Gender and economic preferences Anna Dreber Almenberg Stockholm School of Economics Konjunkturinstitutet 2012-05-02

Background Many important outcomes differ for men and women Why? Labor market, financial markets Why? Discrimination? Differences in performance? Differences in preferences?

Background Recent attention: preference explanation Are there gender differences in economic preferences? If yes: why? Cultural or biological variables? Interactions? We explore both questions Joint work with Anne Boschini, Juan-Camilo Cárdenas, Emma von Essen, Astri Muren and Eva Ranehill (among others)

Focus on 3 types of preferences Risk preferences Competitiveness Social preferences Outline: Earlier research Some new studies Labor market relevance (risk and competitiveness)

The use of experimental economics Inspired by psychology, mainly in the lab Strenghts: Good for randomization Revealed preferences Isolation of specific factors Replications Weaknesses: Artificial? External validity? Field experiments solution

Risk preferences Gambles with given probabilities with monetary outcomes Do you prefer X kr with certainty or a coin toss where you can get 200 or 0 kr? We vary the certain amount (e.g. X from 20 to 160): when does the individual prefer the certain amount to the gamble? Different versions E.g. pairs of lotteries

Risk preferences Risk averse in the domain of gains Risk loving in the domain of losses Do you prefer to gain 90 kr with certainty or a coin toss where you can gain 200 or 0 kr? Do you prefer to lose 90 kr with certainty or a coin toss where you can lose 200 or 0 kr? Large variation between (and within) individuals Gender differences?

Results risk Men are more risk taking than women Finucane Croson and Gneezy 2009

Exceptions and causes A few interesting exceptions (M=F) Professional investors Mixed vs. same sex schools and groups Colombia vs Sweden Hormones? Cárdenas, Dreber, von Essen and Ranehill in press

Competitiveness How do individuals react to different types of incentives? Self-selection and performance Do men and women self-select into different payment schemes because of different preferences or beliefs? Do men and women perform differently depending on the payment scheme?

2 different measures of competitiveness Self-selection/choice of competition or piece-rate payment Ex: You are to solve mazes during 5 min. You can choose 1 out of 2 payment schemes: 1. $1 for each maze solved 2. $3 for each maze solved if you solve at least as many mazes as another random person, otherwise $0 What payment scheme do you prefer: 1 or 2? Performance under competition vs piece-rate First payment scheme 1, then 2. Competitiveness is the performance change Gender differences?

Results competitiveness Men are if anything more competitive: choice But culture/environment important Massai vs Khasi Not always in obvious way… Gneezy and Rustichini 2004, Gneezy et al. 2009, Zhang 2010, Dreber, von Essen and Ranehill 2011, Booth and Nolen 2012

Results competitiveness Cárdenas et al. in press 1200 children aged 9-12 in Colombia and Sweden Global gender gap index 2009: Sweden 4, Colombia 56 Competitiveness in class room

Experimental setup class room Math or word search, 2 min each stage Stage 1: Individual performance, 3p Stage 2: Forced competition, 6 or 0p Stage 3: Choice to compete –then performance No performance feedback Competition against 1 random child Points=pens and erasers Performance change

Choice to compete or not Not uniform results comparing Colombia and Sweden

Choice to compete or not ~200 children in Stockholm aged 16-18 Task matters Confidence/beliefs in performance key p=0.001

Social preferences Payoff of other person enters my utility function Weight can be positive or negative Dictator game One person gets an endowment of money and can choose how to split it between self and other person Second person does nothing Trust game First person can send money to second person, money sent is multiplied, second person can send some money back Second person’s money is not multiplied

Results altruism Women if anything more altruistic Charity: Gender difference early Social expectations can be important Boschini et al. 2011 ”Inequality aversion” vs ”efficiency” Dreber, von Essen and Ranehill 2011b

Results trust Trust: M=F or M>F (some exceptions) Trustworthiness/reciprocity: M=F or M<F (some exceptions) Croson and Gneezy 2009

Study on representative sample in Sweden Earlier studies mainly on students/specific groups Sample can be important Board members Students and non-students 1350 individuals in Sweden, sampled fall 2011 50% response frequency 1000 phone survey, 350 postal survey Measures of risk preferences, competitiveness in two different domains, altruism/generosity, trust

Results No gender differences: Gender differences Risk puzzle Altruism/generosity, risk preferences, competitiveness in word search Gender differences Men are more trusting Men more competitive in math Especially against women Disappears with income control Risk puzzle Almenberg and Dreber 2011 other representative study: men more risk taking

Labor market relevance Risk preferences: Fewer women in sectors with variable pay instead of fixed wage Risk measures correlate with employment choice in large German representative study Less risk taking: more likely to self-select into jobs with more stable wage with lower wage on average Causality not obvious… Bonin et al. 2007, Dohmen et al. 2011

Labor market relevance Competitiveness: Attitudes to how important money/work is explains part of gender wage gap Women sometimes less likely to apply for jobs with competitive payment scheme Choice of competition explains 25% of variation in the choice to take a competitive high school entrance test Controlling for grades etc, 7 percentage points Women perform worse than men on important competitive entrance exams, opposite otherwise Fortin 2008, Manning and Swaffield 2008, Flory et al. 2010, Manning and Saidi 2010, Zhang 2010, Ors et al. 2011

Discussion Some evidence of gender differences in preferences More work needed on labor market relevance Competitiveness particularly important? Math More work needed on understanding when there is a gap in preferences For policy etc ag vet inte exakt hur det ser ut, men den där studien från svenskt näringsliv som finner att kvinnor byter jobb mer sällan men får högre kompensation när de väl gör det säger att mäns och kvinnors beteende på arbetsmarknaden skiljer sig ååt på sätt som lätt kan tros vara korrelerade med underliggande preferenser och som har ekonomisk relevans. tänkte bara att det är en bra grej att säga:-)