Study Casts Doubt on Theory That Women Aren’t as Competitive as Men

As researchers investigate reasons for America’s persistent gender wage gap, one possible explanation that has emerged in roughly the last decade is that women may be less competitive than men, and are therefore passed over for higher-ranking roles with larger salaries.

But a new study suggests that it’s likely not that simple. Researchers found that women enter competitions at the same rate as men – when they have the option to share their winnings with the losers.

The study, conducted by Mary L. Rigdon, associate director of the UArizona Center for the Philosophy of Freedom, and Alessandra Cassar, professor of economics at the University of San Francisco, is published in the journal Proceedings of the National Academy of Sciences.

Rigdon’s research involves studying how market structure, information and incentives impact behavior. Her work over the last 20 years has explored questions about trust, reciprocity, competition, altruism, cheating and more, with a particular focus on gender differences, especially the gender wage gap.

“If we’re finally going to close the gender pay gap, then we have to understand the sources of it – and also solutions and remedies for it,” said Rigdon, who is also a faculty affiliate in the Department of Political Economy and Moral Science in the College of Social and Behavioral Sciences.

In 2021, women will earn 82 cents for every dollar earned by men, Rigdon said, meaning women work nearly three months extra to receive the same amount of pay. This statistic does not account for certain characteristics, such as an employee’s age, experience or level of education.

But even when considering those characteristics, women are still paid about 98 cents for every dollar earned by men, Rigdon said. In other words, a woman is paid 2% less than a man with the same qualifications.

Economists have considered a few possible explanations for this, Rigdon said. One theory, known as the “human capital explanation,” suggests that there are gender differences in certain skills, leading women to careers that pay less. Another theory – perhaps the most widely considered – is patent discrimination.

Rigdon and Cassar zeroed in on the relatively new theory that women are less competitive and less willing to take risks than men.

But if women were more reluctant to compete, then they would occupy fewer high-ranking positions at the tops of major companies, and that’s not the trend that’s taken shape over the last several years, Rigdon said. Women make up about 8% of the CEOs leading Fortune 500 companies. While that number is low overall, it’s a record high.

“We thought it must be the case that women are as competitive as men, but they just exhibit it differently, so we wanted to try to get at that story and demonstrate that that is the case,” Rigdon said. “Because that’s then a very different story about the gender wage gap.”

Rigdon and Cassar randomly assigned 238 participants – split nearly evenly by gender – to two different groups for the study. Participants in each of those two groups were then randomly assigned to four-person subgroups.

For all participants, the first round of the study was the same: Each was asked to look at tables of 12 three-digit numbers with two decimal places and find the two numbers that add to 10. Participants were asked to solve as many tables as possible – up to 20 – in two minutes. Each participant was paid $2 for every table they solved in the first round.

In round two, participants were asked to do the same task, but the two groups were incentivized differently. In the first group, the two participants in each four-person team who solved the most tables earned $4 per table solved, while their other two team members were given nothing. In the other group, the top two performers of each four-person team also earned $4 per table, but they had the right to decide how much of the prize money to share with one of the lower performing participants.

In the third round, all participants were allowed to choose which payment scheme they preferred from the two previous rounds. For half the study participants, this meant a choice between a guaranteed $2 per correct table, or potentially $4 per correct table if they became one of the top-two performers in their four-person subgroup. For the other half of the participants, the choice was $2 per correct table, or $4 per correct table for the top-two performers with the option to share the winnings with one of the losing participants.

The number of women who chose the competitive option nearly doubled when given the option to share their winnings; about 60% chose to compete under that option, while only about 35% chose to compete in the winner-take-all version of the tournament.

About 51% of men in the study chose the winner-take-all option, and 52.5% chose the format that allowed for sharing with the losers.

Rigdon said she and Cassar have a few theories about why women are more inclined to compete when they can share the winnings. One suggests female participants are simply interested in controlling the way the winnings are divvied up among the other participants.

Another theory that has emerged among evolutionary psychologists, Rigdon said, suggests that female participants may be inclined to smooth over bad feelings with losers of the competition.

“We really have to ask what it is about this social incentive that drives women to compete. We think it’s recognizing the different costs and benefits that come from your different biological and cultural constraints,” she said. “But at the end of the day, I think we still have this question.”

Rigdon and Cassar are now developing an experiment that gets to the heart of that question, Rigdon said.

The researchers are careful to not propose policies for corporate America based on a line of research that still has many questions. But, Rigdon said, the latest finding suggests that corporations might do well to engage in more socially responsible activity.

“Maybe you’ll attract a different set of applicants to your CEO positions or your board of director positions,” she said. “Women might be more attracted to positions where there is this social component that isn’t there in more traditional, incentive-based firms where it’s all about CEO bonuses.”

The research was funded by a grant from the National Science Foundation.

Women Have Fundamentally Different Journeys to Financial Wellness, Merrill Lynch Study Reveals

A new Merrill Lynch study conducted in partnership with Age Wave, “Women and Financial Wellness: Beyond the Bottom Line,” celebrates the progress made by women while examining the financial challenges women still face throughout their lives, and offers potential solutions. The study finds that 70 percent of women believe that men and women have a fundamentally different life journey, reinforcing the need to better understand women’s financial concerns and opportunities. The study is based on a nationally representative sample of 3,707 respondents, including 2,638 women and 1,069 men.

“Women’s life journeys are not only different than men’s, they’re different than the life journeys of our mothers and grandmothers.”

“Women have come a long way both personally and professionally, but when it comes to their finances, there is still a trail left to blaze,” said Lorna Sabbia, head of Retirement and Personal Wealth Solutions for Bank of America Merrill Lynch. “As women are at a tipping point to achieve greater financial empowerment and independence, it is even more essential that we support women in helping them pursue financial security for life. This includes encouraging women to invest more of their assets, save earlier for retirement, and pursue financial solutions that closely align to their personal values and life paths.”

Findings include:

Women look beyond the bottom line
While they definitely care about the performance of investments, women view money as a way to finance the lives they want. Seventy-seven percent say they see money in terms of what it can do for themselves and their families. Eighty-four percent say that understanding their finances is key to greater career flexibility. When it comes to investing, about two-thirds of women look to invest in causes that matter to them.1

Superior longevity
Longevity needs to be a factor in everyone’s financial strategy, but more so for women, who on average, live five years longer than men. Eighty-one percent of centenarians are women.2 While 64 percent of women say they would like to live to 100, few feel financially prepared, with 44 percent of women stating they worry they will run out of money by age 80.

Confidence in all but investing
The study finds that women are confident in most financial tasks, such as paying bills (90 percent) and budgeting (84 percent). However, when it comes to managing investments, their confidence drops significantly; only 52 percent of women say they are confident in managing investments, versus 68 percent of men. Millennial women were the least confident at 46 percent. Of women who do invest, their financial confidence soars; 77 percent of women who invest feel they will be able to accumulate enough money to support themselves for life.

A trail left to blaze
The study also finds how important understanding the gender wealth gap (as opposed to the wage gap) and wealth escalators are to women’s financial wellness. Women experience a gender wealth gap – the difference between men’s and women’s financial resources across their lifetimes, including earnings, investments, retirement savings and additional assets. This wealth gap can translate to a woman at retirement age having accumulated as much as $1,055,000 less than her male counterparts.3Contributing factors include:

  • Temporary interruption, permanent impact: Many women experience lasting effects when they take time away from the workforce to provide care, including for aging parents, their own spouses, and their own children. One in three mothers who returned to the workforce after caring for children says she took on less demanding work, which resulted in lower pay. Twenty-one percent say they were paid less for the same work they did previously.
  • Greater lifetime health and care costs: The average woman is likely to have higher health costs than the average man in retirement – paying an additional $195,000 on average4 – due to living longer and having to rely on formal long-term care in later years.

“Women’s life journeys are not only different than men’s, they’re different than the life journeys of our mothers and grandmothers,” said Maddy Dychtwald, co-founder and senior vice president of Age Wave. “We have more opportunities and choices when it comes to family, education and careers, but we’re so busy taking care of other people and other priorities, we often don’t take the time to invest in ourselves and our future financial wellness. If more women can actively take control of their financial future all along the way, it would not only benefit them, but also their families and our society overall.”

Doing more to promote financial wellness
Bank of America’s Global Wealth and Investment Management business serves affluent and wealthy clients through two leading brands in wealth management: Merrill Lynch and U.S. Trust. Advisors specialize in goals-based wealth management, including planning for retirement, education, legacy, and other life goals through investment, cash and credit management.

“In a period of remarkable advances for women in society, a remaining frontier is financial well-being,” said Andy Sieg, head of Merrill Lynch Wealth Management. “It’s a basic component in the quality of life. This report lays out a blueprint for helping to achieve it – and we at Merrill Lynch relish the opportunity to provide women everywhere with advice and support that can make a meaningful difference at every stage of their lives.”

Through its advisors, educational offerings and other resources, Bank of America is positioned to help clients overcome the common challenges presented in the study by:

  • Addressing women’s top financial regret: not investing more. Forty-one percent of women say not investing more is their biggest regret. Women cite lack of knowledge (60 percent) and confidence (34 percent) as top barriers.
  • Focusing on disparities in wealth, not just income. Women’s financial security is about more than closing today’s pay gap. It’s about accumulating assets or wealth at all income levels, and increasing women’s access to wealth escalators (e.g., employee benefits such as paid time off and pretax savings opportunities).
  • Breaking the silence about money. Sixty-one percent of women say they would rather discuss details about their own death than talk about their money. Forty-five percent of women report they don’t have a financial role model.

To learn more about women’s financial wellness, read “Women and Financial Wellness: Beyond the Bottom Line.”

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