For the first time scientists have identified genes that influence whether we are financial risk-takers or not. These two genes regulate the hormones dopamine and serotonin that are involved in brain-signalling and affect mood, novelty-seeking and the sense of reward. Researchers from Northwestern University, US, found that people who inherit a certain version of these genes tend to favour investments that, while potentially more profitable, involve greater levels of risk. The same genes have previously been linked to negative emotions and addiction says PLoS ONE journal, where the findings were published.
The study involved 65 subjects (26 of which were male, average age of 22) who had to make decisions about how to invest 30 dollars of real money in a computerised investment game. The game involved 96 trials where the participants had to choose between a risk-free investment with a guaranteed rate of return (typically +3 per cent) or a risky investment with two possible and equally likely outcomes (e.g. +20 per cent or -10 per cent return).They were not told how much money they won or lost in each trial until the experiment was over.
After the investment tasks were complete each participant provided a saliva sample so researchers could genotype their DNA. It was found that people with two short versions of the serotonin-regulating gene 5HTTLPR, invested 28 per cent less of their money in the risky assets than people with at least one copy of the long version of that gene. Conversely, those who had the long version of the dopamine regulating gene DRD4, invested 25 per cent more of their money in the risky assets than those with the short version of the gene.
Researcher Dr Camelia Kuhnen commented on the findings, saying: 'As we sort through the devastating consequences of this financial crisis, it might be useful to note how our genetic heritage is influencing our economic behaviour.' However, she cautioned that less than 30 per cent of the variations in risk-taking behaviour can be accounted for by genes and the rest comes from experience, upbringing and culture. 'Keep in mind risk-taking in the marketplace may be the result of the genetic makeup of traders and investors, their past experiences in the stock market or their cultural background', she said.
Other research being conducted by an ex-trader, Dr John Coates, at the University of Cambridge, UK, indicates that the hormone testosterone may also partly influence financial decisions and risk-taking. 'If that is true, the answer may be to have more women and older men controlling the market', he said.