Now that the bad news is out of the way, on to the helpful part.
Scientists have long known about the link between gender and financial risk taking. As research from U.K.-based Rplan recently reinforced, appetite for risk tends to come with a Y chromosome. Men are more likely to gamble while women tend to make more conservative choices.
"35% of investment by males is in high risk funds versus 28% for females," according to data published by the investment website, "with males taking more risk and females opting for more caution." By the same token, men put their money in "low risk" investments at about three-quarters the rate that women do.
The data confirms what academics have long known: when it comes to money, men are the risk takers. Men are more likely to strike it rich than their female counterparts and also more likely to go absolutely broke. Women, on the other hand, tend to insulate themselves from the big losses, even when it costs them money that they might otherwise have earned. Men like stocks; women prefer bonds and funds.
On the other hand, men probably can't take as much comfort in this get rich or die trying philosophy, given that they generally think we know more about investing than they really do.
According to Professor Paola Sapienza of Northwestern University, however, this is all just the tip of the iceberg. The real issue isn't gender but testosterone, and it influences just about every decision we make when it comes to money and our careers.
"We know from other work that women are generally more risk averse than men, and we also know that on average women have less testosterone than men," Sapienza said. "So we asked the question whether it is this difference in testosterone level that drives this."
To test her theory, Sapienza and her colleagues ran a series of experiments with MBA students at the University of Chicago. Participants were asked to play a series of games involving financial decision-making, and then quizzed afterwards to get their responses to both money and life choices. The experiment also took samples of each student's saliva both to measure testosterone levels both before and after.
"We found a remarkable correlation," Sapienza said, "within the women's sample between risk aversion and testosterone level. Interestingly this led to careers for women that were correlated with risk, so the women that were more risk-lovers, they tend to have a higher testosterone were more likely to take jobs with careers that were risky, mainly in finance and consulting."
In fact, running their experiment at a business school almost skewed the results, as the researchers found that their female MBA students entered with higher baseline testosterone than women in general. It turns out that appetite for risk not only influences our financial decisions but also has a large effect on how we guide our careers.
While much of the research in this field has focused on how gender impacts our financial decisions, including the discovery that companies with better board-level representation of women weathered the 2008 crisis better than their all-male counterparts, the question of how risk management contributes to career gender gaps has often been left alone.
Yet it's entirely possible that testosterone's influence, or lack thereof, contributes to gender gaps in both pay and promotions. Women, who generally have lower baseline levels of testosterone, are less likely to push for promotions or raises in the workplace, often considered a dangerous move for an employee. They also avoid high-pressure careers at a greater rate than men.
"We know that women, even women that are very well prepared, they're less likely to take some careers," Sapienza said. "The two big questions are do they do this because they're discriminated against [or] do they do this because they prefer not to, maybe because they expect to be too lonely. Is it a risk preference choice?"
Of course, Sapienza was quick to point out, risk preference doesn't explain everything away in a neat package. Gender gaps in pay and promotions are greater than risk preference alone explains away, and many women choose certain professions because they simply have different tastes than men. For example, research has shown that women tend to gravitate towards careers that focus on interpersonal interaction while men are more focused on compensation.
What's more, appetite for risk isn't a constant, because testosterone levels aren't constant. They can change based on external factors such as mood and environment. Many professions that we consider high pressure and high risk, such as investment banking, aren't necessarily responding to external demands. They're built from within, and the system is self-reinforcing.
In a risk-taking, aggressive environment testosterone will spike. In fact, even just after asking a few questions and challenging students to play a game Sapienza and her colleagues discovered that students had far higher testosterone levels than before. In a Wall Street bank, those effects will be magnified. Workers in an environment that encourages high risk, high reward attitudes will become more accustomed to that environment, not just psychologically but also biologically.
It's easy for a firm to become a one-way ratchet, with nothing to step the culture back from the same attitudes we see in 80's movies and Red Bull commercials.
If women and men with lower levels of testosterone are turned off by environments like this, it's worth asking whether that's because a firm necessarily needs to operate on a high-risk, high-reward, always-on business model, or because the office has become a sort of self-reinforcing pressure cooker.
"Are these careers inherently risky," Sapienza said, speaking of the jobs her MBA students talk about, "because they should be risky, or is it because they're dominated by men and men prefer to set it up that way? This is an old debate. We hear that some careers are not very conducive to women because the meetings are being set up at 5 a.m. but we don't ask, 'Well, why should the meetings be set up at 5 a.m.?'… Or, is this the optimal compensation in the financial industry where your fixed salary is very low and you have these big bonuses? Or is that the compensation that's been set for this particular group of people?"
However women can adjust quickly to a risk taking culture, as the effects of higher testosterone were particularly noticeable among the female MBA students that Sapienza studied.
"For women mainly, but not so much for men, higher testosterone leads to less risk aversion," she said and theorized that it has to do with the fact that men start with such a high baseline compared to women. Moving from a medium or low level of testosterone will have an outsized impact, the hypothesis goes, relative to moving from high to very high.
In other words, men come into the room ready to roll the dice. Women just need to warm up a little first.
How does all of this link back to having sex? Well, it turns out sex can actually increase the production of testosterone in the body. So maybe log out of E-Trade before your next date night.
-- Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website A Wandering Lawyer.