Gender and economic preferences

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

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

3. Background • Recent attention: preferenceexplanation • Arethere gender differences in economicpreferences? • If yes: why? • Cultural or biologicalvariables? Interactions? • Weexplorebothquestions • Joint workwithAnne Boschini, Juan-CamiloCárdenas, Emma von Essen, Astri Muren and Eva Ranehill (amongothers)

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

5. The use of experimental economics • Inspired by psychology, mainly in the lab • Strenghts: • Good for randomization • Revealedpreferences • Isolation ofspecificfactors • Replications • Weaknesses: • Artificial? • Externalvalidity? • Fieldexperiments solution

6. Risk preferences • Gambles with given probabilitieswithmonetaryoutcomes • Do youprefer X kr withcertainty or a cointosswhereyoucan get 200 or 0 kr? • Wevary the certainamount (e.g. X from 20 to 160): whendoes the individualprefer the certainamountto the gamble? • Different versions • E.g. pairs oflotteries

7. Risk preferences • Risk averse in the domainofgains • Risk loving in the domainoflosses • Do youprefertogain 90 kr withcertainty or a cointosswhereyoucangain200 or 0 kr? • Do youprefertolose 90 kr withcertainty or a cointosswhereyoucanlose200 or 0 kr? • Large variation between (and within) individuals • Gender differences?

8. Results risk • Men are more risk taking than women Croson and Gneezy 2009

9. Exceptions and causes • A fewinterestingexceptions (M=F) • Professionalinvestors • Mixed vs. same sex schools and groups • Colombia vs Sweden • Hormones? Cárdenas, Dreber, von Essen and Ranehill in press

10. 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?

11. 2 different measuresofcompetitiveness • Self-selection/choice ofcompetition 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 • Firstpaymentscheme 1, then 2. Competitiveness is the performancechange • Gender differences?

12. 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

13. 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

14. 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

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

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

17. Social preferences • Payoffofother person enters my utilityfunction • Weightcan be positive or negative • Dictator game • One person gets an endowmentofmoney and canchoosehowto split it betweenself and other person • Second person doesnothing • Trust game • First person cansendmoneyto second person, money sent is multiplied, second person cansendsomemoney back • Second person’smoney is not multiplied

18. 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

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

20. Study on representative sample in Sweden • Earlier studies mainly on students/specificgroups • Samplecan be important • Board members • Students and non-students • 1350 individuals in Sweden, sampled fall 2011 • 50% responsefrequency • 1000 phone survey, 350 postal survey • Measuresof risk preferences, competitiveness in two different domains, altruism/generosity, trust

21. Results • No gender differences: • Altruism/generosity, risk preferences, competitiveness in wordsearch • Gender differences • Men aremoretrusting • Men morecompetitivein math • Especiallyagainstwomen • Disappearswithincomecontrol • Risk puzzle • Almenberg and Dreber 2011 other representative study: men more risk taking

22. 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

23. 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 ofcompetitionexplains 25% of variation in the choice totake a competitivehighschoolentrance test • Controlling for gradesetc, 7 percentagepoints • Womenperformworsethan men on importantcompetitiveentranceexams, oppositeotherwise Fortin 2008, Manning and Swaffield 2008, Flory et al. 2010, Manning and Saidi 2010, Zhang 2010, Ors et al. 2011

24. 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