Strategy. Innovation. Brand.

women and risk

Are Men Bigger Risk Takers Than Women?

Now that’s risky.

Most people (in America at least) would probably agree with the following statement:

Men are bigger risk takers than women.

Several research studies seem to have documented this. Researchers have asked people what risky behaviors they engage in (or would like to engage in). For instance, they might ask a randomly selected group of men and women whether they would like to jump out of an airplane (with a parachute). Men – more often than women – say that this is an appealing idea. Ask about driving a motorcycle and the response is more or less the same. Men are interested, women not so much. QED: men are bigger risk takers than women.

But are we taking a conceptual leap here (without a parachute)? How do we know if something is true? What’s the operational definition of “risk”? Should we be engaging our baloney detectors right about now?

In her new book, Testosterone Rex, Cordelia Fine suggests that we’ve pretty much got it all backwards. The problem with the using skydiving and motorcycle driving as proxies for risk is that they are far too narrow. Indeed, they are narrowly masculine definitions of risk. So, in effect, we’re asking a different question:

Would you like to engage in activities that most men define as risky?

It’s a circular argument. We give a masculine definition of risk and then conclude that men are more likely to engage in that activity than women. No duh.

Fine points out that, “In the United States, being pregnant is about 20 times more likely to result in death than is a sky dive.” So which gender is really taking the big risks?

As with so many issues in logic and critical thinking, we need to examine our definitions. If we define our variables in narrow ways, we’ll get narrow and – most likely – biased results.

Fine writes that many people believe in in Testosterone Rex – that differences between man and women are biological and driven largely by hormonal effects. But when she examines the evidence, she finds one logical flaw after another. Researchers skew definitions, reverse cause-and-effect, and use small samples to produce large (and unsupported) conclusions.

Ultimately, Fine concludes that we aren’t born as males and females in the traditional way that we think about gender. Rather, when we’re born, society starts to shape us into society’s conception of what the gender ought to be. It’s a bracing and clearly argued point that seems to be backed up by substantial evidence.

It’s also a great example of baloney detection and a good case study for any class in critical thinking.

(I’m taking a risk here. I haven’t yet read Testosterone Rex. I based this commentary on four book reviews. You can find them here: Guardian, Financial Times, NPR, and New York Times).

 

 

Just Add Women

You doubt my effectiveness?

You doubt my effectiveness?

Germany is poised to join the 30 Percent Club. Beginning in 2016, women must hold at least 30 percent of board seats at large, public companies. Germany will join other countries like Norway, France, Spain and the Netherlands in mandating female representation on boards of directors.

Will it work? It depends on what the goal is. Norway began the trend in 2006, mandating 40% representation. As The Economist puts it, “…[the] law has not been the disaster some predicted.” Not exactly a ringing endorsement but the magazine suggests that the real benefit may be a change in attitude.

The Financial Times appears a bit more optimistic: “Early analysis appears to show that quotas work and have been highly successful across Europe.” Fortune appears less sanguine, “a close look at the results of these quotas – and of Norway’s in particular, which have been in effect the longest – shows that the results might not be all that their backers intend.” Fast Company is more positive.

The articles I’ve cited here seem to have different views of what success means. If success is defined as:

  • More female representation on boards, then the quotas work.
  • Better financial and stock performance, then the results are decidedly mixed.
  • Fewer layoffs, then the quotas seem to work.

Unfortunately, none of the articles discuss why boards with women might perform better. I’ve found two different reasons in the literature that suggest that women can bring important qualitative differences to board discussions and decisions.

First, women appear to make better decisions about risk, especially under stress. The research comes from Mara Mather and Nicole Lighthall who study the effects of stress on decision-making. They found that stress changes the way we select alternatives and accentuates differences between men and women. Bottom line: “…stress amplifies gender differences in strategies during risky decisions, with males taking more risk and females less risk under stress.”

Why would that be? Writing in the New York Times, Therese Huston argues that it may be empathy. We generally view women as more empathetic than men. Under stress, Huston writes, women “… actually found it easier than usual to empathize and take the other person’s perspective. Just the opposite happened for the stressed men — they became more egocentric.”

The second major reason stems from the impact of women on group behavior and effectiveness. MIT reports that the “tendency to cooperate effectively is linked to the number of women in a group.” In The Atlantic, Derek Thompson writes that group intelligence is similar to general intelligence in an individual. General intelligence suggests that an individual who is good at one thing is likely to be good at other things as well. Similarly, a group that’s good at one thing is likely to be good at other things, too. This is dubbed collective intelligence, which varies from group to group.

What factors contribute to collective intelligence? It’s not the average intelligence of the people in the group. Nor is it the intelligence of the smartest person. Thompson notes that we can rule out many other things as well, including motivation, cohesion, and employee satisfaction.

So what makes a group collectively intelligent? Average social sensitivity. It’s the ability to read between the lines and understand what someone is really saying. Thompson writes, “social sensitivity is a kind of literacy, and it turns out that women are naturally more fluent in the language of tone and faces than the other half of their species.”

So women make better decisions in stressful situations. Boards have to deal with high levels of stress. Women also make groups more effective. Boards, of course, are groups of people trying to reach effective decisions. The debate on women on boards was generally framed by the question: Why would we put women on boards? With our new understanding, the proper question is: why wouldn’t we?

(The New York Times also has an interesting on group effectiveness and female participation. Click here.)

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