Risky business a man’s game
by Elizabeth Allan
Men take greater financial risks than women, an experimental economics study has found.
The study involving 238 people was conducted by Ananish Chaudhuri, an associate professor of economics at the University of Auckland.
“Men were significantly more willing to send money to a stranger than women, trusting that a dividend would be returned to them,” Professor Chaudhuri said. “Many of the men sent all their money.”
The game is simple. A group of participants – graduate students or general public – is split in two. Half are given an amount of money between $10 and $100 and told they can take it and leave, or send some to a stranger in another room. Whatever amount they send will be tripled, they are told. The other half of the group can then accept the money and leave, or they can send some back to their unknown benefactor.
On average, men initially sent 53 per cent of their money, while women sent just 35 per cent. But men and women sent similar amounts back – just 14 and 19 percent respectively.
So why is it that men are more willing to risk all?
Professor Chaudhuri has an interesting explanation: “I think the ultimate answer could boil down to the way our brains have evolved. Men engage in risky sex while women take care of the progeny. So men can impregnate many partners, while women can only be impregnated at finite periods of time. And that might be the ultimate cause of why men engage in riskier financial behaviour than women do.”
You could say, then, men think it best not to put all your eggs in one basket, while women think it’s best not to count your chickens before they’ve hatched.
Professor Chaudhuri’s colleague, associate professor Sholeh Maani, says experimental research methods are useful because it is difficult to identify the effect of one type of factor in the market when so many things typically change at the same time.
“We observe results are different for men and women,” she says. “Women have less ownership of property - and wages and salaries are often different - so it’s interesting to know more about that.”
Another colleague, associate professor Tim Hazledine, says Professor Chaudhuri’s research is useful because we can’t experiment in the real world – you can’t test economics on lab rats, as in science.
“You find people are a lot more interesting than standard economics would allow for,” he says. “They’re more emotional and have a desire for justice. They have deeply felt feelings about what’s wrong and what’s bad, and that is part of what economics is about as well,” he says.
Professor Chaudhuri previously did the same study at the University of Melbourne and his findings were recently published in the Southern Economic Journal.