Tech & Biz

World Financial Crisis - it's all in the genes

by LotusFlower | February 11, 2009 at 11:18 pm

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New research indicates that financial risk taking could be genetic with those prepared to take the most financial risk having a particular genetic make up.

This could mean that the extravagant risk taking behaviour of senior financial managers within the banking and world money markets that has led to the world financial crisis could in fact be in part due to their genes.

It's not known if those leading our financial institutions into crisis did have the DRD4 7-repeat allele gene but this new research shows that carriers take 25% more financial risk than individuals without the 7-repeat allele.

If a genetic link between extra financial risk takers is further proved and evidence found that those involved with the causes of the world financial downturn had the gene in question then this could open the door to genetic testing of prospective share and money market dealers.

Such a link will be difficult to prove without the cooperation of the main players in the financial crisis coming forward to let themselves be genetically screened and this is unlikely to happen.

Individuals vary in their willingness to take financial risks. Here we show that variants of two genes that regulate dopamine and serotonin neurotransmission and have been previously linked to emotional behavior, anxiety and addiction (5-HTTLPR and DRD4) are significant determinants of risk taking in investment decisions. We find that the 5-HTTLPR s/s allele carriers take 28% less risk than those carrying the s/l or l/l alleles of the gene. DRD4 7-repeat allele carriers take 25% more risk than individuals without the 7-repeat allele. These findings contribute to the emerging literature on the genetic determinants of economic behavior.

Citation: Kuhnen CM, Chiao JY (2009) Genetic Determinants of Financial Risk Taking. PLoS ONE 4(2): e4362. doi:10.1371/journal.pone.0004362

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