You receive $10,000 to invest. Where does it go? Stocks, bonds, or a secure savings account?
While you might assume your decision depends on your financial knowledge or risk appetite, new research suggests something more fundamental is at play—your genetics.
Scientists have discovered a fascinating connection between genetic variation and financial decision-making.
A specific gene, known as 5-HTTLPR, influences how much risk people are willing to take with their money. This gene regulates serotonin, a neurotransmitter that affects mood and anxiety levels.
People with a particular version of 5-HTTLPR tend to be more anxious before making investment choices, leading them to opt for safer financial options. This isn’t just a psychological theory—it’s backed by scientific data.
In an experiment, researchers found that individuals with a certain genetic makeup held onto 24% more of their investment in cash compared to those with a different variation of the gene.
The implications? Your financial behavior may be deeply rooted in your biology.
Rethinking the Role of Free Will in Finance
We often believe that financial decisions are purely logical, driven by careful analysis and knowledge.
However, this study challenges that assumption. If genes can influence risk-taking, how much control do we really have over our financial choices?
Brian Knutson, a psychology professor at Stanford, and Camelia Kuhnen, a finance expert at Northwestern University, have been investigating this link for years.
Their research revealed that neuroticism, a personality trait linked to anxiety, plays a major role in investment behavior.
Individuals with two short versions of the 5-HTTLPR gene were found to be more neurotic, which led them to avoid risky investments.
In a 2009 study, Kuhnen and Knutson examined the relationship between financial risk-taking and two key genes that regulate serotonin and dopamine.
Their latest research, published in PLoS ONE, further cements the idea that some people are genetically predisposed to be more cautious with money.
The Science Behind the Anxiety
To test this, the researchers conducted a study with 60 volunteers from the San Francisco Bay Area. Each participant was given $10,000 and asked to allocate it among stocks, bonds, and cash.
The results were striking: People with two short 5-HTTLPR alleles—associated with higher anxiety—kept significantly more of their funds in cash than those with the longer allele. Interestingly, financial literacy, income, and cognitive ability did not explain these differences. The only distinguishing factor? Their genes.
But here’s where it gets even more interesting. Kuhnen hypothesized that if anxiety-prone individuals were so risk-averse before making decisions, they might react more strongly to financial losses.
However, when participants played a trial-and-error game to identify risky choices, both genetic groups reacted similarly to losses. The difference wasn’t in how they processed negative outcomes—it was in how they anticipated them.
Can You Override Your Genetic Programming?
This discovery leads to a crucial takeaway: Your genes may nudge you in a particular direction, but they don’t dictate your fate. Understanding how genetics influence financial choices can help people become more conscious of their decision-making patterns.
“If you understand how it’s influencing your behavior, then you have a shot at changing that behavior,” says Knutson.
So, what does this mean for you? Next time you hesitate before making an investment, take a step back and ask yourself: Am I making this decision based on logic, or is my genetic wiring pushing me toward caution? Recognizing these influences might just help you make smarter, more balanced financial choices.
