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 interview. 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.
