Are women more risk averse than men?

Are women more risk averse than men?

Studies have shown that women are more reluctant to take risks than men… or are they? 

I read recently that gender differences in risk aversion are determined by one’s cultural and social environments and that those differences can change. In Sex or gender? Expanding the sex-based view by introducing masculinity and femininity as predictors of financial risk taking, Meier-Pesti and Penz classified these specific norms as masculine and feminine characteristics.  Competitiveness, optimism, adventurism… Do these characteristics come into play when debating a risky financial decision?

Unlike testosterone, the female hormone, oxytocin, acts to a large extent as responsible for female emotional stability but in a calm way and would explain that in the midst of a financial crisis, women investors were much better than their male counterparts.

Women and men take risks in the same way, only that historically this act has been seen in such a categorical and reduced way, that it has managed to condition what we collectively perceive as risk.

It’s not that women aren’t risky, but that they probably take different risks or face them in a different way. And that has to do with their life experiences and the gender socialization processes that mark their professional careers. For example, in leadership models used by women, they take into account processes and people, and not only results. This is relevant when taking certain risks, because ultimately much more is taken into account for possible repercussions that the so-called risk could have on the rest of the team.

Generally, women’s responses are less individualistic and more collaborative which allows these risk decisions to be more cushioned or less risky. Whereas men have historically been more individualistic in their decision-making as a result of the socialization and expectations placed on different genders. Men are more goal oriented. And that makes them anxious to achieve things faster.

According to Alexandra van Geen’s (Harvard University) 2013 study Risk in the Background: How Men and Women Respond, women are more likely to take risks in the future when they are sure of having an income. That is, financial security could potentially change their behaviors. Again, this data shows that women weigh many more factors–  such as the well-being of their families– into their decision making.

As explained by psychologist of the Universidad Catolica, Juan Pablo Villanueva, when faced with the possibility of assuming greater work responsibilities, women will always contemplate that they are responsible for domestic and care work. In my translation, he says there is no genetic or biological reason that determines whether or not women take risks. That has gone hand in hand with cultural biases. What does happen is that when making decisions, women weigh many more things, such as the fact that they are the ones who have historically taken charge of the home and family. This has to do with the definition of gender roles and with the fact that at a cultural level there are less options for men to assume family responsibility.

We’ve been living in a society that embraces the traditional paradigm of gender roles– and one that establishes that caring for the family is the main objective of a woman’s life– and that therefore restricts vocational and career decisions. As a society, it’s important that we encourage young girls to take risks. Dr. Elaine Liu, Ph.D. at the University of Houston said “gender norms are slow to change, but there are social influences that could play a role in how we shape that behavior”.
At the end of the day, the perception of risk depends on many factors, not only how much testosterone we have running through our veins. Men and women are shaped by both biology and society, and we don’t know which of the two universes has the greater influence. So what can we do to encourage young girls to be less risk averse and teach them the lessons that will shape their personalities and shape the decisions in the years to come?