The Role of "Cowboy Genes" in the Wall Street Fiasco of 2008

http://www.plosone.org/article/info:doi/10.1371/journal.pone.0030844 Discussion Our primary finding is that two genetic alleles that affect DA are associated with success at trading stocks on Wall Street. We showed that alleles of COMT and DRD4P were predominant in traders compared to controls, and we also demonstrated that a combination of these alleles were associated with being a trader. Both COMT and DRD4P affect the brain's synaptic levels of dopamine. Several neuroeconomics studies of financial decisions have shown that activity in the dopaminergic nucleus accumbens predicts risk-taking [18]. It is possible that the successful traders in our sample who had genes associated with moderate synaptic dopamine may be predisposed to take an appropriate level of risk, but not too much, thereby contributing to their success. This was evidenced by their reduced reports of trading in volatile markets. Using years on Wall Street as a measure of success, we found a positive correlation between success as a trader and a combination of alleles that are associated with intermediate levels of synaptic DA. We did not find that traders were more likely to carry the 7R variant of the DRD4e3 VNTR, an allele associated with risk-taking in two laboratory studies. Our results suggest that successful traders in our sample weigh risk and reward, rather than taking excessive risks. This was born out in the personalities of our sample of traders. We found that they were good at integrating disparate pieces of information, eschewed trading in volatile markets, and did not view the world as threatening their survival. These findings align with previous evidence suggesting that more experienced traders may respond in a less emotional way than those with less experience [10]. Nevertheless, other studies of professional traders have found that they are susceptible to trading biases [70]–[72]. We also examined two other genetic targets that affect DA levels and personality traits: MAO-A and SERT. We found no significant difference in the frequency of MAO-A or SERT alleles in traders compared to controls. This is potentially problematic, given that other studies have linked SERT and MAO-A to financial risk-taking tendencies; however, these results have been inconsistent [51], [56], [57]. It is important to note that our observations come from a relatively small sample. High income individuals recruited at work, such as the Wall Street traders, are difficult to access for data collection, which is the reason for the small sample at hand. It is therefore important that the results reported here are replicated. Additionally, our sample of traders may not include some of the most successful professionals who have the opportunity to leave the types of major companies from which we drew our data for early retirement or to begin their own company. We opted to define successful trading by longevity because this information could be reliably collected and because this is a measure also used in previous research [12]; however, other definitions of success may be considered more informative and should be examined in the future. Our findings can contribute to discussions of changes in the regulation of finance professionals and asset markets in the wake of the 2008 recession. Our results suggest that using a history of risk-taking and competitive behaviors when hiring traders could be a mistake, though this is often done [73]. Having too little or too much risk-aversion is not associated with success by those in our sample; rather taking a balanced level of risk appears to be optimal. Further, our findings indicate the importance of training the dopamine system to accurately assess risk and reward in the context of trading. The balancing of risk and reward is essential to successful trading, but trading on another's behalf may skew the way risk is assessed [74]. Recent research from our lab has shown that without training the dopamine system, losses are accentuated even when trading for one's own account [75]. Lastly, our findings indicate that hiring more female traders may improve investment company returns. Nonprofessional female investors tend to be more risk-averse, trade less, and earn higher returns [76]–[78]. So, what makes a professional trader successful? Combining the personality analyses and genetic findings from the present study, reveals that our sample of traders are analytical, integrative, and can delay gratification. They have a genetic profile associated with balanced levels of dopamine, and also linked to moderate but not high risk-taking behavior. Thus, successful traders do not appear to take extraordinary risks and also appear to take a longer-term perspective. Our analyses indicate that these traits may have a genetic predisposition.