Threat - May 3rd, 2020
- A New Link Between Testosterone and the Prevention of Dementia in Women - May 3rd, 2020
- Is Being a Lumberjack More Manly Than a Football Player? It's All in the Testosterone! - April 28th, 2020
- Testosterone Drug, Androxal, Helped Gay Cubans Have More Sex - April 10th, 2020
- Androxal Meets its Testosterone Study Goals - April 1st, 2020
- Testosterone Replacement Beneficial for Modern Men? - February 11th, 2020
- Low on Testosterone? No Problem! - February 10th, 2020
- Dr. Richard Bebb - Testosterone, Diabetes and the Metabolic Syndrome - Video - January 21st, 2020
- New Study Finds That Testosterone Does Not Increase Cardiovascular Risk - September 2nd, 2019
- Baby Boomers find “The Fountain of Youth” in Testosterone - September 2nd, 2019
- Declining Testosterone Levels in Men Not Part of Normal Aging - August 12th, 2019
- Low Testosterone Levels may Affect Man's Sex Drive and Affect his Intimate Relationships - August 11th, 2019
- TEFINA: Nasal Spray That Can Increase Female Orgasms - August 10th, 2019
- Quick Weight Loss Tips and Diet Recommendations for HRT - August 10th, 2019
- Testosterone and Alcohol: Your Health and the Holiday Season - August 9th, 2019
- Testosterone builds muscle but has risks - August 4th, 2019
- Testosterone, the Power Hormone - August 1st, 2019
- Behavior and Lifestyle Linked to the Effect of Declining Testosterone, Not Necessarily Natural Aging - July 31st, 2019
- BUSTED: Myths About Testosterone And Its Link To Sexual Desire In Men And Women - July 28th, 2019
- Some experts say testosterone decline is a normal part of aging in men - July 14th, 2019
- The Secret to Guys Sex Appeal: Low Stress, High Testosterone, Strong Immunity - July 7th, 2019
- Is Testosterone the New Drug of Choice on Wall Street? How Traders are Using Male Hormone Booster Shots to Maintain a ... - July 4th, 2019
- The Effects of Parenthood Upon Testosterone Levels - April 22nd, 2019
- Testicular Cancer Survivors are at Risk for Low Testosterone - April 21st, 2019
- Amygdala and it's Relationship to Testosterone and Fear - April 19th, 2019
- Testosterone Does Not Cause Atherosclerosis (Hardening of the Arteries) in Older Men - April 19th, 2019
- Increased Testosterone DOES NOT Cause Prostate Cancer to Spread - April 19th, 2019
- Testosterone Cypionate and Testosterone Enanthate: The Real Facts - April 19th, 2019
- A Surprising Side Effect of Methadone Treatment: Suppressed Testosterone - April 19th, 2019
- Low T - My life was falling apart because I had low testosterone - April 16th, 2019
- What Is Testosterone AndroGel - April 2nd, 2019
- How long does it take for Testosterone replacement treatments and therapy to work? - April 2nd, 2019
- The Testosterone Industry Globally is Booming - April 1st, 2019
- Five Benefits of Testosterone That You Need to Know - March 31st, 2019
- Testosterone Nasal Gel: A New Form of Testosterone Replacement Therapy - March 17th, 2019
- New Research Proves Testosterone Replacement Therapy is Safe for the Heart - March 17th, 2019
- Skinny Bartender with Low Testosterone Becomes a Ripped Bodybuilder - March 16th, 2019
- Low-T and Your Health - August 17th, 2018
- What is Testosterone? What does Testosterone do? Find on - August 9th, 2016
- The Truth About Testosterone | The Dr. Oz Show - June 9th, 2016
- How Men Work | HowStuffWorks - May 28th, 2016
- 6 Ways to Increase Testosterone Levels Naturally - wikiHow - May 4th, 2016
- Testosterone: Common Questions | Testosterone Test: Total ... - May 4th, 2016
- How to Lower Testosterone in Women | eHow - February 8th, 2016
Word Count: 701