Prenatal testosterone predicts financial risk taking: Evidence from Latin America

- Prenatal testosterone and risk were related in a homogeneous non-Caucasian population.
- The relation is significant for the left hand but not for the right hand.
- The relation is weak and better captured by binary than by ordered models.
- The relation was found for both 2D:4D and rel2.
- Higher prenatal exposure to testosterone increases the choice of risky lotteries.

Most research on the relation between steroid hormones and risky behavior has been done for Caucasian populations using 2D:4D. Some articles with ethnically mixed samples were not conclusive. We studied the relation between prenatal exposure to testosterone (T) and financial risk in a Colombian population (89 male, 34 female). Colombian population is the result of miscegenation among Amerindian, Spanish and African groups. Prenatal exposure to T was proxied by 2D:4D and rel2 digit ratios. Risk behavior was elicited by the choice of a lottery in a 50%-50% Eckel and Grossman task with actual monetary payoffs. People with higher prenatal T exposure (lower left-hand 2D:4D, rel2 ratios) tend to choose more risky lotteries, although the effect is weak and better captured in binary-choice than in ordered-logit models. Results are statistically significant for the left hand but not for the right hand. An increment of one standard deviation in the 2D:4D/rel2 of the left hand diminishes the probability of taking the riskier lotteries by 8%/10%.