Second-to-fourth digit ratio predicts success among high-frequency financial traders

John M. Coates, Mark Gurnell, Aldo Rustichini

Research output: Contribution to journalArticlepeer-review

192 Scopus citations

Abstract

Prenatal androgens have important organizing effects on brain development and future behavior. The second-to-fourth digit length ratio (2D:4D) has been proposed as a marker of these prenatal androgen effects, a relatively longer fourth finger indicating higher prenatal androgen exposure. 2D:4D has been shown to predict success in highly competitive sports. Yet, little is known about the effects of prenatal androgens on an economically influential class of competitive risk taking - trading in the financial world. Here, we report the findings of a study conducted in the City of London in which we sampled 2D:4D from a group of male traders engaged in what is variously called "noise" or "high-frequency" trading. We found that 2D:4D predicted the traders' long-term profitability as well as the number of years they remained in the business. 2D:4D also predicted the sensitivity of their profitability to increases both in circulating testosterone and in market volatility. Our results suggest that prenatal androgens increase risk preferences and promote more rapid visuomotor scanning and physical reflexes. The success and longevity of traders exposed to high levels of prenatal androgens further suggests that financial markets may select for biological traits rather than rational expectations.

Original languageEnglish (US)
Pages (from-to)623-628
Number of pages6
JournalProceedings of the National Academy of Sciences of the United States of America
Volume106
Issue number2
DOIs
StatePublished - Jan 13 2009

Keywords

  • 2D:4D
  • Market selection
  • Neuro-economics
  • Risk taking
  • Testosterone

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