Jan 11, 2011 | My Money MD | Shirley M. Mueller, MD
Men and women approach making financial decisions differently. That much is widely documented. For example, one study showed that if a large number of 401(k) investment fund options are offered, fewer women participate than men. (I wrote about this phenomenon in a previous post.) On the other hand, if the retirement plan’s selection of funds is small, more women tend to participate than men. This tantalizing diversity begs the question, “What is going on here? Why are the sexes different when they analyze investment options?”
The reasons behind gender divergence are just beginning to be revealed. Senior author Daniel Tranel and co-authors report that there is a hemispheric sex-related asymmetry in financial decision-making. Their article is about to be published in the journal Neuropsychologia.
Though the experiment is complex, it is worth examining. The researcher’s investigation was unique in that it involved patients with brain impairments rather than healthy study participants. The patients had amygdala and ventromedial posterior cortex (VMPC) lesions. Damage to the amygdala has been found to decrease autonomic reactions to stressful and emotional stimulus. The authors state that the injury impairs “the emotional response to learned complex, cognitive information.” It is the learning that involuntarily elicits an emotional response.
The VMPC, on the other hand, links memory and emotional systems. If it is damaged, the patient will fail certain financial tests, in part because he or she can’t recreate earlier bodily sensations that told the individual a mistake had been made. This awareness is tested by the skin conductance response, a way to measure a reaction to stress. Recognized failure of an appropriate financial choice is one way to induce a reaction, because it initiates an unconscious stress response in a normal person. This response does not occur in a VMPC-damaged patient.
Read more at: http://www.hcplive.com/physicians-money-digest/columns/my-money-md/01-2011/-Why-Men-and-Women-Differ-in-Financial-Decision-Making#sthash.qmaMykCs.dpuf