Is Financial Risk-Taking Genetic? Kellogg Prof Says, Yes!

Wall Street’s fallen can now legitimately cry, “My genes made me do it!”  The first study to link risk-taking in the marketplace with the genetic makeup of traders and investors appears in the latest issue of Kellogg Insight from the Kellogg School of Management at Northwestern University. Finance professor Camelia Kuhnen and psychology professor Joan Chiao tapped into advances in neuroscience methodology, as well as emerging research on the effects of the neurotransmitters serotonin and dopamine on decision-making, and found that variations in certain genes that regulate brain chemicals can be linked to financial investment risk-taking.

“Our research pinpoints, for the first time, the roles that specific variants of the serotonin transporter gene and the dopamine receptor gene play in predicting whether people are more or less likely to take financial risks,” says Kuhnen. “It shows that individual variability in our genetic makeup effects economic behavior.”

There’s still a nurture side–experience and upbringing –to the risk-taking equation, but  the work of these researchers may put us closer to discovering the genetic drivers behind other compulsive behaviors, such as gambling and drug addiction. In the wake of the financial fallout, any clues as to why it all played out as it did are welcome.

“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 behavior,” says Chiao. “Think about how the excessive risks taken by just a few affected so many, from large institutions to average people.”

Check out their research article “Genetic Determinants of Financial Risk Taking” for the scientific nitty gritty.


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