Doug French

Wall Street traders, like high-stakes poker players, are a different breed. The constant pressure, the appetite for risk, the ability to think and react in split seconds, all the while calculating odds in their heads that most can't do with an HP12C.

"These guys are a pretty weird bunch," Dr. Paul Zak says. "They're very rational and very competitive." Zak is a neuroeconomist at Claremont Graduate University who is studying the brains of traders to find out if this personality type has a certain genetic signature.

In his "Head Case" column in the Wall Street Journal, Jonah Lehrer writes that Dr. Zak and fellow Claremont neuroeconomist Steve Sapra have analyzed the genes of 60 professional traders working at five major Wall Street firms. Zak and Sapra focused on the genes known to affect the activity of dopamine.Street Freak: Money and Madness at Lehman Brothers

Dopamine is a neurotransmitter in the brain that "helps to regulate decisions involving risk and reward," Lehrer writes, "allowing us to experience both the thrill of getting what we want and the pain of losing it all."

Traders who manage to last on Wall Street for a long time, "tended to hit a sweet spot of dopamine activity: their genes kept them from experiencing either very high or very low levels of the molecule," explains Lehrer. "These prosperous professionals were much more likely to have so-called Goldilocks genes, placing them solidly in the middle of the dopamine distribution."

Goldilocks is not what comes to mind as we watch the frantic activity on any trading floor. In fact, it's just the opposite, with people yelling, screaming and gesturing wildly. As Jared Dillian says in this video clip promoting his book Street Freak: Money and Madness at Lehman Brothers, "For someone who has bipolar disorder, being on the trading floor is the absolute worst place to be, because no one's going to notice that anything's wrong, because everybody is crazy." If Dillian had been working at Starbucks, his mercurial behavior might have called attention to his disorder. As is was, at Lehman, being manic, yelling and screaming, was "considered functional behavior on the trading floor."

Dillian tells his story in a fast-paced style that sweeps the reader up into the author's two worlds: the bare-knuckle world of price discovery on the trading floor, along with his descent into depression and the constant coping with his nearly debilitating obsessive-compulsive behavior. All of this makes the book hard to put down.


Doug French

Doug French is is president of the Mises Institute and author of Early Speculative Bubbles & Increases in the Money Supply and Walk Away: The Rise and Fall of the Home-Ownership Myth

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