Admission Department Take Note: Finance in Your Genes

This study by CMC finance professors Amir Barnea and Henrik Cronqvist has already been on the school website for some time, but I think it's worth exploring some of its central findings.

Investor behavior is largely determined by nature rather than nurture according to a new study by finance professors at Claremont McKenna College and the University of Washington. By studying twins and their financial behavior, researchers found that genetics account for one-third, on average, and as much as 45 percent of investor behavior. Other factors previously studied, such as age, gender, education, wealth and home ownership, when combined explain only five to 10 percent of investor behavior.

In a way, doesn't it suggest that CMC's mission of imparting to many of its students a sense of finance might be an exercise in futility? (Admitting, of course, that many of the students attracted to CMC in the first place might be interested in finance due to their family connections with it already.)

The whole thing kind of reminds me of the discussion between Adams and Jefferson regarding the "natural aristocracy." Maybe there truly are individuals that are good, or best, at finance and that we should just accept their right to rule us in things monetary. Or maybe, then again, I could be just rationalizing the fatal conceit.