Anyone who has seen Martin Scorsese's 2013 film "The Wolf of Wall Street" is familiar with the idea of Wall Street traders living on a perpetual high, as the movie portrays something of a caricature on the industry - but a new study has shown there might be some truth behind this, as it seems hormones testosterone and cortisol play a huge part in traders' decision-making.
Researchers at Imperial College in London have found that those stock traders with high levels of testosterone and cortisol, the former of which is a hormone associated with s*x, are more prone to make hasty and erratic decisions.
According to Daily Times Gazette, the research on testosterone and cortisol was the brainchild of Dr. Ed Roberts from the English university, as he considers stock traders to have highly taxing jobs that force them to be on their toes at all times, not unlike elite athletes.
The Monitor Daily reports that, for the investigation, researchers injected varying levels of cortisol and testosterone on 75 men from 18 to 30 years of age, who were put in an environment where they had to simulate the stressful conditions stock brokers live with at all times.
Then, the research team observed how men with varying degrees of cortisol and testosterone in their bodies reacted to the pressure of stock trading, and the results were fairly interesting: in all, those with higher levels made far more rash and irrational decisions, even being familiar with the market.
Cortisol is called a "stress hormone," as it increases in high-pressure situations, while testosterone, usually associated with sex, can increase volatility.
"The results suggest that cortisol and testosterone promote risky investment behavior in the short run," said Roberts about the testosterone and cortisol study, according to The Daily Mail. "We only looked at the acute effects of the hormones in the lab. It would be interesting to measure traders' hormone levels in the real world and see what the longer-term effect might be."
