Laura Rowley Money & Happiness

Crystal and Harry Gettings have spent months hunting for an investment property in their native Orlando, where foreclosures abound. Harry, 26, works in his family's production company and recording studio. Crystal, 24, is a public relations executive. They shun debt, stash their savings and discuss their goals and progress every other Saturday over breakfast.

"He's interested in investing and stocks and learning more about the strategies that go along with that, whereas I'm interested in saving money on a day-to-day basis and taking care of the bills," says Crystal. "Harry's more of a risk-taker, and I'm a little more reluctant. I want to make sure it's the right thing."

Research suggests women tend to be like Crystal -- more risk-averse in their financial decisions. But a new study argues that gender is not the issue. Researchers at Northwestern and the University of Chicago found women who have higher-than-average levels of testosterone are just as willing as men to take risks, at least when it comes to their jobs.

"Higher-testosterone women are more prone to take risk, and this attitude is correlated with riskier career choices," says Paola Sapienza, associate professor at Northwestern's Kellogg School of Management and co-author of the study with Luigi Zingales of the University of Chicago. The paper will appear in a forthcoming issue of Economic Sciences.

Testosterone is a male sex hormone found in both men and women, but in higher levels among men. It's been linked to aggression, fearlessness, competitiveness and rule-breaking (some prison inmates have higher levels of testosterone and end up behind bars because they're more disposed to breaking the law).

Willingness to Gamble

Sapienza and Zingales were initially intrigued by the pay gap between the genders. Data shows just 36 percent of female students who receive a master's in business administration (MBA) at Northwestern and University of Chicago choose a riskier career path like investment banking or trading -- versus 57 percent of their male classmates. Ten years after leaving school, MBA grads working in finance earn an average of 2.8 times their fellow alums. But they're also much more likely to be unemployed.

"There is a large literature in finance and economics that highlights gender differences in attitude toward risk, and for economists this is quite important because it may in principle lead to higher rewards," says Sapienza. "So the gender gap in salaries at some level could be linked to preferences for riskier careers. That was our starting point -- would an (appetite for risk) extend to preference for certain jobs?"

In the study, more than 400 MBA students at the University of Chicago played a series of computer games, in which they were asked 15 different times to choose between a guaranteed dollar amount (ranging from $50 in the first choice to $120 in the 15th choice) and a lottery that paid either $200 or zero with equal probability. They were rewarded according to their decision (and the lottery drawn) in that choice.

Extremely risk-averse people always choose the sure thing, while extreme risk-takers readily take the gamble. As the guaranteed amount rises, the participant should cross over from the lottery to the certain payoff. The bigger the risk-taker, the longer they'll wait to switch over, more willing to risk it all for a bigger prize. The researchers took saliva samples at the beginning and end of the test to measure hormone levels.

Two years after the study, the researchers collected data on accepted job offers at graduation. Individuals with equally high testosterone levels demonstrated the same level of risk-taking. "It was not an issue of their gender," says Sapienza, adding that high-testosterone women were nearly seven times more likely to take risks than females with lower hormone levels. (The 90 percent of women and 31 percent of men with low testosterone levels were equal in their risk-aversion.)

Meanwhile, higher salaries tend to translate into higher confidence levels, regardless of gender. Consider two recent surveys of affluent and middle-income women. Financial Finesse, a firm hired by employers to provide workers with personal finance education, found just 40 percent of women respondents felt comfortable with their investing knowledge. They earned between $40,000 and $70,000. A separate survey by Citi's Women & Co. found 75 percent of women consider themselves knowledgeable about finance and investing; these respondents had $100,000 in investable assets.

Perception and Reality

Could testosterone play a role in how confidently (and perhaps, overconfidently) people report financial events? Consider Ohio State's Consumer Finance Monthly, which interviews 1,000 people, asking them to predict their future behavior and recall past actions.

For instance, people who used credit cards were asked if they "expect, plan, or do pay off the entire balance each month?" Sixty-one percent of men said yes, compared to 54 percent of women. They were also asked whether they had "either missed or were late with paying off at least the minimum balance." Some 13 percent of men reported said they had, compared with 16 percent of women.

But when asked if they had ever filed for bankruptcy -- a dramatic event that no one forgets -- the responses were much closer: 10 percent of men and 11 percent of women. "As we go down the list from future expectations to what really happened to you, there is a gap all the way through, and men either report better outcomes or expectations than women," says Jay Zagorsky, an Ohio State researcher. "But as you get more and more concrete, the gaps get smaller and smaller."

Financial Finesse has spied a similar trend. "We see anecdotally in our financial counseling that men think they know more than they do, and women know more than they think they do -- that's some of the gap," says Liz Davidson, CEO of Financial Finesse. "Also, men have usually picked up more financial education along the way."

Clearly nurture plays an important role in both earning power and investing prowess.

Lindsey Brown, a marketing director at a city tourism bureau in Texas, says her marriage is a case in point. "From a very young age my husband's grandma gave him Exxon stock for Christmas, where my dad taught me how to balance my checkbook but never taught me investing," she says. "My friend always tries to tell me things. She's very appalled by the facts I don't know."

And what does Brown's friend do for a living? Investment banker.