Friday, January 16, 2009

(BN) Long Ring Fingers May Point to Wealth in Traders, Study Says

Long Ring Fingers May Point to Wealth in Traders, Study Says

2009-01-13 05:01:01.7 GMT
By Elizabeth Lopatto

Jan. 13 (Bloomberg) -- A glance at a trader's hand may reveal the
size of his paycheck. The longer the ring finger is compared with the
index finger, the bigger his pay is likely to be, a study of London
traders found.
The secret to prosperity may be contained in their digit ratio,
which reflects the length of the index finger divided by the length of
the ring finger, according to a study of 44 London traders in the
Proceedings of the National Academy of Sciences.
Traders with a lower digit ratio made an average of 679,680 pounds (or
about $1 million U.S.), compared with 61,320 pounds
($90,956 U.S.) by those with a higher ratio, the report said.
Previous research has found that the digit ratio reflects how much
testosterone an unborn baby was exposed to in the womb.
Those exposed to high levels of the hormone are more sensitive as adults
to testosterone that creates feelings of confidence and encourages
risk-taking, said study author John Coates.
Recognizing the physical characteristics of employees may help companies
weigh their reaction to events, he said.
"Economics hasn't actually looked at the physiology of people in
stock market bubbles and crashes to see if their rationality is being
impaired by their physiology," said Coates, a professor at the Judge
Business School at the University of Cambridge in the UK, in a telephone
Earlier studies have identified several physical characteristics
that reflect prenatal hormone exposure, including the digit ratio. The
study only examined male traders.

Trader Fingers Measured

The new study was funded by the University of Cambridge.
Coates and his team photocopied the right hands of 44 traders, all men,
in London. He then measured the length from the tips of the fingers to
the crease closest to the palm; the measurement was replicated by an
independent observer.
The team found those with a lower digit ratio of 0.93, on average,
earned 10 times more than those with an average ratio of 0.988. Men
typically have a ratio below 1, indicating their ring fingers are
longer, Coates said. Women typically have a ratio of
1 or above.
The study also found traders who have long ring fingers stayed in
their jobs longer. Participants worked in a type of trading known as
"high-frequency" trading, which lends itself to risk-taking and quick
reactions, the authors wrote. In other types of asset management, such
as mutual fund or pension management, these types of traders may not be
as successful, Coates said.
Even within high-frequency trading, comparing the finger ratio only
works if traders have equal access to capital and information, and
similar risk limits, said Coates, who worked as a derivatives trader at
Deutsche Bank in New York from 1996 to 2001, during the dot-com bull
market. He was able to adjust the study data to minimize the influence
of these factors.
"This was the trickiest part," Coates said.

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--Editors: Donna Alvarado, Andrew Pollack

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