Usually we accuse women of having hormone-driven behaviour, but do men have testosterone mood swings? Apparently they do. Men are at the mercy of their testosterone and sometimes adrenaline mood swings.
Lets take for example the ultimate arenas of the alpha male:
#1. Hockey Fights / Violent SportsFew places are more single-minded, avaricious, coarsely competitive, sharp-elbowed, and overwhelmingly male than violent macho sports. Testosterone driven men fighting over women, hockey pucks, who gets paid the most, side-checking and throwing punches.
The same can also be said for Ultimate Fighting, boxing, martial arts and a variety of other violent sports.
#2. The MilitaryMen with guns and permission to use it? Testosterone, stress, the constant threat of life and death, the emotional trauma of having friends die in combat? Its all an explosive cocktail recipe for disaster, corruption and bad behaviour. Its no wonder the suicide rate for soldiers is so high.
#3. High Finance
This is where risk-taking is the drink of choice and greed, at least until recently, was all good. Indeed some financiers argue that the current recession can be blamed on greedy and overly cocky male investors and bankers.
"I think a lot of it had to do with men not wanting to admit to other men that they didn't understand certain things that were happening," says Heather-Anne Irwin, a former investment banker and equity specialist, now with the Rotman School of Management. "There's a lot of bravado, aggression, guys trying to position themselves. It's easy for group-think to take over."
Especially in a place where money = status & power.
In the past, whenever anyone suggested that the finance culture is too aggressively male, a surge of foaming sexist ridicule was unleashed that women can't compete with men in high finance.
But that is no longer true. Now men are beginning to look like "too high risk" because male hysteria tends to take hold when groups of men begin to panic and spiral towards bad decisions."Clearly, something needs to change," says Howard Archer, a senior economist at IHS Global Insight in the U.K. "You can argue that men have made a right mess of it, and now the ladies should have a go."
A Cambridge University study points to a lot of non-economic reasons for the current American recession. Wall Street trader John Coates and neuroscientist Joe Herbert have discovered that it isn't calm calculation that drives markets up and down. Basic biochemical processes influence behaviour, they say, and should be taken into account for financial decision-making.
Last year, Coates and Herbert assessed the impact of the male hormone testosterone, which is tied to aggressiveness and risk-taking and well-known as a driving force in the finance world. They also examined the lesser-known "stress" hormone Cortisol, which affects mood and rises when a person is stressed or uncertain.
Before and after the day's trading they measured the hormone levels in the saliva of male traders at a London bank who spent their days buying and selling stocks, options, futures, currencies and other, more arcane derivatives. They're the type of hyperactive traders who are looking to make quick profits on daily trades.
What the researchers found was that a trader's morning testosterone level predicted his success during the day. Those with the highest levels made the highest profits, which in turn boosted their testosterone levels, their confidence and appetite for risk.
But prolonged high levels of testosterone start to have the opposite effect, leading to irrational or impulsive decision-making that can have disastrous consequences and result in a losing streak. For traders on a roll, said Coates, "several rounds of winning means testosterone so high they start taking stupid risks."
Market volatility also induces stress, which means the Cortisol hormone kicks in. When that happens their anxiety shoots up and so does their willingness to take stupid risks.
With Cortisol "you tend to see danger everywhere," Coates explained. "People get paralyzed by the fear. It takes over so that they're no longer thinking rationally. They're no longer doing the things that they should be doing to make money."
Long periods of Cortisol can make traders shun risk altogether, which then exaggerates any downward spirals. "Traders may feel the noxious effects of chronic cortisol exposure and end up in a psychological state known as `learned helplessness,'" said Coates. "If this happens, central banks may lower interest rates only to find that traders still refuse to buy risky assets."
These chemical swings could be partly responsible for market crashes and booms, say the researchers, and explains why market volatility tends to come in waves.
Its not just traders. The hormonal ups-and-downs of bankers, brokers, fund managers and executives play an even bigger role.
The solution to this problem? More women in boardrooms to bring some calm to the situation and lessen the hysteria so men aren't reduced to a testosterone and Cortisol driven mob mentality. Less than 20% of the people in high finance are female so increasing that to 40% should half the testosterone-based hysteria.Take Iceland for example. Its two large banks have collapsed and its swaggering male "Vikings" have just been replaced by women – appointed by the new female prime minister of Iceland. The goal? To make Iceland's stock market less driven by risk and testosterone and more stable.
Unfortunately taking risks is what high finance is all about and the women in the business have been trained to take calculated risks just like men do. But do their emotions effect how well they do in the day? Evidently another study is in order.
Perhaps gender isn't the issue at all. Another new study by Chicago's Northwestern University suggests it's genetics that determines how humans, regardless of sex, evaluate risk.
Researchers gave real money to 65 young men and women to make a series of computerized investments. They could make risk-free ones, yielding them a small return, or high-risk ventures that could bring a big gain – or a big loss.
DNA samples were taken from their saliva to analyze the serotonin levels, associated with impulsive behaviour, and dopamine, the "feel-good" chemical that's linked to decision-making. Those with a "long" version of a gene related to serotonin were 28% less willing to take a risk than those with the "short" version. Those with a particular gene related to dopamine were 25% more likely to make a risky investment.
There was no difference between females and males. The study concluded that a person's genetic makeup accounts for only about one-third of his or her attitude to risk. Experience, cultural background and upbringing play an even greater role.
I think however what we need to do is scrap this daily trading nonsense. We should have one trading session per week, or even per month. It will give people more time to evaluate their decisions and make a decision based on the last week of careful consideration.This business of buying and selling within minutes of each other so traders can make a half cent profit off several thousand shares is... frankly fruitless. What is even stupider is investment banks paying these people to trade other people's money, investing in Ponzi schemes, futures (futures is basically gambling on the future price of a commodity) and the amount of greed and corruption in the business.
As Citigroup CEO Vikram Pandit told a U.S. congressional hearing: "We understand the old model doesn't work."
