Hormones: The New Economy Fall Guy
It might be just a coincidence, but as the market has reeled over the last few years there have been more and more scientific studies looking at one potential source of blame for dangerously risky financial behavior: our hormones. A study published in 2008 (that I wrote about with Joshua Boak in the Chicago Tribune) found that male financial traders with elevated levels of testosterone took more chances and performed better on a British trading floor. John Coates, one of the authors of that study, told me he was inspired to look at the influence of hormones on trading after observing unusual behavior from people in the financial world:
“I began to think that the people involved in this insanity were under the influence of some drug,” said Coates, who was a Wall Street trader. “When it was all over, they were like people in a hangover, they couldn’t believe they had bought some net company with no earnings, no interest plan, and lost all of their savings.”
An extension of that study recently took place not far from our home at the University of Chicago Medical Center, as 550 students from the University’s Booth School of Business were the subjects for an experiment on testosterone levels and career choice. That study, published in the Proceedings of the National Academy of Sciences this week, has stirred up a lot of media coverage, from the likes of The Economist and the Wall Street Journal. Authors from U. of C. and Northwestern found that testosterone does indeed correlate with risk-taking behavior – the higher your level of the hormone, the more risks you will take. The authors found no gender difference in this correlation; that is, women were just as susceptible to the effects of elevated testosterone levels on risk-taking as men. Testosterone levels also were found to influence career choice, as business students with higher testosterone levels and low risk-aversion tended to choose riskier careers in investment banking or trading.
Another fun fact from the article is that you can assess your prenatal testosterone exposure by measuring your fingers. Take the ratio between the length of your index finger and ring finger – the higher the ratio, the less testosterone you experienced in the womb. This ratio has been linked to everything from sexual preference to heart disease to athletic ability, and there is even a blog devoted to the latest finger-ratio news. Nothing surprises me any more on the internet.
Why Give Drugs When the Placebo Works Just As Well
An excellent and very long article in this month’s Wired by Steve Silberman looks at why the placebo effect in pharmaceutical trials has been increasing, and how that is bad, bad news for drug companies.
From 2001 to 2006, the percentage of new products cut from development after Phase II clinical trials, when drugs are first tested against placebo, rose by 20 percent. The failure rate in more extensive Phase III trials increased by 11 percent, mainly due to surprisingly poor showings against placebo. Despite historic levels of industry investment in R&D, the US Food and Drug Administration approved only 19 first-of-their-kind remedies in 2007—the fewest since 1983—and just 24 in 2008. Half of all drugs that fail in late-stage trials drop out of the pipeline due to their inability to beat sugar pills.
(Silberman also reveals a piece of industry jargon – “the futility boundary” – which should definitely be the name of an emo band.)
The placebo effect is a fascinating phenomenon that is both crucially important to how scientific experiments are conducted and, perhaps ironically, poorly understood by science. Silberman’s point that the placebo effect has been misappropriated as a mere obstacle for pharmaceutical approval rather than for its insight into our inherent biological healing processes is right on. But it’s also worth noting that the placebo effect can be put to nefarious uses as well. An amusing example of this is Obecalp, a sugar pill marketed to parents looking to basically trick their children out of minor illnesses. More disturbing is the rise of overseas stem-cell clinics promising cures for a whole slew of currently untreatable diseases, from spinal cord injuries to blindness. Many of these clinics offer patient testimonials about how the treatment worked for them; my suspicion (informed by the lack of scientific proof for these therapies) is that the patients’ improvement is pure placebo effect, obtained at very high cost.
But Silberman gives an encouraging description of the increasing amount of research, here and abroad, into what neurobiological processes create the placebo effect. Tapping into those processes more directly might actually lead to new, more effective drug treatments, potentially making the boring old sugar pill one of the most important drugs in modern medicine.
A study finds that drinkers are less depressed than those who abstain from drink, a “suicidal planet” is discovered, and (in a finding that hits close to home) habitual multi-taskers perform worse on attention and cognitive tests. Now for a nice weekend of writing e-mails while watching soccer while folding laundry while listening to music while talking to my wife.