In the anatomy of the spotted hyena, known more commonly as the laughing hyena, one finds a most singularly peculiar feature: the females have a large, elongated clitoris that is shaped like a penis and likewise subject to erection. Furthermore, the vulva has folded upon itself to resemble a scrotum, complete with two fatty deposits where the testicles would be. In fact, aside from a slight difference in body mass, it is virtually impossible to tell the sexes apart short of palpation of the labia/scrotum (which I don't imagine the hyenas particularly appreciate).

The generally accepted theory about the fashion in which this peculiar structure came to evolve centers around hyena patterns of social interaction. Whenever two hyenas of the same clan encounter each other in the wild, they each lift one leg, revealing their exposed penis or clitoris to the other, and each one licks the other's genitalia for a few seconds. This is presumably an affirmation of friendship; by exposing their most vulnerable parts, they express a strong mutual trust. It would therefore seem reasonable that males would tend to be distrustful of the less "endowed" females (who would not seem to be making themselves as vulnerable), so there would then be less opportunity for these females to mate. Over the course of many, many generations, the genitalia of the female would grow to resemble more closely the genitalia of the male.

In his book Hen's Teeth and Horse's Toes, Stephen Jay Gould proposes an alternate explanation. The most likely biological cause of the peniform clitoris is a heightened level of androgens, so Gould suggests that the heightened androgen levels may be an adaptation to something else, and the peniform clitoris is merely a secondary effect of this adaptation. As quickly as he suggests this alternate explanation, he admits that he accepts the other explanation as a more likely scenario; his alternate explanation served merely to drive home the point that a great deal of the explanations given by evolutionary science are just speculation.


Sources:
http://animaldiversity.ummz.umich.edu/accounts/crocuta/c._crocuta$narrative.html
Gould, Stephen J. Hen's Teeth and Horse's Toes.

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