This weekend’s FT had an article titled “Mars and Venus – how women invest” bringing up, yet again, whether men’s supposed risk-seeking behavior and women’s supposed risk-averse behavior is reason that men are so much more successful in the business world and basically the whole world in general. This question has been discussed in media and academic literature before, but it’s especially appropriate on the release of Sheryl Sandberg’s Lean In, where she argues that we just need to “lean in” a little more and not back away from risk and potential accomplishment. The FT reviews some surveys that show women feel less prepared to make financial decisions compared to men and that women are less likely to “enjoy the sport of investing.” The FT also discusses risky types of investing where men overwhelmingly dominate, even more than in the finance sector in general. Apparently women are virtually non-existent in the world of “spread betting” (despite the dirty jokes that could be made), which is arguably the most risky type of investing.
The FT makes an effort to address the underlying reasons behind women’s apparent risk-aversion. They argue that women feel the need to maintain their assets in order to provide for their families more than men do. Women might receive different financial advice than men do.
But an academic paper “Does Entrepreneurship Pay?” by Ross Levine and Yona Rubinstein points to some societal reasons why risk taking may be less lucrative for women and non-whites. Levine and Rubinstein find that entrepreneurs tend to be overwhelmingly male and white. These white men also tend to come from well-educated and financially secure backgrounds, making it easier to take risks with a cushion to fall back on. This points to larger social structures that encourages (white) men to take risks and discourages everyone else from being able to do so.
The pressure on women to just step up, take a risk, “lean in”, may be misguided. Some experimental evidence suggests that there are not inherent personal characteristic differences between men and women that influence their risk-taking decisions, with the exception of one’s own perception of one’s skills, likelihood of failure and available opportunities (reviewed in this World Development Report on page 204). So the risk-seeking behavior of men and the risk-aversion of women is because we socialize men and women differently and they receive different types and levels of support from their families and society. Men are told they can do it from an early age, they believe it, we give them the means to do it, and then they do it. I don’t think that Sandberg’s call for women to just “lean in” once they reach the business world are sufficient.
One’s entire life background shapes who they will be once they enter the labor market and the economy as adults. If you are trained to set modest goals, set socially-minded goals, to be safe, then you can’t just “lean in” once you enter the labor market. Furthermore, why should you? Women are productive members of society, and if they aren’t investing in risky bets which have the potential to bring down our world economy in financial crashes again, maybe their behavior is not so bad after all and they just need to be more justly compensated for it. To continue to attribute men’s success to risk-seeking behavior and telling women they should just try to do that too misses the point entirely.
Social structures shape not only these behaviors, but also our perception of them as desirable ones in the first place. We tell men to be risky, then we believe that riskiness is good behavior in the economy, then we continue to tell men to be risky. Meanwhile, women are feeding our children and educating them for the future at measly wages and without any respect. I think changing how we think about these behaviors is the first step in the right direction rather than just telling women to “lean in” and be a man.