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Beyond Mars and Venus: Understanding gender differences in financial risk tolerance

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  • Lemaster, Philip
  • Strough, JoNell

Abstract

Research indicates that men are more risk tolerant and make riskier financial decisions than women. To explain this, researchers have favored “essentialist” explanations that attribute differences to core biological mechanisms and have tended to neglect psychological mechanisms that reflect the influence of culture and socialization. To better understand gender differences in risk tolerance, we investigated the relative effects of multiple psychological dimensions of gender, including gender identification (i.e., identifying as one’s biological sex and viewing it as a positive part of the self), gender typicality (i.e., feeling like a typical member of one’s biological sex), and gender-stereotyped personality traits and social roles. We also measured 2D:4D digit ratios as an indicator of prenatal testosterone exposure. Stereotypically masculine or instrumental personality traits (e.g., strong, acts as a leader) were associated with more risk tolerance in both men and women but were relatively more important for understanding men’s risk tolerance. Stereotypically feminine or communal personality traits were associated with less risk tolerance in women. Women who identified more with other women, and men who identified less with other men showed greater risk tolerance. Digit ratio was not associated with risk tolerance. Further research focused on psychological gender and risk tolerance is emphasized.

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  • Lemaster, Philip & Strough, JoNell, 2014. "Beyond Mars and Venus: Understanding gender differences in financial risk tolerance," Journal of Economic Psychology, Elsevier, vol. 42(C), pages 148-160.
    • Handle: RePEc:eee:joepsy:v:42:y:2014:i:c:p:148-160
    DOI: 10.1016/j.joep.2013.11.001
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    2. Luo, Jin-hui & Peng, Chenchen & Zhang, Xin, 2020. "The impact of CFO gender on corporate fraud: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 63(C).
    3. Dingli Xi & Timothy Ian O'Brien & Elnaz Irannezhad, 2019. "Investigating the Investment Behaviors in Cryptocurrency," Papers 1912.03311, arXiv.org.
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    5. Zandri Dickason-Koekemoer & Sune Ferreira-Schenk, 2022. "Constructing a Model for Domain-specific Risk-taking, Life Satisfaction and Risk Tolerance of Investors," International Journal of Economics and Financial Issues, Econjournals, vol. 12(4), pages 84-90, July.
    6. Friedl, Andreas & Pondorfer, Andreas & Schmidt, Ulrich, 2020. "Gender differences in social risk taking," Journal of Economic Psychology, Elsevier, vol. 77(C).
    7. Natalia Rogova & Shashi Matta, 2023. "The role of identity in digital consumer behavior: A conceptual model and research propositions based on gender," AMS Review, Springer;Academy of Marketing Science, vol. 13(1), pages 55-70, June.
    8. Khor, Ling Yee & Sariyev, Orkhan & Loos, Tim, 2020. "Gender differences in risk behavior and the link to household effects and individual wealth," Journal of Economic Psychology, Elsevier, vol. 80(C).
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    More about this item

    Keywords

    Sex differences; Risk tolerance;

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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