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The erotics of investing
When young men were shown erotic pictures, they were more likely to make a larger financial gamble than if they were shown a picture of something scary, such as a snake, or something neutral, such as a stapler, university researchers reported.
The arousing pictures lit up the same part of the brain that lights up when financial risks are taken.
...The study conforms with recent research that indicates men shown a pornographic movie were more likely to make riskier sexual decisions. Another suggests straight men think less about their financial future after being shown pictures of pretty women.
Here is more. One question -- and perhaps a more direct test of the hypothesis -- is whether traders in more sexually integrated firms do in fact behave differently. Or how about companies located next to modeling agencies? I suspect in real social settings the effect washes out, for reasons identified by Freud (among others) some time ago. The more literally minded among us might also question whether a stapler is in fact a neutral image. It isn't for me.
Posted by Tyler Cowen on April 6, 2008 at 01:13 PM in Economics | Permalink
Comments
Tyler, Both of your examples are different from the experiment because men in firms and next to modeling agencies are around the same women for a long time. They get used to the idea that no sex is on offer and ... go out to the bars. A big part of the mating game is the initial surge (so to speak) of interest in that other person, the ultimate person, the partner in making babies. Men take those risks because the reward is higher. If men know the women in the firm and that risk is not going to mean anything, they revert to baseline risk-taking, which is still higher in men. Note the interesting corollary: Incest is biologically/psychologically unattractive if you have lived with the person all your life, but happens more often if you meet a sibling (e.g., cousin) for the first time after reaching sexual maturity.
Posted by: David Zetland at Apr 6, 2008 1:45:02 PM
"I suspect in real social settings the effect washes out, for reasons identified by Freud (among others) some time ago."
Could you elaborate on this? I bet I'm not the only one who doesn't get this sentence.
Posted by: LemmusLemmus at Apr 6, 2008 2:19:08 PM
Is it a red Swingline stapler?
Posted by: at Apr 6, 2008 2:30:48 PM
I would imagine successful investors aren't nearly as effected by this sort of thing, if at all. Just another reason investing should largely be left up to professionals, like any other specialty...
Posted by: Grant at Apr 6, 2008 2:53:57 PM
I'll second Lemmus on that.
Posted by: Rachel at Apr 6, 2008 3:24:22 PM
The obvious next question is whether this effect is specific to erotic emotions, or if you'd get the same effect with other positive emotions. In other words, is sex special because you need to use sexy stimuli to get this effect, or is sex special because you need to use sexy stimuli to get this effect into the news?
Posted by: anon at Apr 6, 2008 3:25:18 PM
I sure hope no taxpayer money was used to fund this study.
Posted by: Peter at Apr 6, 2008 3:35:31 PM
(...)whether a stapler is in fact a neutral image.
- Look, children, here's a brick. What come to your mind when you see it? John?
- A big factory where such bricks are produced...
- Mary?
- All those fine new buildings that could be built of such bricks...
- Peter?
- Girls.
- Why on earth, Peter???
- Well, I think of them all the time anyway.
Posted by: Pretinieks at Apr 6, 2008 3:36:00 PM
A staple remover would have been a nice control image.
Posted by: BT at Apr 6, 2008 3:37:14 PM
This is pure garbage. I am not aware of any of the brokerages that employs the method (porn & trade)as presented by the researchers. Tyler are you aware of any?
The external validity (ability to generalize beyond the bounds of the experiment) of this study is zilch. What is to be generalized? We have no idea what the constructs that are being tested. What is the theoretical basis? Men who are aroused exhibit changes in judgment and perception. That is novel. How do we understand internal validity in this study? That is what is the causal mechanism We really can't beyond our common intuitive understanding of human. We just have statistical validity. Which leaves us with the old adage about lies and statistics. This research is pure garbage and offers nothing but false recognition for third class researchers.
Posted by: bee at Apr 6, 2008 3:55:55 PM
The more literally minded among us might also question whether a stapler is in fact a neutral image. It isn't for me.
Am I the only one who is puzzled by this comment? Should I be disturbed?
(kidding)
((maybe))
Posted by: bobvis at Apr 6, 2008 4:32:17 PM
I see this as another extension of the basic advertising saying "sex sells", as well as the old joke "God gave men a penis and a brain, but not enough blood to operate both effectively at the same time".
Posted by: mikesdak at Apr 6, 2008 4:39:37 PM
I see this as another extension of the basic advertising saying "sex sells", as well as the old joke "God gave men a penis and a brain, but not enough blood to operate both effectively at the same time".
Posted by: mikesdak at Apr 6, 2008 4:40:40 PM
My apologies. I have no idea why that posted twice.
Posted by: mikesdak at Apr 6, 2008 4:50:00 PM
"straight men think less about their financial future after being shown pictures of pretty women"
Is it any wonder that many men spend their life savings in strip clubs? Or on a lesser scale, a large chunk of their paycheck on buying pretty women drinks?
Posted by: axel molotov at Apr 6, 2008 4:54:11 PM
It seems people are discussing it with second-hand information. What people SHOULD be discussing is if such a sweeping conclusion can be drawn on a sample of 15 right-handed heterosexual males.
http://www.kellogg.northwestern.edu/faculty/kuhnen/htm/RESEARCH/KWKW_2008.pdf
1. If you actually look at Table 2, the number of subjects is 15 but the number of observations is 315.
2. This is the first result of this kind.
3. If you read the paper carefully, you will see that the authors do NOT make the kind of sweeping statements that media reports show.
Tapen
Posted by: Tapen Sinha at Apr 6, 2008 5:11:38 PM
I think Tim Harford would argue that this effect would disappear if you tested experienced traders, and not 15 (likely undergraduate) students at Stanford.
Posted by: stan at Apr 6, 2008 6:37:44 PM
My apologies. I have no idea why that posted twice.
Maybe your brain wasn't getting enough blood.
Posted by: Bernard Yomtov at Apr 6, 2008 6:52:56 PM
The effect was covered in the NYT by John Tierney long ago
here
Posted by: Ron Hardin at Apr 6, 2008 9:16:33 PM
im detecting a little too much faith in so-called "experienced investors" from some of this crowd
Posted by: fity at Apr 7, 2008 1:09:07 AM
i think i understand why vegas has so many strip clubs , churches and casinos... all on the same strip....
Posted by: aj at Apr 7, 2008 1:56:13 AM
It appears that SAC Capital has some views on this issue:
http://www.nypost.com/seven/10122007/business/two_in_the_sac.htm
Posted by: Tim at Apr 7, 2008 10:17:09 AM
"no honey...I only bought it for research purposes! I swear!"
Posted by: shawn at Apr 7, 2008 10:22:23 AM
The more literally minded among us might also question whether a stapler is in fact a neutral image. It isn't for me.
Stapler lust.
The love that dare not speak its name.
Posted by: diz at Apr 7, 2008 10:22:32 AM
When I think of staplers, I think of receiving gifts. I think of papers rolling off a printer, and being stapled, and being given to me. In stapled form. For me a stapler is a very positive image.
Posted by: Tyler Cowen at Apr 7, 2008 11:26:51 AM
No wonder bankers used to take clients out to strip clubs.
Posted by: Stock Market Beat at Apr 7, 2008 2:08:46 PM
Tyler, please tell me you think a stapler is scary. And, since you are practically begging us to ask,alright, there it goes, what's with the Freud reference?
I agree with David Zetland, erotic images are different from constant exposure to women (even really pretty women) you see everyday, as far as their arousing effects are concerned.
Posted by: NPTO at Apr 7, 2008 3:06:46 PM
When hired at both my current and previous brokerage firms I got a stapler and a warning not to look at pictures naked women on company time.
Posted by: John Kunze at Apr 7, 2008 3:27:22 PM
man see woman. Man want to have sex with woman. How man have sex with woman? Man need money. Man need lots money. Where man get money?
Man make risky investment. It pay off, man have bucks, get some. It no pay off, man no get off.
Man make less risky investment, it pay off, man have cents. Man no get off.
Risky investment better. Safe investment no lead to nookie.
Sometimes I think you economists overthink things too much. Even a caveman could figure out why a risky investment is better after seeing a naked woman.
Posted by: pierce wetter at Apr 7, 2008 5:52:59 PM
Completely agree with Pierce - I think this comes down to pure coital motivation operating on a sub-conscious level.
Posted by: Brian at Apr 8, 2008 8:00:27 PM
