Low- and high-testosterone individuals exhibit decreased aversion to economic risk

Testosterone is positively associated with risk-taking behavior in social domains (e.g., crime, physical aggression). However, the scant research linking testosterone to economic risk preferences presents inconsistent findings. We examined the relationship between endogenous testosterone and individuals' economic preferences (i.e., risk preference, ambiguity preference, and loss aversion) in a large sample (N = 298) of men and women. We found that endogenous testosterone levels have a significant U-shaped association with individuals' risk and ambiguity preferences, but not loss aversion. Specifically, individuals with low or high levels of testosterone (more than 1.5 SD from the mean for their gender) were risk and ambiguity neutral, whereas individuals with intermediate levels of testosterone were risk and ambiguity averse. This relationship was highly similar in men and women. In contrast to received wisdom regarding testosterone and risk, the present data provide the first robust evidence for a nonlinear association between economic preferences and levels of endogenous testosterone.