TRADING PLACES

Why do stereotypes persist that women distrust markets and avoid taking risks?

A friend recently asked me how to fix the US health-care system. (Simple question, right?) I suggested a market-oriented solution which would co-exist with the safety net provided by the government. He was hoping I’d just say “single payer,” got frustrated, and said, “I forgot you are like this, you are a smart woman, you’re supposed to be more left-wing.”

I get that a lot. I am not sure what I am politically, but I know I love markets. Understanding how they work (which they mostly do) and how they fall short (which also sometimes happens), is my jam. It is why I did a PhD in economics. But my enthusiasm for markets often confuses people. In this increasingly enlightened era of gender equality, we dare not suggest differences between the sexes when it comes to ability in math or science or dedication to a career. And yet, it is still acceptable to project certain values on women, like that they distrust markets or fear risk more than men.

Take a recent article in the Economist. It cites a study, based on 160 European economics professors, as evidence that women tend to be skeptical of markets. The paper estimates the odds women will support this statement, on a scale of 1 to 5 (1 strongly disagree and 5 strongly agree), “Market solutions are superior to government intervention.” The study found, statistically, that women are predicted to say 2 (disagree) and men tend to say 4 (agree). This is a large and significant difference.

What the survey interprets as “intervention” is a weighted average of several different statements. For some, a negative response borders on rejecting capitalism outright, as in “Market solutions are the most efficient way to allocate resources under most circumstances.” Other statements advocate more anodyne market tweaks, like “The European Union should strengthen policies to reduce youth unemployment.” (What constitutes a “stronger” policy in this case is left open to interpretation.)

The authors of the study also surveyed US economists and found much smaller, though significant, differences in market enthusiasm between the sexes. Still, 80% of the female economists surveyed agreed with the statement, “Market solutions are the most efficient way to allocate resources under most circumstances.”

Yet The Economist goes on to argue women’s exclusion from economics may explain why the profession favors market-based solutions. Perhaps economists’ bias towards capitalism is a by-product of the patriarchy, it seems to suggest.

Another socially acceptable stereotype is the idea that women are more risk averse than men. Take the “Lehman Sisters” hypothesis: the idea that risk-loving financiers are reckless and need more risk-averse women around them to rein them in. Cordelia Fine, a professor of the history and philosophy of science at the University of Melbourne, who also frequently encounters back-handed feminism at cocktail parties, comprehensively debunked the myth that women aren’t risk takers (paywall).

These stereotypes can be harmful, even if they are supposed to be flattering. When market-friendly female economists advocate intervention (it is necessary sometimes) they could dismissed as biased, driven by gender rather than data. The risk-averse stereotype may also hold women back. If women prevent men from taking risk, they also stop them from exposing companies to potentially profitable opportunities, never mind not seizing these risky-but-rewarding opportunities themselves. In good times, when more bets pay off, risk aversion is seen as a liability, which is why many women are often tapped for top jobs only after risk-taking gets out of hand (the so-called “glass cliff“).

It could be these stereotypes are socially acceptable because they fit into our view of women as nurturing caretakers. A responsible caretaker won’t bet your house on the stock market. A nurturing woman thinks the community should band together to help poor people. And perhaps there is some truth to these stereotypes. The studies suggest that female economists, even ones who like markets, are more open to some forms of redistribution, after all. But in our new, more enlightened era, we are supposed to treat grains of truth with more nuance and be open to the idea that women, like men, have a wide range of skills and values.

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