Traders and testosterone

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In the April 22 PNAS, Coates and Herbert report on a study of the correlation between testosterone/cortisol levels and performance by traders:
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.

I don't have access to the paper (it's behind the PNAS paywall), so I don't know if they address the obvious correlation/causation issues. If it's just the case that better results result in increased testosterone levels, that's not very interesting.

What's more interesting is the suggestion that there's some set of cognitive enhancements that would make you a a better trader. One interesting question is whether these traders are outperforming the market (contra the efficient market hypothesis) or just themselves. Even more interesting would be the (implied) claim that performance increases because of more risk-taking behavior. As I understand it, the general on conventional gambling is that it's not really to your benefit to get more aggressive and/or risk-taking.

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