Advertisement

Journal of Risk and Uncertainty

, Volume 42, Issue 1, pp 1–26 | Cite as

Digit ratios (2D:4D) as predictors of risky decision making for both sexes

  • Ellen Garbarino
  • Robert SlonimEmail author
  • Justin Sydnor
Article

Abstract

Many important decisions involve financial risk, and substantial evidence suggests that women tend to be more risk averse than men. We explore a potential biological basis of risk-taking variation within and between the sexes by studying how the ratio between the length of the second and fourth fingers (2D:4D) predicts risk-taking. A smaller 2D:4D ratio has been linked to higher exposure to prenatal testosterone relative to estradiol, with men having lower ratios than women. In financially motivated decision-making tasks, we find that men and women with smaller 2D:4D ratios chose significantly riskier options. We further find that the ratio partially explains the variation in risk-taking between the sexes. Moreover, for men and women at the extremes of the digit-ratio distribution the difference in risk-taking disappears. Thus, the 2D:4D ratio partially explains variation in financial risk-taking behavior within and between sexes and offers evidence of a biological basis for risk-taking behavior.

Keywords

Risk Sex differences Experiments Testosterone 

JEL Classification

C9 D81 

Notes

Acknowledgements

We thank Rachel Croson, John Manning, numerous seminar participants, an anonymous referee and the Journal of Risk and Uncertainty Editorial Board for useful comments on this project. Special thanks to Angelo Benedetti and Jason Cairns for invaluable research assistance. This project was supported by a grant from the Kauffman Foundation.

References

  1. Apicella, C. L., Dreber, A., Campbell, B., Gray, P. B., Hoffman, M., & Little, A. C. (2008). Testosterone and financial risk preferences. Evolution and Human Behavior, 29, 384–390.CrossRefGoogle Scholar
  2. Arnold, A. P., & Breedlove, S. M. (1985). Organizational and activational effects of sex steroids on brain and behavior: a reanalysis. Hormones and Behavior, 19(4), 469–498.CrossRefGoogle Scholar
  3. Austin, E. J., Manning, J. T., McInroy, K., & Mathews, E. (2002). A preliminary investigation of the association between personality, cognitive ability and digit ratio. Personality and Individual Differences, 33, 1115.CrossRefGoogle Scholar
  4. Ball, S., Eckel, C., & Heracleous, M. (2010). Risk aversion and physical prowess: prediction, choice and bias. Journal of Risk and Uncertainty, 41(3), 167–193.CrossRefGoogle Scholar
  5. Binswanger, H. P. (1980). Attitudes toward risk: experimental measurement in rural India. American Journal of Agricultural Economics, 62, 395–407.CrossRefGoogle Scholar
  6. Binswanger, H. P. (1981). Attitudes toward risk: theoretical implications of an experiment in rural India. The Economic Journal, 91, 867–890.CrossRefGoogle Scholar
  7. Brooks, P., & Zank, H. (2005). Loss averse behavior. Journal of Risk and Uncertainty, 31(3), 301–325.CrossRefGoogle Scholar
  8. Burnham, T. (2007). High-testosterone men reject low Ultimatum Game offers. Proceedings of the Royal Society B, 274, 2327–2330.CrossRefGoogle Scholar
  9. Byrnes, J. P., Miller, D. C., & Schafer, W. D. (1999). Gender difference in risk-taking: a meta-analysis. Psychological Bulletin, 125(3), 367–383.CrossRefGoogle Scholar
  10. Cesarini, D., Dawes, C. T., Fowler, J. H., Johannesson, M., Lichtenstein, P., & Wallace, B. (2008). Heritability of cooperative behavior in the trust game. Proceedings of the National Academy of Sciences USA, 105(10), 3721–3726.CrossRefGoogle Scholar
  11. Cesarini, D., Dawes, C. T., Johnnesson, M., Lichtenstein, P., & Wallace, B. (2009). Genetic variation in preferences for giving and risk-taking. Quarterly Journal of Economics, 124, 809–842.CrossRefGoogle Scholar
  12. Chen, Y., Katsucak, P., & Ozdenoren, E. (2009). Why can’t a woman bid like a man? Working paper.Google Scholar
  13. Cleave, B., Nikiforakis, N., & Slonim, R. (2010). Is there selection bias in laboratory experiments? Working paper.Google Scholar
  14. Coates, J. M., & Hebert, J. (2008). Endogenous steroids and financial risk-taking on a London trading floor. Proceedings of the National Academy of Sciences USA, 105(16), 6167–6172.CrossRefGoogle Scholar
  15. Coates, J. M., Gurnell, M., & Rustichini, A. (2009). Second-to-fourth-digit ratio predicts success among high frequency financial traders. Proceedings of the National Academy of Sciences USA, 106(2), 623–628.CrossRefGoogle Scholar
  16. Croson, R., & Gneezy, U. (2009). Gender differences in preferences. Journal of Economic Literature, 47(2), 448–474.CrossRefGoogle Scholar
  17. Csatho, A., Osvath, A., Bicsak, E., Karadi, K., Manning, J. T., & Kallai, J. (2003). Sex role identity related to the ratio of second to fourth digit length in women. Biological Psychology, 62, 147–156.CrossRefGoogle Scholar
  18. Daruvala, D. (2007). Gender, risk and stereotypes. Journal of Risk and Uncertainty, 35(3), 265–283.CrossRefGoogle Scholar
  19. DeBruine, L. M. (2004). AutoMetric software for measurement of 2D:4D ratios, from www.facelab.org/debruine/Programs/autometric.php, accessed June 24, 2008.
  20. DeLeire, T., & Levy, H. (2001). Gender, occupation choice and the risk of death at work. National Bureau of Economic Research, Working Paper 8574.Google Scholar
  21. Dohmen, T., Falk, A., Huffman, D., & Sunde, U. (2007). Are risk aversion and impatience related to cognitive abilities? IZA Discussion Paper 2735.Google Scholar
  22. Dreber, A., & Hoffman, M. (2007). Portfolio selection in Utero. Mimeo, Stockholm School of Economics.Google Scholar
  23. Eckel, C., & Grossman, P. (2002). Sex differences and statistical stereotyping in attitudes towards financial risks. Evolution and Human Behavior, 23(4), 281–295.CrossRefGoogle Scholar
  24. Eckel, C. C., & Grossman, P. J. (2008). Forecasting risk attitudes: an experimental study of actual and forecast risk attitudes of women and men. Journal of Economic Behavior & Organization, 68(1), 1–17.CrossRefGoogle Scholar
  25. Fink, B., Neave, N., Laughton, K., & Manning, J. T. (2006). Second and fourth digit ratio and sensation seeking. Personality and Individual Differences, 41, 1253–1262.CrossRefGoogle Scholar
  26. Gneezy, U., & Potters, J. (1997). An experiment on risk taking and evaluation periods. Quarterly Journal of Economics, 112(2), 631–645.CrossRefGoogle Scholar
  27. Goy, R., & McEwen, B. (1980). Sexual differentiation of the brain. Cambridge: MIT.Google Scholar
  28. Harrison, G., & Rutström, E. E. (2008). Risk Aversion in the Laboratory. In J. C. Cox & G. W. Harrison (Eds.), Research in experimental economics, 12 (pp. 41–196). Bingley: Emerald Group Publishing Limited.Google Scholar
  29. Honekopp, J., Bartholdt, L., Beier, L., & Liebert, A. (2007). Second to fourth digit length ratio (2D:4D) and adult sex hormone levels: new data and a meta-analytic review. Psychoneuroendocrinology, 32, 313–321.CrossRefGoogle Scholar
  30. Kahneman, D., & Tversky, A. (1979). Prospect theory: an analysis of decision under risk. Econometrica, 47, 263–292.CrossRefGoogle Scholar
  31. Kempel, P., Gohlke, B., & Kelmpau, J. (2005). Second-to-fourth digit length, testosterone and spatial ability. Intelligence, 33, 215.CrossRefGoogle Scholar
  32. Kemper, C. J., & Schwerdtfeger, A. (2008). Comparing different methods of digit ratio (2D:4D) measurement. American Journal of Human Biology, 21(2), 188–191.CrossRefGoogle Scholar
  33. Kondo, T., Zakany, J., Innis, J. W., & Duboule, D. (1997). Of fingers, toes and penises. Nature, 390(6655), 29.CrossRefGoogle Scholar
  34. Leeth, J. D., & Ruser, J. (2003). Comparing wage differentials for fatal and nonfatal injury risk by gender and race. Journal of Risk and Uncertainty, 27(3), 257–277.CrossRefGoogle Scholar
  35. Lutchmaya, S., Baron-Cohen, S., & Raggett, P. (2004). 2nd to 4th digit ratios, fetal testosterone and estradiol. Early Human Development, 77, 23.CrossRefGoogle Scholar
  36. Manning, J. T. (2002). Digit ratio: A pointer to fertility, behavior and health. New Jersey: Rutgers University Press.Google Scholar
  37. Manning, J. T., & Bundred, P. E. (2000). The ratio of 2nd to 4th digit length. Medical Hypotheses, 54, 855.CrossRefGoogle Scholar
  38. Manning, J. T., & Taylor, R. P. (2001). Second to fourth digit ratio and male ability in sport: implications for sexual selection in humans. Evolution and Human Behavior, 22, 61–69.CrossRefGoogle Scholar
  39. Manning, J. T., Baron-Cohen, S., Whellwright, S., & Sanders, G. (2001). The 2nd to 4th digit ratio and autism. Developmental Medicine and Child Neurology, 143, 160–164.Google Scholar
  40. Manning, J. T., Henzi, P., & Venkatramana, P. (2003). 2nd to 4th digit ratio: ethnic differences and family size in English, Indian and South African populations. Annals of Human Biology, 30, 579–588.CrossRefGoogle Scholar
  41. Manning, J. T., Stewart, A., Bundred, P. E., & Trivers, R. L. (2004). Sex and ethnic differences in 2nd to 4th digit ratio of children. Early Human Development, 80, 161–168.CrossRefGoogle Scholar
  42. McCarthy, M. M., & Konkle, A. T. M. (2005). When is a sex difference not a sex difference? Frontiers in Neuroendocrinology, 26(2), 85–102.CrossRefGoogle Scholar
  43. McIntyre, M. H., Ellison, P. T., Lieberman, D. E., Demerath, E., & Towne, B. (2005). The development of sex differences in digital formula from infancy to the Fels Longitudinal Study. Proceedings of the Royal Society B, 272(157), 1473–1479.CrossRefGoogle Scholar
  44. Meier-Pesti, K., & Penz, E. (2008). Sex or gender? Expanding the sex-based view by introducing masculinity and femininity as predictors of financial risk-taking. Journal of Economic Psychology, 29, 180–196.CrossRefGoogle Scholar
  45. Murnighan, J. K., Roth, A. E., & Shoumaker, F. (1987). Risk aversion and bargaining: some preliminary results. European Economic Review, 31, 265–271.CrossRefGoogle Scholar
  46. Murnighan, J. K., Roth, A. E., & Shoumaker, F. (1988). Risk aversion in bargaining: an experimental study. Journal of Risk and Uncertainty, 1(1), 101–124.CrossRefGoogle Scholar
  47. Neave, N., Laing, S., Fink, B., & Manning, J. T. (2003). Second to fourth digit ratio. Proceedings of the Royal Society of London. Series B, 270, 2167.CrossRefGoogle Scholar
  48. Sapienza, P., Zingales, L., & Maestripieri, D. (2009). Gender differences in financial risk aversion and career choices are affected by testosterone. Proceedings of the National Academy of Sciences USA, 106(36), 15268–15273.CrossRefGoogle Scholar
  49. Sulloway, F., & Zweigenhaft, R. (2010). Birth order and risk taking in athletics: a meta-analysis and study of Major League Baseball. Personality and Social Psychology Review, Online April 30, 2010.Google Scholar
  50. Tester, N., & Campbell, A. (2007). Sporting achievement: what is the contribution of digit ratio? Journal of Personality, 75(4), 663–677.CrossRefGoogle Scholar
  51. Tversky, A., & Kahneman, D. (1992). Advances in prospect theory: cumulative representation of uncertainty. Journal of Risk and Uncertainty, 5(4), 297–323.CrossRefGoogle Scholar
  52. van Anders, S. M., & Hampson, E. (2005). Testing the prenatal androgen hypothesis: measuring digit ratios, sexual orientation, and spatial abilities in adults. Hormones and Behavior, 47, 92–98.CrossRefGoogle Scholar
  53. Wallace, B., Cesarini, D., Lichtenstein, P., & Johannesson, M. (2007). Heritability of ultimatum game responder behavior. Proceedings of the National Academy of Sciences USA, 104, 15631–15634.CrossRefGoogle Scholar
  54. Weiss, S., Firker, A., & Hennig, J. (2007). Associations between the second to fourth digit ratio and career interests. Personality and Individual Differences, 43, 485–493.CrossRefGoogle Scholar
  55. Wilcox, N. (2009). ‘Stochastically more risk-averse:’ a contextual theory of stochastic discrete choice under risk. Journal of Econometrics. doi: 10.1016/j.jeconom.2009.10.012.Google Scholar
  56. Williams, J. H. G., Greenhalgh, K. D., & Manning, J. T. (2003). Second to fourth digit ratio and possible precursors of developmental psychopathology in preschool children. Early Human Development, 72, 57–65.CrossRefGoogle Scholar
  57. Zethraeus, N., Kocoska-Maras, L., Ellingsen, T., von Schoultz, B., Linden Hirschberg, A., & Johannesson, M. (2009). A randomized trial of the effects of estrogen and testosterone on economic behavior. Proceedings of the National Academy of Sciences USA, 106(16), 6535–6538.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Department of Marketing, Faculty of Economics and BusinessUniversity of SydneySydneyAustralia
  2. 2.School of Economics, Faculty of Arts and Social SciencesUniversity of SydneySydneyAustralia
  3. 3.Actuarial Science, Risk Management, and Insurance Department, Wisconsin School of BusinessUniversity of WisconsinMadisonUSA

Personalised recommendations