Born to Be Wild: Second-to-Fourth Digit Length Ratio and Risk Preferences

Abstract

The second-to-fourth digit length ratio of an individual’s hand (digit ratio) is a putative biomarker for prenatal exposure to testosterone. We are examining the hypothesized negative association between the digit ratio and the preference for risk taking within a large U.S. population survey. Our statistical framework provides a cardinal proxy for the true digit ratio based on ordinal digit ratio measurements and accounts for measurement error under the assumptions of Gaussianity and time-invariant true digit ratios. Our empirical findings support the hypothesis and suggest a meaningful biological basis for risk preferences.

JEL Classification: A12, C8, D01