Is taking risks a gender issue? [12.09.20]
A reasonable risk tolerance is prerequisite for professional success and thus, also for financial and health prosperity. It is often claimed that men in general take more and greater risks as compared to women. This assumption is often used to explain gender-related pay differences. In an economic-psychological study, scientists from Hohenheim University take a closer look at this claim. Using a risk game, the risk behavior of men and women in the same household has been examined. The aim was to assess how risk behaviour correlates with gender, household and/or wealth effects. The study confirms that women are generally less willing to take risks. However, this gender difference is no longer evident in the more affluent households. Interestingly, wealthy women nevertheless considered themselves more risk averse.
Picture credit: https://pixabay.com/de/photos/glück-glückszahl-17-roulette-839037/
Publication
Khor, L.Y., Sariyev, O., Loos, T., 2020. Gender differences in risk behavior and the link to household effects and individual wealth. Journal of Economic Psychology 80, 102266. doi.org/10.1016/j.joep.2020.102266
Abstract
This study examined the differences in risk behavior between men and women using a household survey that captured the risk preferences of two members in a household and recorded wealth at the individual level instead of the usual approach of representing wealth at the household level. After controlling for commonly used explanatory variables, such as gender, education, age, and wealth, household fixed effects explain about 15% of the variation in risk behavior. This highlights the magnitude of household effects in shaping one’s risk behavior. In general, females in the study area are more risk averse than males based on a risk game with real payout. The gender differences disappear when focusing on only the top land owners. However, even in those cases, females consider themselves more risk averse, supporting results from previous studies that link culture and societal norms to the gender differences in risk behavior.
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