Gender and economic preferences

Anna Dreber AlmenbergStockholm School of Economics

Konjunkturinstitutet2012-05-02

Background

• Many important outcomes differ for men and women– 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

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

1. 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?

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

Gneezy and Rustichini 2004, Gneezy et al. 2009, Zhang 2010, Dreber, von Essen and Ranehill 2011, Booth and Nolen 2012

• Massai vs Khasi• Not always in obvious way…

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

20 + 58 + 21 = 22 + 37 + 21 = 31 + 25 + 11 = 33 + 46 + 84 = 18 + 37 + 97 = 28 + 26 + 25 = 24 + 38 + 18 = 16 + 74 + 24 = 13 + 16 + 13 = 30 + 24 + 22 = 20 + 21 + 18 = 33 + 22 + 22 =

D A L K O H C W R Z D Z EE T R O L O V A D E Q T TA L K K R L C S Ö G I F JB Y S O C O R Å W D X A EÅ S S A X I A H O E B M DS O Y T N K N R J T O I WR C K G S A F K Q Ä T L OR P A L Ä A C I C X R J MO R Ä J A M O R B I I T TV P I B R Ö L L O P P E AÅ H E M M A K V Ä L L H NG R Ä K Y N V L K R A M KR O M A N T I K O V X Ö E

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:– 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