Introduction
There has been an analysis in both psychological and neuropsychological literature for research. There has been a noted difference in cognitive skills in the different gender as reported by these studies, the world over. In particular, and with respect to cognitive development, higher verbal abilities have been reported in females more than males. Further, higher spatial abilities have been reported skewed in favor of men as having higher mathematical abilities. A general belief even amongst academic is that women or females are possessed of better verbal abilities as compared to men. More so, the female population has been reported by various studies to have a broad vocabulary, faster development of language and significant fluency in speech. The differences among the gender are not lonely restricted to the cognitive skills but also extend to attitudes, communication patterns and characteristics relating to aggression and power. This paper seeks to espouse further on the area of characteristics relating to aggression and power between the two genders. In this endeavor, to compare and contrast the trait between the two genders, this paper shall narrow down to the characteristic of risk preference.
It is trite that almost all decision especially in business involves some element of risk which must be taken by the entrepreneurs. The same holds for the labor market where persons choose career paths and make decisions such as the changing of their jobs with an eye on the remuneration and work conditions. It must first be stated that there is a serial and common stereotype that women or females are more risk averse compared to the male population. Consequently, this behavior or characteristic of being risk averse among female leads to their choice of jobs which have lower salaries and less attractive. The current gender gap in the career world is due to the fact that women tend to take less risky career choices. The same position may be as a result of the fact that women make different choices while in employment which in most cases are conservative. As such, females are unlikely to change their jobs in a frequent manner or negotiate for their remuneration thereby remaining at the lower edge of the career ladder.
Suffice to say that though it may be true that there may be no real gender differences in terms of attitude towards risk, the mere fact that the same is ingrained in persons as a stereotype has the effect of working against women. In this sense, the same has implications for the kind of jobs that women are able to obtain or given by their employers. For instance, if an employer is of the view that women are more averse to risk as compared to men, it is likely that the employer will not engage a woman for jobs that involve risk taking such as investment analysts and managers. Indeed, this explains the reason for the specious disparity in this nature of jobs between members of the different gender. To better put this issue of risk preferences between the two genders into perspective, an examination of the literature published on the issue will be imperative.
The statement that women are more risk averse compared to men is reinforced by literature published by Byrnes, Miller and Schaffer who conducted an analysis of over 150 studies. The study conducted involved over 100,000 participants and recorded an overwhelming result in favor of men as risk takers. The study found that in around 14 tasks of out of 16 tasks, men were found to be risk takers. The research further found even significant differences in terms of risk taking when the risk involved one that posed a danger to the health of the individual. For instance, health risks such s smoking and drug abuse was more recorded in males than females. Another study conducted by Arch did an analysis of 50 studies and arrived at a similar conclusion. Arch then sought to explain the phenomenon by stating that males usually view a risky situation as one calling for participation since they see it as a challenge. On the other hand, Arch argued that females usually see such risky situations as threats that demand avoidance.
More literature has also been published in the financial or business world relating to financial risk. A survey done by Eckel and Grossman found out that women are more risk averse than men. An examination of the investment decisions and behavior of single men, single women and married couples using data available from the Survey of Consumer Finances points to the same conclusion. This examination reveals that single women are more risk averse compared to single men. Single men were found to be more adventurous with their savings and invested in risky affairs. It was also found that men who are married to spouses who are willing to take risks normally allocate a lot of their pension to risky investments as compared to those men who are married to risk-averse women. Women in the same situation as a man, usually risks only a little of their pension in the investments.
The reason for the different risk attitude between the various genders is influenced more by the perception of the same risks. Braber and Odean tested the over confidence model and came to a conclusion that men usually trade 45 percent more than females with this finding even more pronounced when single men and women were put into consideration. The studies also found that men are normally more overconfident than women and this could possibly explain the differences in risky behavior attendant to men and women.
It is essential to note that the studies discussed above were conducted among the general population. A study which compared the performance and investment behavior of two persons, that is, a male and a female executive, who were mutual fund managers and found that there was no significant differences. The point that can be gathered from this finding is that differences and disparities in investment behavior is not obtained from the gender differences but rather from the knowledge of investment and those wealth constraints that attend the investor. A study of a similar nature conducted by Johnson and Powell compared the characteristic of decision making of males and females that were in a non-managerial position against those who had received formal education and were engaged in managerial positions. The results of the study were that under the managerial population both males and females showed similar propensity to take a risk. In contrast, among the non-managerial population females were found to be more risk averse than men.
The inference that can be made from the studies above is that differences are more pronounced among female and male managers as compared to the general population. This position could be due to the fact that females who choose to venture into managerial positions are those that are more willing to take risks. It is not in dispute that few women do take managerial positions which involve much risk taking. The inference is that the increased risk preference among expert females in business is as a result of adaption to the rigors of their jobs and the demands of the positions they occupy.
Conclusion
In view of the above discussion and review of the published literature, it may be safe to state that men are more likely to engage in risk taking compared to women. There is ample evidence to the effect that women are more risk averse compared to men. It is also clear, that training and expertise on the part of the female population may debilitate against this position. Females who are managers or in positions that require the making of risky investment decisions do exhibit similar propensity to take risk just like men. Additionally, there is a glaring gender gap in higher positions and specifically in jobs that require the making of risky decisions. This state of things can be explained by the subsistent stereotypes that work against women as they are deemed as averse to risk and thus unable to fulfill their functions effectively. It is the case that the gender of the manager in an organization usually influences the gender of the person employed as an investment manager. Since top executive jobs involve a level of risk taking, it then follows that there arises statistical discrimination against females in such jobs.
References
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Barber, B., & Odean, T. (2009). oys will be Boys: Gender, Overconfidence,and Common Stock Investment,. Quarterly Journal of Economics , 261-292.
Eckel, C. C., & Grossman, P. J. (2007). re Women Less Selfish than Men?Evidence from Dictator Experiments,. Economic Journal , 726-735.
Hyde, S. J., Fennema, E., Ryan, M., Frost, L., & Hopp, C. (2006). GENDER COMPARISONS OF MATHEMATICS ATTITUDES AND AFFECT. Psychology of Women Quarterly , 299-324.
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