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Are Women Really More Risk-Averse than Men?

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  • Julie Nelson

Abstract

While a substantial literature in economics and finance has concluded that women are more risk averse than men, this conclusion merits reconsideration. Drawing on literatures in statistics and cognitive science, this essay discusses the important difference between drawing conclusions based on statistical inference, which concerns aggregates such as mean scores, and generalization, which posits characteristics of individuals classified into kinds. To supplement findings of statistical significance, quantitative measures of substantive difference (Cohen's d) and overlap (the Index of Similarity) are computed from the data on men, women, and risk used in 28 published articles. The results are considerably more mixed and overlapping than might be expected. Paying attention to empirical evidence that challenges subjective cultural beliefs about sex and risk has implications for labor economics, finance, and the economics of climate change.

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Paper provided by Institute for New Economic Thinking (INET) in its series INET Research Notes with number 12.

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Date of creation: 21 Sep 2012
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Handle: RePEc:thk:rnotes:12

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  1. Alison L. Booth & Patrick Nolen, 2012. "Gender differences in risk behaviour: does nurture matter?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 122(558), pages F56-F78, 02.
  2. Borghans Lex & Golsteyn Bart & Heckman James & Meijers Huub, 2009. "Gender Differences in Risk Aversion and Ambiguity Aversion," ROA Research Memorandum, Maastricht University, Research Centre for Education and the Labour Market (ROA) 005, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  3. Dohmen Thomas & Falk Armin & Huffman David & Sunde Uwe & Schupp Jürgen & Wagner Gert G., 2009. "Individual Risk Attitudes: Measurement, Determinants and Behavioral Consequences," Research Memorandum, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) 039, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  4. Helga Fehr-Duda & Manuele Gennaro & Renate Schubert, 2006. "Gender, Financial Risk, and Probability Weights," Theory and Decision, Springer, Springer, vol. 60(2), pages 283-313, 05.
  5. Uri Gneezy & Kenneth Leonard & John List, 2009. "Gender differences in competition: Evidence from a matrilineal and a patriarchal society," Artefactual Field Experiments, The Field Experiments Website 00049, The Field Experiments Website.
  6. Daniela Beckmann & Lukas Menkhoff, 2008. "Will Women Be Women? Analyzing the Gender Difference among Financial Experts," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 61(3), pages 364-384, 08.
  7. Catherine C. Eckel & Philip J. Grossman, 2008. "Forecasting Risk Attitudes: An Experimental Study Using Actual and Forecast Gamble Choices," Development Research Unit Working Paper Series, Monash University, Department of Economics archive-01, Monash University, Department of Economics.
  8. Nelson, J.A., 2013. "Ethics and the economist: What climate change demands of us," Ecological Economics, Elsevier, Elsevier, vol. 85(C), pages 145-154.
  9. Adrian Bruhin & Helga Fehr-Duda & Thomas Epper, 2010. "Risk and Rationality: Uncovering Heterogeneity in Probability Distortion," Econometrica, Econometric Society, Econometric Society, vol. 78(4), pages 1375-1412, 07.
  10. LINDA McDOWELL, 2010. "Capital Culture Revisited: Sex, Testosterone and the City," International Journal of Urban and Regional Research, Wiley Blackwell, Wiley Blackwell, vol. 34(3), pages 652-658, 09.
  11. Powell, Melanie & Ansic, David, 1997. "Gender differences in risk behaviour in financial decision-making: An experimental analysis," Journal of Economic Psychology, Elsevier, Elsevier, vol. 18(6), pages 605-628, November.
  12. Ziliak, Stephen T. & McCloskey, Deirdre N., 2004. "Size matters: the standard error of regressions in the American Economic Review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 33(5), pages 527-546, November.
  13. Lindquist, Gabriella Sjögren & Säve-Söderbergh, Jenny, 2011. ""Girls will be Girls", especially among Boys: Risk-taking in the "Daily Double" on Jeopardy," Economics Letters, Elsevier, Elsevier, vol. 112(2), pages 158-160, August.
  14. Nelson, Julie A., 2009. "Between a rock and a soft place: Ecological and feminist economics in policy debates," Ecological Economics, Elsevier, Elsevier, vol. 69(1), pages 1-8, November.
  15. Richard S. J. Tol, 2010. "The Economic Impact of Climate Change," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, Verein für Socialpolitik, vol. 11(s1), pages 13-37, 05.
  16. Stephen T. Ziliak & Deirdre N. McCloskey, 2004. "Size Matters: The Standard Error of Regressions in the American Economic Review," Econ Journal Watch, Econ Journal Watch, vol. 1(2), pages 331-358, August.
  17. Renate Schubert, 1999. "Financial Decision-Making: Are Women Really More Risk-Averse?," American Economic Review, American Economic Association, American Economic Association, vol. 89(2), pages 381-385, May.
  18. Lex Borghans & Bart H.H. Golsteyn & James J. Heckman & Huub Meijers, 2009. "Gender Differences in Risk Aversion and Ambiguity," Working Papers, Geary Institute, University College Dublin 200903, Geary Institute, University College Dublin.
  19. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, American Economic Association, vol. 100(1), pages 557-71, March.
  20. Meier-Pesti, Katja & Penz, Elfriede, 2008. "Sex or gender? Expanding the sex-based view by introducing masculinity and femininity as predictors of financial risk taking," Journal of Economic Psychology, Elsevier, Elsevier, vol. 29(2), pages 180-196, April.
  21. Joseph Henrich & Steve J. Heine & Ara Norenzayan, 2010. "The Weirdest People in the World?," Working Paper Series of the German Council for Social and Economic Data, German Council for Social and Economic Data (RatSWD) 139, German Council for Social and Economic Data (RatSWD).
  22. Catherine C. Eckel & Philip J. Grossman, 2002. "Sex Differences and Statistical Stereotyping in Attitudes Toward Financial Risk," Development Research Unit Working Paper Series, Monash University, Department of Economics archive-03, Monash University, Department of Economics.
  23. Barsky, Robert B, et al, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(2), pages 537-79, May.
  24. Brad M. Barber & Terrance Odean, 2001. "Boys Will Be Boys: Gender, Overconfidence, And Common Stock Investment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(1), pages 261-292, February.
  25. Nelson, Julie A., 1992. "Gender, Metaphor, and the Definition of Economics," Economics and Philosophy, Cambridge University Press, Cambridge University Press, vol. 8(01), pages 103-125, April.
  26. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, American Economic Association, vol. 92(5), pages 1644-1655, December.
  27. Jane Miller & Yana van der Meulen Rodgers, 2008. "Economic importance and statistical significance: Guidelines for communicating empirical research," Feminist Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 14(2), pages 117-149.
  28. Randall, Alan, 2009. "We Already Have Risk Management - Do We Really Need the Precautionary Principle?," International Review of Environmental and Resource Economics, now publishers, now publishers, vol. 3(1), pages 39-74, August.
  29. Hartog, Joop & Ferrer-i-Carbonell, Ada & Jonker, Nicole, 2002. "Linking Measured Risk Aversion to Individual Characteristics," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 55(1), pages 3-26.
  30. Kimmo Eriksson & Brent Simpson, 2010. "Emotional reactions to losing explain gender differences in entering a risky lottery," Judgment and Decision Making, Society for Judgment and Decision Making, Society for Judgment and Decision Making, vol. 5(3), pages 159-163, June.
  31. Sunden, Annika E & Surette, Brian J, 1998. "Gender Differences in the Allocation of Assets in Retirement Savings Plans," American Economic Review, American Economic Association, American Economic Association, vol. 88(2), pages 207-11, May.
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Cited by:
  1. Julie A. Nelson, 2012. "Is Dismissing the Precautionary Principle the Manly Thing to Do? Gender and the Economics of Climate Change," GDAE Working Papers, GDAE, Tufts University 12-04, GDAE, Tufts University.
  2. Antonio FILIPPIN & Paolo CROSETTO, 2014. "A Reconsideration of Gender Differences in Risk Attitudes," Departmental Working Papers, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano 2014-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.

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