Whats to blame for the global financial meltdown? Is it the banks? The government? Greed? Try DNA. New research from scientists at Northwestern University has linked two specific genes to risk-taking in financial investment decisions.
The researchers started with the theory that many of the investors who took the excessive risks that led to the current financial crisis may carry two gene variants responsible for regulating dopamine and serotonin, brain chemicals that help us experience the pleasure of reward. To test their speculation, they gave 65 students $15 to make a series of investments, allowing them to spread their cash between risky and risk-free assets as they saw fit.
Before deciding how to bet their money, the subjects were told that the risk-free investments would net about 3-percent profit and the risky assets might have a return as high as 20-percent. As the participants (evenly divided between twenty-something men and women) made a series of 96 trades over the course of 90 minutes, they were continuously fed more money but werent clued in about the performance of their portfolios until the end of the exercise.
Just as the researchers predicted, people who possessed the two gene variants invested about 25 percent more on the riskier investments than those who didnt and the more money they were given, the more they gambled on riskier strategies. "Our research pinpoints, for the first time, the roles that specific gene variants play in predicting whether people are more or less likely to take financial risks," said Camelia M. Kuhnen, assistant professor of finance, Kellogg School of Management at Northwestern and one of the studys lead authors. "It shows that individual variability in our genetic makeup effects economic behavior."
