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Wednesday, January 30, 2008

"A good wife always forgives her husband when she's wrong." - Milton Berle

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Gender Differences in Preferences

"If women prefer jobs that are less risky, more socially virtuous and less competitive, then this could explain part of the gender differences in the labor market...

This article has reviewed a stream of experimental literature on gender differences in risk preferences, social preferences and competitive preferences. In general, this literature has documented fundamental preference differences between the two genders (with exceptions noted in the text). These differences are consistent with preference-based explanations for the gender gap in wages.

For example, most lab and field studies indicate that women are more risk-averse than men (section 2). This risk-aversion can lead to the attraction of women to jobs with lower mean, lower-variance salaries. This preference-based explanation is consistent with some gender-gap evidence without resorting to discrimination arguments.

A number of studies also indicate that women’s social preferences are more sensitive to subtle cues than are men’s (section 3). This can lead women to choose professions which they think are socially appropriate for women, based on the cues they observe about the workforce (for example, what proportion of women are in this given profession).

Finally, a third stream of literature suggests that women’s preferences for competitive situations are lower than men’s. This can lead women to choose professions with less competition (and again to end up receiving lower wages on average). It can also lead to women earning less or advancing more slowly within a given profession...

One important and interesting question about these differences is whether they are ingrained or taught. By taking a step back and asking what causes the gender difference we can also connect some of the different elements discussed in this paper. For example, a large body of literature in evolutionary biology and socio-biology documents differences in competitiveness between males and females, in many species. This literature argues that the differences in competitiveness arise because, due to differences in the cost of reproduction, competitive males will attempt to mate at every opportunity. Females, on the other hand, are inherently choosy, reserving their favors for the strongest suitor.

Connecting competitive behavior with risk taking, Dekel and Scotchmer (1999) developed an evolutionary model of preference-formation, to investigate to what extent evolution leads to risk-taking in winner-take-all environments (like reproduction). They show that winner-take-all games are related to the survival of risk-takers and the extinction of risk-averters. Since in many species a winner-take-all game determines the males’ right to reproduce, the argument suggests that males will evolve to be risk-takers.

Similar evolutionary explanations are consistent with women being more sensitive to social cues than men. In exercising choosiness about mate selection, women who were sensitive to these cues could, on average, produce more fit offspring than those who were not. In contrast this increased sensitivity did not affect a male’s chance of reproduction, and was thus not selected for.

Indirect evidence on the nature/nurture question comes from the studies with children (before nurture has full impact) and cross-culturally (when nature remains constant but nurture changes). The evidence we have here suggests that gender differences in preferences remain among children and in different cultures, providing support for the nature over nurture explanation. Of course, some cultural differences have been identified, suggesting that nurture has an effect as well."


Finally - something to throw at those who ask me to justify my observation that women are more risk averse.

Nothing yet about irrationality, paranoia or gullibility, though (then again, paranoia is an extreme form of risk averseness).
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