Why are some people willing to take risks by gambling on "longshot" payoffs while, on the other hand, taking the opposite tack by buying insurance to reduce their risks? An international team of economists and molecular geneticists says the answer can be found in our genetic makeup.
In an article recently published online in PLoS ONE, researchers combined the tools of experimental economics and molecular genetics to examine the role of a well-characterized
gene, monoamine oxidase A (MAOA), in predicting whether subjects are more likely to buy the lottery or insurance (or both) under well-controlled laboratory conditions.
In the experiment, 350 Han Chinese subjects were recruited in Beijing and participated in two simple choice tasks, representing proclivities to purchase lottery tickets and insurance, using real monetary incentives.
For example, the subjects were given options to keep a very small cash return upfront, with no risk, or of gambling bigger amounts that they were given upfront but with a minimal chance of actually winning and keeping the money in a lottery drawing. In the second task, concerning
insurance, subjects were asked whether or not they would insure a certain but insignificant loss or would take out insurance on a larger amount with a real but low risk of actual loss.
They found that subjects with a high-activity variation of the MAOA gene are characterized by a preference for the longshot lottery and also less insurance purchasing than subjects with the low-activity genetic version. The study's result is the first to link attitude towards risk taking to a specific gene, and complements other recent findings on the neurobiological basis of economic risk taking.
The researchers also added that, as the world economy shakes off the recession, it is worth considering that inborn biases, coded by common genetic variants, may have a tremendous impact on financial markets.
Citation: Songfa Zhong, Salomon Israel, Hong Xue, Richard P. Ebstein, Soo Hong Chew, 'Monoamine Oxidase A Gene (MAOA) Associated with Attitude Towards Longshot Risks', PLos One, December 2009, 4(12): e8516; doi:10.1371/journal.pone.0008516
