LINTHICUM, MD, April 23 - A Swiss study suggests that a common stereotype contributing to the "glass ceiling" -- that woman are more reluctant than men to take risks in financial decisions -- is wrong. The paper is being presented at a convention of the Institute for Operations Research and the Management Sciences (INFORMS®) in Cincinnati on Wednesday, May 5.
Context the Key
The authors maintain that when men and women are both presented with the same
types of choices, the differences in approaching decisions are negligible.
"We observe no gender differences in risk propensity toward 'contextual'
decisions," write the authors. "Since in practice financial decisions are always
contextual, our results suggest that the ... gender stereotype may not reflect
male and female attitudes toward financial risks."
These results are important, say the authors, because previous studies on financial decision making have shown a widespread view that women are more reluctant to take risks than men. This view has hurt women at the workplace, they say, with women receiving less trust than men to make risky decisions that can contribute to a firm's success. The stereotype, they maintain, hurts career women in the financial and labor markets and contributes to "glass ceilings" that limit women's ability to receive corporate promotions.
Differs with Previous Studies
"In contrast to recent survey and experimental evidence, the results reported
here question the prevalence of stereotype gender specific risk attitudes,"
write the authors. "Under controlled economic conditions we find that female
subjects do not generally make less risky financial choices than male subjects.
"The data reported here shows that the comparative risk propensity of male and
female subjects in financial choices strongly depends on the decision
frame ... Moreover, when identical decisions are presented as investment and
insurance choices, no gender differences in risk attitudes are found.
"Our findings suggest that gender specific risk behavior found in previous
survey data may be due to differences in male and female opportunity sets rather
than stereotype risk attitudes."
Experiment
The authors conducted two experiments to test this assumption. The subjects were
undergraduates at the University of Zurich and the Swiss Federal Institute of
Technology.
The first experiment tested a group of 36 male and 32 female subjects. The subjects were confronted with risky choices in two different decision contexts. The subjects first had to complete a series of investment decisions. They were then presented with a series of identical choices, this time, however, framed as insurance decisions. Each investment and insurance decision incorporated a choice between a risk and a certain payoff.
The second experiment tested a different group, containing 40 male and 33 female subjects. The subjects in this group were confronted with the same risky decisions as those in the first experiment. The difference was that this second experiment was a control in which all choices were framed as abstract gambling decisions. The experiment sought to detect gender differences about willingness to take risks that may lead to gains and willingness to risk losses. The paper is entitled, "Financial Decision Making: Are Women Really More Risk Averse?" The authors are Renate Schubert, Martin Brown, and Matthias Gysler of the Swiss Federal Institute of Technology in Zurich; and Hans Wolfgang Brachinger of the University of Fribourg. The study is scheduled to be published in American Economic Review.
Operations Research
INFORMS® is holding its semi-annual convention in Cincinnati from Sunday, May 2
to Wednesday, May 5. The theme is "Delivering to the Global Consumer." It takes
place at the Cincinnati Convention Center and the Omni Netherland Plaza.
The convention includes sessions on topics applied to numerous fields, including
commuter transit, e-commerce, health care, information technology, energy,
transportation, marketing, telecommunications, and sports. More than 1,300
papers are scheduled to be delivered.
The General Chair is Professor David Rogers of the University of Cincinnati. The convention is underwritten, in part, by a generous grant of $125,000 from Procter & Gamble. For additional information on the conference, including a full list of workshops, visit http://www.informs.org/Conf/Cincinnati99/
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 12,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, the stock market, and telecommunications.