The 2D:4D ratio does not always correlate with ...

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Jul 21, 2018 - self-employment preferences and 2D:4D ratio do not always hold ... 2011; Garbarino et al., 2011; Pearson and Schipper, 2012; Sapienza.

Economics and Human Biology 30 (2018) 172–181

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The 2D:4D ratio does not always correlate with economic behavior: A field experiment with African-Americans Natalia Candeloa,* , Catherine Eckelb a b

CUNY Queens College, 225 E 72nd St #901, New York, NY 10021, USA Texas A&M University, 4228 TAMU, College Station, TX, USA


Article history: Received 3 October 2017 Received in revised form 7 July 2018 Accepted 11 July 2018 Available online 21 July 2018 JEL classification: H4 C91 C93


Several studies present evidence of correlations between prenatal testosterone exposure measured with the 2D:4D ratio and behaviors such as pro-social behavior, risk and patient attitudes, and selfemployment. Individuals exposed prenatally to higher levels of testosterone have lower levels of risk aversion, higher levels of patience and invest more in others, and in themselves, therefore have higher individual financial wellbeing. We test these hypotheses with a sample of 115 African-Americans who live in a low-income urban area in the U.S. The 2D:4D ratio in our sample of males and females does not have a consistent and robust correlation with risk, patient attitudes, pro-social behavior and selfemployment in contrast to previous studies. © 2018 Elsevier B.V. All rights reserved.

Keywords: Risk Time preferences Patience Pro-social behavior Self-employment 2D:4D ratio Prenatal testosterone exposure

1. Introduction Recent economic studies have found that exposure to testosterone in the mother’s womb, measured by the ratio of the length of the second to fourth fingers (the 2D:4D ratio), affects risk preferences (Garbarino et al., 2011; Brañas-Garza and Rustichini, 2011), self-employment (White et al., 2006), intellectual capacity (Brañas-Garza and Rustichini, 2011), and pro-social behavior (Van den Bergh and Dewitte, 2006; Millet and Dewitte, 2006; Sanchez-Pages and Turiegano, 2010). Some studies state that these preferences and their relationship with exposure to prenatal testosterone determine financial gains (Coates et al., 2009; Brañas-Garza and Rustichini, 2011; Nye et al., 2017). However, recent biology studies present evidence that several individual biological traits that are often related to 2D:4D ratio do not always correlate with it (Putz et al., 2004). Following this latter line of research, this paper presents evidence that correlations between individuals’ risk aversion, patience, pro-social and

* Corresponding author. E-mail addresses: [email protected] (N. Candelo), [email protected] (C. Eckel). 1570-677X/© 2018 Elsevier B.V. All rights reserved.

self-employment preferences and 2D:4D ratio do not always hold and could be context-dependent. The 2D:4D ratio is a simple method that has been used in previous studies to determine the effects of exposure to prenatal sex hormones on the human brain and other sex-hormonemediated traits. These traits or domains range from levels of current hormones in humans, fertility, sexual orientation and identity, health, vigor, cognitive abilities, appearance, status, etc (See Putz et al., 2004 for an introduction). However, Putz et al. (2004) present a meta-analysis on how the results of several of these studies are mixed and there is no conclusive evidence of the correlations between 2D:4D ratio and diverse biological/behavioral traits. In fact, they show how many positive results are restricted to one sex or the laboratory where the measures were taken. In economics, there is a general absence of replications for studies using the 2D:4D ratio and a few studies show that the evidence seems to be mixed as well. Thus, unlike previous research, to the best of our knowledge, we are the first to use the same sample to test for the relationships between the 2D:4D ratio and four out of five economic behaviors that have been reported to be correlated with the digit ratio in previous studies: risk aversion, patience, prosocial and self-employment preferences. In this way, this paper complements previous work by providing a unified test on how the

N. Candelo, C. Eckel / Economics and Human Biology 30 (2018) 172–181

2D:4D ratio correlates with these four different channels that could potentially affect several life outcomes. Risk, patience, pro-social and self-employment preferences are widely studied in economics because of their association with financial gains or other life outcomes (Coates et al., 2009; BrañasGarza and Rustichini, 2011; Nye et al., 2017). As a result, the empirical association of these four dimensions with a biomarker is of special interest. In this paper we examine the correlation between the 2D:4D ration and preferences, where the preferences are elicited using incentivized tasks. First, in the study, the participants make risky, patient and pro-social decisions with real money under lab-in-thefield conditions. Second, we elicit self-employment with a post-task survey. Third, we scan participants’ hands to measure the 2D:4D ratio biomarker. We complement rather than refute previous studies by showing one case in which none of these economic behaviors correlate significantly with this biomarker. Several studies have used majority-Caucasian samples of students to study the correlations between the 2D:4D ratio and economic behaviors (for example, Brañas-Garza and Rustichini, 2011; Garbarino et al., 2011; Pearson and Schipper, 2012; Sapienza et al., 2009). However, Henrich et al. (2010) argue that we should be studying populations other than these accessible samples. Indeed, we focus on a unique subject pool-low-income, adult AfricanAmericans. One of the largest ethnic minority groups in the U.S., African-Americans will constitute 17.9% of the nation’s total population by 2060 (U.S. Census, 2010) and present a poverty rate that is above the national rate (U.S. Census, 2010). Historically, this population not only has had the lowest median household income in the U.S. since 1967 (U.S. Census, 2014), but also presents the highest poverty rate (i.e., 26.2% in 2014) with respect to other populations in the U.S. (U.S. Census, 2014). As a result, our exploration of the 2D:4D ratio, risk, patience, pro-social and self-employment preferences is crucial and relevant for this minority group. However, despite their importance, little is understood about these correlations for lowincome individuals and minority groups. Thus, we expand this literature by using a unique random sample of African-Americans who live in a low-income neighborhood of a major metropolitan area in the U.S. in order to measure their 2D:4D ratio and relate this measure to their risk aversion, patience, pro-social and selfemployment behaviors. Our data set presents variation in individual-level measures and shows that these four correlations for our sample are not the same as with previous studies. The remainder of the paper is organized as follows. Section 2 reviews the previous literature and introduces hypotheses. In Section 3 we describe the experimental design and procedures. Section 4 presents the analysis and results. Section 5 concludes. 2. Previous literature and hypotheses In terms of risk preferences, the evidence relating risk tolerance and the measure of 2D:4D ratio, or prenatal exposure to testosterone, is somewhat mixed. A number of studies do not find a significant relationship. Sapienza et al. (2009) show that the correlation between risk-prone behavior (i.e., elicited through a choice lottery task) and 2D:4D ratio disappears after controlling for gender. However, this might be due to its sample of MBA students. Pearson and Schipper (2012) find no correlation between prenatal exposure to testosterone and competitive bidding behavior in a sealed bid first-price auction experiment. However, some studies have found that higher prenatal exposure to testosterone (a lower 2D:4D ratio) is correlated with higher tolerance towards risk. Garbarino et al. (2011) and BrañasGarza and Rustichini (2011) show that subjects choose lotteries that are riskier when they present lower measures of 2D:4D ratio (i.e., higher prenatal exposure to testosterone). Coates et al. (2009) find that male traders’ prenatal exposure to testosterone is correlated to their long-term profitability assuming profits are associated with


bidding (risky) behavior. Stenstrom et al. (2011) using a risk-taking behavior scale survey with a male sample find that prenatal testosterone exposure has structural effects on a man’s financial risk-taking tendency. This literature leads to state our null hypothesis 1 which remains an empirical question given the mixed results: more exposure to prenatal testosterone is correlated with more risk tolerance. In terms of patience, previous literature suggests that individuals with higher prenatal exposure to testosterone are more patient. Millet and Dewitte (2008) show that male student subjects with higher exposure to testosterone are more patient by requiring less money in order to wait 1 week, 1 month, 3 months, 6 months and 1 year instead of receiving 15 euros now (using hypothetical, nonincentivized decisions). Unlike this previous study, our study allows us to identify patient behavior that is costly in real life for our subjects by using incentivized tasks with substantial stakes. If our subjects are patient, they have to wait at least six months for a larger real amount of money. This leads to hypothesis 2: more exposure to prenatal testosterone is correlated with higher patience. In the dimension of pro-social behavior, an emerging literature has documented the association of hypothetical altruistic behavior with 2D:4D ratio. Millet and Dewitte (2009) show that a sample of male students with higher exposure to prenatal testosterone say that they will share more money with strangers in a hypothetical dictator game. Van den Bergh and Dewitte (2006) find that a higher demand for fairness is correlated to more prenatal testosterone exposure with a sample of male students who participated in an ultimatum game where only 20% of the subjects were paid and received the money several weeks after. Sanchez-Pages and Turiegano (2010) find that student Caucasian males with higher prenatal exposure to testosterone cooperate more in a one-shot Prisoners’ dilemma game. While these studies are related to ours, the main difference relies on the salience of the pro-social behavior measures. Their measures are hypothetical or involve low stakes. Our paper extends this literature by eliciting pro-social behavior with more salience through a real dictator game with substantial stakes. Still, based on previous studies, our null hypothesis 3 in this dimension is: more exposure to prenatal testosterone is correlated with higher pro-social behavior. In the last dimension, we consider self-employment preferences and some of the mentioned correlations, and propose that individuals who are more risk tolerant and patient might prefer to be self-employed given the uncertainty of future income. In fact, Greene et al. (2014) show that there is a positive correlation between current testosterone levels and self-reported selfemployment among a sample of Australian men. Unlike this study, we do not measure current levels of testosterone and rely on the measure used in the majority of economic studies, the 2D:4D ratio, that measures the prenatal exposure to testosterone. This reasoning leads to the following hypothesis 4: More exposure to prenatal testosterone is correlated with self-employment. We also augment our study by testing if the prenatal exposure to testosterone absorbs the impact of gender on these economic behaviors. It seems that the strongest biological evidence presented is that males have a lower digit ratio than females (Manning et al., 1998). Several economic behaviors have also been associated with gender (see Croson and Gneezy (2009) for an overview). In this study we use measures for both 2D:4D ratio and gender to disentangle the potential relationship between these two variables. The predominance of the evidence shows that, in most domains, and using most measures, women seem to be more risk averse and less competitive than men (Charness and Gneezy, 2012; Eckel and Grossman, 2008a; Gneezy et al., 2003; Chen et al., 2013). However, the evidence on patience is mixed (see Croson and Gneezy, 2009). For pro-social behavior, there is evidence that women are more pro-social than men (beginning with Eckel and Grossman, 1998; Croson and Gneezy, 2009 again provide a survey).


N. Candelo, C. Eckel / Economics and Human Biology 30 (2018) 172–181

Therefore, it is not clear to what extent this is the result of in utero testosterone levels or the environment. This reasoning leads to the following interaction hypotheses. In hypothesis 5 we expect that more exposure to prenatal testosterone is correlated with gender. Thus, males receive a higher prenatal exposure than females. And in hypothesis 6, we expect that the above correlations of economic behaviors such as risk aversion, patience, pro-social and selfemployment preferences are consistent with the effects of exposure by gender. 3. Experimental design and procedures 3.1. Participants Our project involves a lab-in-the-field experiment using individuals who live in a low-income urban neighborhood with a large African-American community (80%). The median per capita income for this neighborhood in 2010 was approximately $23,433 (U.S. Census, 2010). We randomly selected a sub-sample (n = 115) from an overall random sample that is geographically-weighted in the neighborhood (n = 1460). Details on the full project are available in Leonard et al. (2011). Our sample includes only African-Americans. A detailed sociodemographic composition of our sample can be seen in Table 1 below. The sample is 55% female, and on average, 43 years old. 86% of participants completed high school.1 The median household income and the median one-wage-earner household income range between $10,000 and $20,000.2 28% of our sample is unemployed and 12% is self-employed.3 3.2. Study implementation The experiments were conducted from June 2009 to March 2010. Subjects were recruited via door-to-door visits and had an appointment to participate in the study. Sessions were run between 7 A.M. and 6 P.M., both during the week and on the weekends, at a field station at the neighborhood that was familiar to locals, safe, and central. Each session was run with an average of 12 participants and lasted about two hours. Subjects arrived in the field station and signed the consent form. Average individual earnings were $70.16 per session (minimum = $0, maximum = $190) including a show-up fee of $20. Subjects knew the extra earnings depended on their decisions during the experimental tasks. Only one experimental leader ran all sessions. Subjects first participated in ten incentivized tasks. All decisions in the tasks were incentivized with real money. At the end of an experimental session, one task was chosen at random for payment. The payoffs of the tasks were calibrated so that they all had expected earnings of around $70. This is a substantial stakes level for this population. The experimental tasks were always run in the same order, with no feedback between tasks. We use the data from three of these tasks. A post-survey was conducted after the experimental tasks and we use a few questions from this survey. Then we scan participants’ right hands at the end of every session.

1 80% of African-Americans in the U.S. completed high school which is similar to our sample (U.S. Census, 2010). 2 The median one-wage-earner household income of African-Americans in the U. S. is $17,700 (U.S. Census, 2010), which also resembles our sample. 3 3% of African-Americans are self-employed (U.S. Census, 2010). The larger fraction in our sample allows us to explore further our variation in selfemployment.

Table 1 Participants’ Demographics. Variable

Observations Mean Std. Dev.



Socio-Demographic Variables Female Age Self-employed Unemployed Education 8th grade or less High School Diploma Some College or more Annual Household Income Less than $10,000 $10,000–

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