The economist Anne Sibert hypothesizes that gender inequality in the finance industry is partly to blame for the financial crisis. She points to evidence that men are less risk-averse in financial decision-making, more overconfident, and perhaps susceptible to testosterone-fueled feedback loops in asset bubbles. She concludes, “If — as the research may suggest — men are less risk-averse than women, then a work group composed primarily of men (or primarily of women) may be a particularly bad idea.” (HT: Free Exchange) [%comments]
Could Women Have Prevented a Financial Crisis?
TAGS: Gender
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The real question is not about differences on the whole between men and women, but about differences between men and women in decision making roles. Furthermore, looking at just the trading activities of financial institutions as the cause of this crisis is extremely narrow sighted, considering failures on many levels, some of which were not taking risks. Politicians, regulators, borrowers, businesspeople from not just financial firms, but retail, industrial etc, missed things that have cost themselves and their institutions dearly.
In regards to the financial industry, I think it would be safe to say that women who enter high level roles in this field possess similar levels of risk aversion and aggression as do their male counterparts. A poor study at best.
Its not risk taking, its basic honesty.
For New Yorker men, if you want to keep a blond, busty, bimbette in a brownstone, you need a 7 figure income.
Being honest doesn’t allow you to swing the “big dick”!
The concept fits nicely into the agrument that men and women and complements and not equals. This is misguided religious doctrine that has been accepted by society at large. I reject the premise.
Teaching is dominated by women.
It would be rediculous to agrue a bridge collapse was due to not enough women in engineering. Or that the twin tower of NYC would be standing today had more women been involved with the design.
Finally, women have been very successful in the US in the last 20 years entering the legal profession, yet an arguement that the law is becoming more risk averse does not pass the laugh test.
it’s not gender- people are less risk-averse with other people’s money
Women would simply have their own version of financial crisis eventually, because, every system at some point does break (more of less spectacularly)
Women may be different people to men, but … they are not ‘better’ people at all. Just people (and female)
BTW, usually it is women who make the decision about which house to buy, and the nesting instinct when it’s in full swing can cost the family hundreds of thousands of pounds.
Realtors all over the world know this very well, and usually try and use this to their advantage.
So, in a way, women are kind of responsible for the current crisis somewhat too anyway, directly so by the decision they made, which was to buy too much house on too little income.
It was really good that Bernie Madoff had Laura Pendergest-Holt’s risk aversion to check his testosterone.
It used to be said that female heads of state would be unlikely to go to war.
That theory didn’t stand up to Golda Meir or Indira Ghandi or Margaret Thatcher.
This theory wouldn’t fare any better, although I can’t blame women for suggesting that they get their turn at overpaid incompetence.
Oh come on. Don’t care who was running the show, it all boils down to:
“The money was too good. I got stupid.”
Jayne Cobb – Firefly