Research has consistently shown that women tend to be more cautious and risk-averse than men. This difference in risk-taking behaviour has significant implications for various aspects of life, including careers and earnings.
For example, men are more inclined to start businesses and invest in the stock market. But what underlies this variation in risk tolerance?
Recent research suggests that the key factor driving women’s lower risk-taking propensity is their heightened sensitivity to the potential pain associated with losses.
It’s important to note that these findings pertain to averages, and there is substantial overlap between male and female risk-taking tendencies. Many women indeed take risks that surpass the average man’s behaviour.
Decades of research
Drawing from psychological data tracking over 13,000 UK participants for nearly two decades, researchers assessed how men and women approached risky decisions. This involved evaluating the likelihood of experiencing a financial loss and the expected level of pain associated with that loss.
The study revealed that, on the whole, women were more focused on the possibility of financial loss and anticipated greater emotional distress from those losses. Consequently, they were more risk-averse. When considering scenarios like stock market investment, women were less inclined to take risks.
Disparity in financial confidence
Furthermore, when asked to envision their financial status a year from now, men displayed significantly more optimism. This could possibly linked to their overconfidence in workplace capabilities compared to women. These differences in risk attitudes can partly explain why women are less likely to become entrepreneurs and are underrepresented in high-paying and upper management roles. Achieving financial success often necessitates taking on a degree of risk.
The question arises whether it is possible to change people’s behaviour, especially in this context, if we aim for gender equality. The answer hinges on whether differences in behaviour between sexes have biological or environmental roots. Some suggest that these differences stem primarily from socialisation and environmental influences.
Impacts of Heritage
A recent study indicated that environmental factors significantly shape risk aversion. For instance, girls from matrilineal cultures, where women hold higher social status than men, tend to be more willing to take risks compared to girls from patriarchal societies.
On the other hand, biologists have identified numerous differences with evolutionary origins, suggesting that some attributes linked to risk-taking, such as aggression and impulsiveness, may result from sexual competition between males for access to females or resources.
In essence, both biology and environment contribute to these differences. This complexity implies that while we may be able to reduce some psychological disparities, completely closing the gap seems unlikely.
Moreover, it raises questions about whether we should strive for complete alignment in risk-taking tendencies between men and women, particularly if some differences have biological, genetic, or evolutionary origins. Balancing the pursuit of gender equality with acknowledging and respecting these differences presents a significant challenge. Failing to address these disparities carries its own set of risks in the quest for equality.
