Is women's stereotypical timidity damaging their financial and career prospects?

An often expressed layman intuition is that women exhibit less risk-taking behavior than men. Statistics consistently show that men will more often engage in “risky” behaviors (including criminal activity, for example). Indeed, there is an extensive collection of literature on the topic of risk-assessment processes in men versus women.


Here’s an overview of the research in this topic:

http://www.sciencedirect.com/science/article/B7P5N-4SYS65G-4G/2/982a686c9779d5fde2be323032f480e6

I’d like to point out in particular one of the studies covered in this overview:


Gysler, M., Kruse, J.B., Schubert, R. (2002). “Ambiguity and Gender Differences in Financial Decision-Making: An Experimental Examination of Competence and Confidence Effects”.

Here is the full article if you’re interested:
http://www.peel.pitt.edu/esa2003/papers/schubert_ambiguitygender.pdf)

The authors suggest that “women's risk-aversion diminishes as their expertise increases. The interactions have just the opposite effect for men, with risk aversion increasing with expertise and confidence.” Women become more risk-taking when they are making decisions in a domain in which they are expert, while in men we see an opposite trend. Why is it the case that women become more risk-prone as they become more financially savvy, or equally curiously, why should it differ between men and women?

Whatever the mechanism, these studies in risk-taking behavior hold relevant implications for women as consumers, investors and entrepreneurs. Is risk aversion in part responsible for the discrepencies we see between the number of male and female entrepreneurs?

Sure, it’s possible. The Wall Street Journal blogged about something to this effect last year:
(http://blogs.wsj.com/independentstreet/2008/09/02/does-an-aversion-to-risk-taking-hold-back-women-entrepreneurs/tab/article/).

I have doubts as to the hypothesizing around the factors that are holding back female entrepreneurs, however. Is risk-taking itself a prerequisite to entrepreneurial success, or is it merely necessary to secure the money from male-oriented venture capitalists and clients? Is risk-taking, in itself, what entrepreneurs need to launch a successful venture, or does it only seem this way because men, who are so often in control of capital, perceive risk-proneness as a desirable personal quality?

If the features of maleness are over time associated with entrepreneurial prowress, how we can disentangle the confoudning factors? I argue that we cannot know if risk taking is a desireable quality in entrepreneurs.

Can insight into the female psyche make corporations millions?

While women wear many hats in the modern world, be it friend, mother, or professional, the female as a consumer has caught the attention of market watchers recently.

Michael J. Silverstein and Kate Sayre have published “Women Want More,” a book exploring what the female market looks like today and how to best capture it.

Follow this link for a cover of this research in the Harvard Business Review: https://archive.harvardbusiness.org/cla/web/pl/product.seam?c=532&i=534&cs=891f1a6dac549701466611bdc4ce5f29

More women are working and the income gap between men and women is closing. Women, it appears, are enjoying more discretionary income and are willing to spend it. With women working full time more often, both at work and at home, Silverstein and Sayre think that services that cater to the modern women’s busy schedule will generate the biggest profits of the future.

In my opinion, in catering to the female populace it is hard to achieve a balance between realistically meeting the true needs of the average female and falling back on stereotypes. The only way to do this, I think, is to be fastidious about surveying to understand the true nature of demand. When Dell offered a laptop in pink, hoping to capture the fastest growing segment, the campaign crashed when female outcry condemned the campaign as condescending and ill-matched to their actual needs.

Consider financial services. It may be the empirical truth that women are less financially literate than men. If so, and if women really do need good advice, will such programs help to address the problem without doing more harm in terms of reinforcing stereotypes and offending the very demographic targeted?

Fitness, the author’s claim, is an area in which industry has done better for women. Recognizing that women prefer cardio to body building, chains such as Curves have stepped up to provide quick, easy, low cost alternatives to the fitness center chains primarily targeted toward men.

Overall, the economy is paying attention to the unmet needs of women, and this can’t be a bad thing. Products and services specialized for women, especially for modern working women, are designed to recognize the fact that businesses are coming to terms with the fact the females and men are essentially different types of consumers. Different biological systems produce different psychologies, which lead to different characteristic patterns of consumer behavior between women and men. I think it is more important to recognize this fact than to avoid speaking about women in broad strokes. Overall, I am excited to see this women specific research take flight, even if it is in the pursuit of capturing as much of our money as possible.

Knowing What to Want

Straight from the psychological powerhouse that is Yale and indeed from our very own Peter Salovey, today’s study explores the relationship between emotional intelligence and the accuracy with which we predict our responses (in moods and emotions) to future events. We call this ability “affective forecasting.”

Here is the link to the article, entitled “On Emotionally Intelligent Time Travel: Individual Differences in Affective Forecasting Ability"

http://psp.sagepub.com/cgi/reprint/33/1/85 (hit the download button if it does not pop up immediately).

Most people are miserable predictors of how happy or sad a future event will make them, overlooking the strength and versatility of what some call our “psychological immune system.” We end up overestimating the duration and intensity of our emotional reactions to events.

The idea of affective forecasting, and the fact that we are bad at it, is hardly news. I open the topic today to suggest the possibility that not all affective forecasters are equally impaired. This study compellingly presents a case for emotional intelligence as a significant predictor of how accurately an individual can forecast his or her future emotional state. The better we are at a certain facet of emotional intelligence -- emotional management -- the better forecasters we are.
Though I suppose any empirical research is never conclusive, it is approaching consensus that women exhibit, in more studies than not, higher emotional intelligence than men. If so, does that mean that women are better affective forecasters?

The authors investigate the role of gender here, and find that it is the increased emotional intelligence, not gender itself, that is playing the greatest role in the effect. Nevertheless, women score higher on emotional intelligence, so the link still holds.

Researchers Gilbert and Wilson in an earlier affective forecasting study subtitle their paper as “Knowing What to Want.” If we are dismal predictors of how happy we will be after attaining our goals, can we really trust ourselves to be the enablers of our future wellbeing? “Knowing oneself,” may be the key to acting today in the best interest of each or our future selves.

Happiness over Time

Today I’d like to cover what I believe to be one of the most, and maybe the only, important research topic- happiness research. If all other human drive-, the pursuit of influence, fortune, and deep interpersonal connections- are pursued in the service of the ultimate end of happiness, then it makes sense to investigate the relationship between the intermediate goals of wealth and love to the umbrella goal of wellbeing. In the article I have chosen today, two economists investigate changing average happiness levels for men and women over time in America. How does our life satisfaction change as we age? What changes in the lives of men and women are responsible for the trends that emerge?

The article I have chosen is entitled “Aspirations, attainments, and satisfaction: Life cycle differences between American women and men,” and was published in December 2008 in the Journal of Happiness Studies. It’s not too long, doesn’t bore with the nitty gritty of method, and is very accessible.

Here is the original article:
http://www.genet.ac.uk/workpapers/GeNet2008p32.pdf

Here is a good summary from when the article was covered by Business Week last summer:
www.businessweek.com/careers/workingparents/blog/archives/2008/07/the_happiness_g.html

The economist Easterlin is also known for his research connecting income levels within and between countries to life satisfaction levels, in an article that is cited all the time in the continuing work on money’s exact relationship to well-being. Anke Plagnol has a background in economics and sociology and explores subjective well-being and gender equality.

Essentially, the findings of their study suggest that women in early life are happier than men, but that this pattern is reversed by the time adults reach the age of 50. The authors point to age 48 as the time at which average male life satisfaction exceeds that of females. Easterlin and Plagnol point to differences between marriage rates and financial satisfaction as the factors behind this result.
And now for the briefest of explorations into the methods of the experiment. The authors were hoping to tease out the gap between the aspirations and the attainments of their subjects, Discrepancies between what people consider part of a “good” life (aspirations), and what they consider themselves have now (attainments) should point to the missing components of one’s life that lead to imperfect happiness (unattained aspirations). The happiness and satisfaction data the authors use spans roughly from 1972-1993 and then biannually after ’94.
The authors analyzed aspirations and attainments over time across men and women. The pattern that emerges for marriage aspirations I thought was particularly interesting. In early adulthood, we see a large proportion of both genders seeking a happy marriage (approximately 9/10 individuals). What’s interesting is that the authors find that for both genders happy marriage ambitions decline over time, but that they decline at a faster rate for women. After the early 40’s, less women desire a happy marriage than men. The authors also find that in early adulthood women are more likely to have a happy marriage than men, while after middle age the opposite is true. Women want marriage less as they get older, but also have a happy marriage less often.
A somewhat similar trend emerges over time for women and men on the aspiration of possession of valuable (“big ticket”) consumer goods. In early adulthood, men report a larger gap between their aspirations and their attainments, reflecting a larger dissatisfaction with their finances overall. Women in later life are less satisfied with their finances, and indeed on averaged women own fewer valuable goods than men overall. In terms of differences in aspirations for material goods, the authors suggest that men and women do not significantly diverge on their desires, with the exception of clothing, which women desire significantly more. I wasn’t shocked by that finding, though I know a fair amount of male prepsters who are attached to a hefty wardrobe.
Unattained aspirations of lasting marriage and material satisfaction appear to produce the conclusions reported by Easterlin and Plagnol. A fulfilling family life (marriage) and financial well being are significant determinants of personal happiness. As I mentioned above, some of Easterlin’s studies seem to suggest that income does not predict happiness to as great an extent as we might have once thought. In the Easterlin and Plagnol study, however, we are looking at personal aspirations against personal attainments, essentially examining within subjects the unfulfilled goals on these fronts. In this way the two studies differ and so do not necessarily present contradictory findings.
What’s important about this study is not only what it says about the factors that prove important to the relative happiness levels of men and women, but also that legitimate differences in the patterns of well being for men and women at different stages in their lives exist at all. Of course individual happiness varies across demographic features (which were controlled for in this study), but it is, in my opinion, not intuitive that there would be a happiness gap between men and women at any age. Gender is a variable that is a significant predictor of well being. It’s important to look at how and why women and men experience different average happiness levels overtime- perhaps there are institutional solutions that can help to alleviate some of the factors that emerge later in life to decrease average happiness of women.

What is a Women's Decision Making Blog?

Rooted in the tradition of psychology and expanded by developments in neuroimaging technology, the field of decision making in cognitive science has emerged relatively recently. Its fascinating and shows up all over the place (I see that often findings from related fields pop up in the New York Times TierneyLab blog.)
Inspired by my courses I found the material that we covered to be entirely relevant to so many of my everyday conversations. I began e-mailing around the interesting articles I was reading in class or in journals, feeling strongly that those around me were debating topics that we have empirical research to address. In this blog I hope to centralize the research that I’ve studied or come across on my own in a location for the Yale (and greater) community to access. More than any other academic discipline I have yet studied, the results coming out of these departments are immediately applicable to day-to-day living, and I believe that an appreciation of this research’s relevance can and will lead to increased understanding of the components of wellbeing.
That being said, lets get down to the actual substance of this blog, which I hope to organize roughly with a new topic each week. I hope to cover a broad array, drawing from the disciplines of philosophy, organizational behavior, behavioral finance, social psychology and others. Though the content I hope to cover is subject to change over the course of the term, some of the topics I’m most excited about are women and risk-taking, overconfidence and metaknowledge, incentive structures and the female professional, women’s decisions about healthcare, women and vision-oriented leadership, personal relationships and relationship satisfaction over time, etc.
I hope that the blog becomes a conversation about the applicability of empirical research to daily wellbeing, but at the very least, I just hope to expose others to what kind of work this field is generating.
And now, as should be clear from the title of this blog, I hope to give this blog a feminine spin- paying particular attention to work that has yielded gender-specific results.

My first article will be listed this week! Stay tuned!