Man-made disaster? Cultural image of testosterone and not just its biological effects may contribute to our bargaining strategies

“Both feminist and mainstream economists have pointed out that the credit crunch is quite literally a man-made disaster, a monster created in the testosterone-drenched environment of Wall Street and the City.”

This quote from Ruth Sunderland in the Guardian – and there are many more examples in a similar vein – suggests that the global recession was at least partly driven by the hormone that has, in Western culture, become inherently associated with aggressive, masculine and risky behaviour. But to what degree is it fair to connect the crisis of the world economy to a single hormone?

University of Zurich economist Ernst Fehr has long believed that theoretical economics has failed to adequately take into account our social and biological nature when building models of decision-making. In a series of earlier experiments, scientists led by Fehr demonstrated that people could be made more trusting in an economic game simply by being given a dose of a hormone called oxytocin which had previously been implicated in social bonding and maternal behaviour. He has now turned his attention to investigate whether testosterone might also alter the way we interact and trade.

One paradigm used by Fehr to probe how social factors influence our decisions is the Ultimatum Game. In this game, a proposer divides a sum of money between himself and a responder and the responder then decides whether to accept or reject the offer. If accepted, both players get the money as split by the proposer; otherwise, neither receives anything.

Although this game is played only once and participants often never meet, responders have consistently been shown to reject offers which strongly favour the proposer. The proposer’s task therefore is to find an appropriate balance between fairness and selfish monetary gain.

In January of this year, Fehr and colleagues published their first findings on the effects of testosterone in the Ultimatum Game in the journal Nature. Against expectations, rather than making them more risk-taking and uncooperative, the women who received testosterone became more generous in their role as proposer, offering significantly more money to the responder than those who had taken a placebo.

Arguably, however, the most intriguing results emerge when Fehr examined the offers made by those participants who simply believed they had been given the drug, irrespective of whether they actually had. Those who reported that they had taken the hormone played the game less fairly, proposing to split money significantly more unevenly, compared to the women who believed they had received the placebo. In other words, while testosterone was working to encourage fairer offers, long-held notions of how testosterone should make us behave were paradoxically promoting selfish behaviour.

The precise interaction between hormones and economic behaviour, however, is likely to be complicated. Two studies published in Proceedings of the National Academy of Sciences last year reported contradictory results, with higher levels of testosterone being linked with reduced risk aversion in female MBA students but not in post-menopausal women. Moreover, testosterone may actually promote better trading in some real-life situations. In an experiment conducted on the City of London floor, John Coates and Joe Herbert showed that professional traders had higher levels of testosterone on days on which they enjoyed above-average returns.

During his 2010 Clarendon Lectures at the University of Oxford, Fehr argued that testosterone may only lead to aggression and risk-taking when such behaviour is necessary to uphold status in social situations. If true, it might turn out that testosterone is not the “monster of Wall Street and the City” but instead only turns into this when people feel required to take great risks to comply with expectations.

The reptilian brain: the new left brain, right brain?

Over the past couple of weeks I have heard a number of different people on the radio – a scientist in one case, psychologist in another – talk about our intuitive brain, our reptilian brain, our emotional brain as if it were a separate entity within our brain. Slightly surprised by this idea, I decided to look at it in a bit more detail – surprised because my conception of the brain as someone who has studied it is that of an integrated, unified entity in which different regions throughout are working together in order to perceive the world, make sense of it and act in it appropriately. The idea of the existence of a special system dealing with our emotions and intuitions seems counterintuitive in a system where every single part works together with other parts in order to think, act, memorize, speak.

We like to believe that the decisions we make, the actions we take and, at least sometimes, the thoughts we have are based on rational weighing up of pro’s and con’s. Equally, I think that most of us would admit that at times we do things because our gut feeling tells us to do so. This idea is not a new one; even Aristotle suggested that a logical decision can be overturned by mere appetite for pleasure or anger. But even if there is the existence of gut feeling alongside reason, does this mean we have a separate set of brain regions to deal with our different states of mind?

According to a number of researchers, it does. Several groups of prominent neuroeconomists, such as Douglas Bernheim and Antonio Rangel, have proposed models that describe the brain as operating in a “cold” deliberative mode or a “hot” emotional mode, depending on the situation in which a decision is being made. Based on the anatomical structure of our brains, back in the 1960s Paul MacLean proposed the influential theory that we have a ‘triune’ brain consisting of three parts, each formed at a different time in evolution. In essence, he too argued that our brains contain ancient reptilian fight or flight mechanisms, animal instincts and emotions, and new thoughtful cortex to offset these other urges.

While some of these principles are generally accepted, the existence of entirely separate systems underlying emotional, intuitive impulses on the one hand and rational considered behaviour is more controversial. Nonetheless, the notion of a direct anatomical basis for separate intuitive and rational systems seems to have caught the public imagination. A quick Google search on “reptilian brain and decision” brings up numerous self-help and business-based writings about how to tame your reptilian brain, live with your emotional urges and stop it buying your Starbucks lattes.

It doesn't seem too long ago to me that another dichotomous idea from neuroscience, that the two halves, or hemispheres, of our brain have highly specific functions, was providing this market with these metaphors. Again, the science suggested (not without challenge) that left part of the brain was the dominant linguistic side, cold and calculating and dealing with details (the cognitive side) whereas the right was the imaginative but suppressed side that dealt with the global processing of information and emotions (the intuitive side). And again, this spawned a large industry of self-help and business books on everything from how to unshackle your right hemisphere in order to become more imaginative and even to help us get in touch with the opposite sex.

Looking at the persistence with which ideas of a separation between intuition and reason have popped up in the past and present, is it likely whether these theories will ever fade? Or does our hunger to become a better person – more creative or more logical – make us embrace the idea of separate systems because we feel they give us (false?) opportunity to enhance certain qualities in ourselves to make us into the person we want to be?

I wrote this article for 'Matters Scientific', the science blog of Cherwell, the Oxford University student newspaper.