Are differences in risk aversion and competitiveness between men and women due to cultural pressures rather than innate tendencies?:
Gender, risk, and competition, by Alison Booth, Vox EU: It is well known that women are under-represented in high-paying jobs and top-level management positions. Recent work in experimental economics, largely examining college-age men and women attending coeducational universities, has examined to what degree this underrepresentation may be due to innate differences between men and women. Experimental studies have shown that women are less willing than men to take risks or to enter a competitive environment such as a tournament (see for example Niederle and Vesterlund, 2007).
Gender differences in risk aversion and competition, it is sometimes argued, may help explain some of the observed gender disparities in labour force achievement. For example, if remuneration in high-paying jobs is tied to bonuses based on a company's performance and if women are more risk-averse than men, fewer women may choose to take high-paying jobs because of the uncertainty.
Might culture matter?
Are women naturally more risk-averse or less inclined to enter a competitive situation? Or are they trained to be that way? Why women and men might have different preferences or risk attitudes has been discussed but not tested by economists. Broadly speaking, those differences may be due to nurture, nature, or some combination of the two. For instance, boys are pushed to take risks and act competitively when participating in sports, and girls are often encouraged to remain cautious. Thus, the choices made by men could be due to the nurturing received from parents or peers. Similarly, the disinclination of women to take risks or act competitively could be the result of parental or peer pressure not to do so.
An interesting study by Gneezy, Leonard, and List (2008) explored the role of culture in determining gender differences in competitive behaviour. They investigated two distinct societies, the Maasai tribe of Tanzania and the Khasi tribe in India. The former is patriarchal while the latter is matrilineal. In the patriarchal society, women were found to be less competitive than men, a result consistent with studies using data from Western cultures. But in the matrilineal society, women were more competitive than men. Indeed, the Khasi women were found to be as competitive as Maasai men. The authors interpret this as evidence that culture has an influence.
What other environments could affect competitive and risk-taking behaviour? Educational psychologists argue that the gendered aspect of individuals' behaviour is brought into play by the gender of others with whom they interact, and that there may be more pressure for girls to maintain their gender identity in schools where boys are present than for boys when girls are present. In a coeducational environment, girls are more explicitly confronted with adolescent subculture (such as personal attractiveness to members of the opposite sex) than they are in a single-sex environment. This may lead them to conform to society's expectations of how girls should behave to avoid social rejection. If competitive behaviour or risk avoidance is viewed as being a part of female gender identity while risk-seeking is a part of male gender identity, then a coeducational school environment might lead girls to make less competitive and risky choices than boys.
Experimental evidence on environmental influences
To investigate the role that nurturing might play in shaping risk and competitive attitudes, we used UK students from years 10 and 11 of state-funded single-sex or coeducational schools as experimental subjects (Booth and Nolen 2009a, 2009b). The students had been in that environment since completing primary school, and their average age was just under 15 years. Our goal was to examine the effect of two potential types of nurturing – educational environment and randomly assigned experimental peer-groups. The former represents long-run nurturing experiences, while the latter captures short-run environmental effects.
The students were taken by bus from their respective schools to the University of Essex for the experiments. They came from eight schools in the counties of Essex and Suffolk. Four of the schools were single-sex. In Suffolk County, there are no publicly funded single-sex schools. In Essex County, the old single-sex "grammar" schools remain, owing to a (convenient for our purposes) quirk of political history. On arrival, students from each school were randomly assigned into 65 groups of four. Groups were of three types – all-girls, all-boys, or mixed. Mixed groups had at least one student of each gender and the modal group comprised two boys and two girls. The composition of each group – the appropriate mix of single-sex schools, coeducational schools and gender – was determined beforehand. Thus only the assignment of the 260 girls and boys from a particular school to a group was random. The school mix was two coeducational schools from Suffolk (103 students), two coeducational schools from Essex (45 students), two all-girl schools from Essex (66 students), and two all-boy schools from Essex (46 students). All students were paid a show-up fee as well as any winnings from the experiments. A survey was administered immediately after the experiment, to obtain background information to facilitate robustness checks.
We gave subjects in the controlled experiment an opportunity to choose the risky outcome – a real-stakes gamble with a higher expected monetary value than the alternative outcome with a certain payoff – and in which the sensitivity of observed risk choices to environmental factors could be explored. The task was carefully constructed so that subjects with a coefficient of relative risk aversion greater than a particular level would choose the real-stakes gamble; otherwise they would choose the certain amount. Their choice was either to receive £5 with certainty or to flip a coin and get £11 if the coin comes up heads or get £2 if the coin comes up tails.
We hypothesized that women and men may differ in their propensity to choose a risky outcome for several reasons – innate preferences or because their innate preferences are modified by pressure to conform to gender-stereotypes. Single-sex environments are likely to modify students' risk-taking preferences in economically important ways. Our specific conjectures were that girls from single-sex schools are less risk averse than girls from coed schools, and that girls in same-gender groups are less risk averse than girls in coed groups. We also conjectured that girls in same-gender environments (single-sex schooling or same-gender experimental groups) are no less risk-averse than boys.
We found that girls from single-sex schools were as likely to take a risk by gambling their £5 in the hopes of winning £11 as boys (from either coed or single sex schools) and were more likely to take a risk than coed girls. Moreover, gender differences in preferences for risk-taking were sensitive to the gender mix of the experimental group, with girls being more likely to choose to take a risk when assigned to an all-girl group. This suggests that observed gender differences in behaviour under uncertainty found in previous studies might reflect social learning rather than inherent gender traits.
Competitive behaviourwas measured by allowing students to choose between payment via a tournament (winner-takes-all) or by piece rate. Subjects were advised that their payment would depend on which option they chose if this round was randomly selected for payment. Students’ tasks involved solving paper mazes, as is common in this literature.
Using the data generated from this experiment, we found that girls from single-sex schools were significantly more likely to choose to enter the tournament than coeducational girls, ceteris paribus. Being randomly assigned to an all-girls group made the girl more likely to enter the tournament. We also compared girls' behaviour with that of boys from single-sex and coeducational schools – girls from single-sex schools behaved more like boys. These findings were robust to a number of sensitivity checks.
What might explain these findings?
While our research should not be interpreted as saying that we should all immediately enrol our daughters in single-sex schools, it does provide food for thought. Educational studies have shown that there may be more pressure for girls to maintain their gender identity in schools where boys are present than for boys when girls are present. In a coeducational environment, adolescent girls are more explicitly confronted with adolescent subculture (such as personal attractiveness to members of the opposite sex) than they are in a single-sex environment. This may lead them to conform to boys' expectations of how girls should behave to avoid social rejection. If risk avoidance is viewed as being a part of female gender identity while risk seeking is a part of male gender identity, then being in a coeducational school environment might lead girls to make safer choices than boys.
What role for policy?
These results matter, not least because of the underrepresentation of women in high-paying jobs and top management positions. While gender differences in risk aversion or competition could explain some of the observed disparities in labour force achievement, these gender differences are not necessarily innate, as shown by our experiments and those of Gneezy et al. (2008). Women may be trained to be so by their environment. Appropriate policy action might be directed not only to removing discrimination on the demand-side but also towards developing female confidence in risk-taking on the supply-side.
Booth, Alison L. and Patrick Nolen (2009a). “Gender Differences in Risk Behaviour: Does Nurture Matter?” CEPR Discussion Paper No. 7198, March.
Booth, Alison L. and Patrick Nolen (2009b). “Choosing to Compete: How Different Are Girls and Boys?” CEPR Discussion Paper No. 7214, March.
Gneezy, Uri, Kenneth Leonard, and John List. (2008). “Gender Differences in Competition: Evidence from a Matrilineal and a Patriarchal Society”. Forthcoming in Econometrica.
Niederle, Muriel and Lise Vesterlund (2007). “Do women shy away from competition? Do men compete too much?” Quarterly Journal of Economics 122 (3); 1067-1101.
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