Blame it on the Beard

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I am very excited to begin exploring my topic regarding the effects of gender inequality on Wall Street! I strongly feel that the absence of women on wall-street was a contributing factor to the great recession.  The next steps in my research required me to ask the following questions:

1.)    Why are women absent on Wall Street?

  1. I found a great book in the library called “Selling Women Short: Gender and Money on Wall Street.” Although this book was written before the recession, and thus does not draw a correlation between gender inequality and the recession, it is very helpful in describing why women are less prone to achieve advanced positions in finance. It brings up the idea of “pay for performance” on Wall Street. On Wall Street, performance is linked to how much revenue an individual can produce for a firm. Great risks à great rewards for company à bonuses for the individual à career advancement. Risk-taking behavior is central to a successful career on Wall Street. The book also presents other arguments including how managers tend to promote people who closely resemble them and/or their clients. Thus, females are likely to be assigned to female clients, but those accounts tend to be less lucrative. In addition, it talks about how senior male managers tend to take men under their wings due to shared interests and backgrounds. Ultimately leveraging the access these men can have within the company. The following quote from the book illustrates this point:

“Preferences among managers for junior employees who resemble themselves or who have higher social status could affect access to opportunity, pay and promotion. Those who promote their own careers may also receive more than those who wait for others to notice their contributions, and men are more likely to promote themselves while women tend to have less of a sense of entitlement” (page 70).

2.)    Are there statistics to prove that men are more prone to risk-taking behavior?

  1. In order to address this question I decided to enter the world of academia and look through some psychological studies on men and risk-taking behavior. I found two that serve to justify my argument quite well. The first is called “Personality and Risk-Taking: Common Biosocial Factors” by Marvin Zuckerman and D. Michael Kuhlman from the University of Delaware.  The study demonstrates how gender differences on risk-taking are mediated from by differences on impulsive sensation seeking (men are much more likely to be characterized as having high impulsive sensation seeking behavior). The study spans six categories of risk and men show higher risk-taking behavior in each of the six categories.
  2. The next study I found is from Harvard and is called “Testosterone and Financial Risk Preferences.” It is focused on analyzing the direct relationship between testosterone and risk-taking. The study was conducted using a sample of 98 men and having them participate in a simulated investment game with potential for actual monetary gains. It was found that there is a positive correlation between risk-taking and salivary testosterone levels as well as facial masculinity. That’s right, the more masculine your face (i.e. beard) the more likely you are to engage in financial risk!! It is a very interesting study and provides great scientific evidence to prove why men are so prone to take risks, especially in the investment world.

The next steps of my research will dive into the concrete/specific examples of the actions that occurred that can be classified as “risky” that helped bring about the financial crisis. I will look into different financial instruments like credit default swaps and understand how they were used. I would also like some feedback from everyone regarding the importance of “role fulfillment” to this topic. Do you think it would be interesting to talk about the pressures that employees on Wall Street face in order to successfully fill their role? Are they asking in a risky manner because that is the nature of the position? I am also going to explore ways in which the Wall Street role can be redefined in order to avoid this type of behavior in the future.


9 Responses

  1. I wrote my last paper about how the women who have been the most successful in the workplace have largely been those who flaunted their femininity and did not try to become masculine (like Rebecca Mark). You argue that masculinity is valued on Wall-Street because it corresponds to greater propensity…so, if this is the case I question why very feminine women are the most successful in high-level positions. Possible explanations I can think of include:

    1. There is no correlation between masculinity and proclivity to risk-taking behaviors – basically, the research is bogus. After all, it is based on self-report tests which are notoriously inaccurate and perhaps men are just more inclined to think that they are risk-takers or to want to say that they are risk-takers (maybe because there is a notion that risk-taking increases masculinity and men typically want to be perceived as more masculine?).
    2. The very feminine women who have been successful are anomalies. Maybe this even explains why there are so few of them.
    3. I am idiot and my paper is based on a completely flawed and inaccurate argument.

    Thoughts on which explanation (or another one) is correct?

  2. I am curious to hear more about the study and what Brooke just mentioned. Is it true that men are prone to riskier behavior than women? And if so, do the women who have made it to the top of management have these behavioral traits as well? I do think talking about the pressures that executives face on Wall Street. This may provide reasoning as to why all executives, not just men, may take part in risk taking behavior for large payoffs.

  3. I am curious to hear more about the studies that relate men to risk taking behavior. It is true that may of these executives may act in this manner but it also may be part of the job. This may not be a trait based on gender but based on managerial roles. Women that made it to these positions may also contribute to risk taking behavior on these institutions. think it would be beneficial to talk about the pressures that employees face on Wall Street. I think this would provide reasoning as to why all of these executives, not just men, may be extremely risk taking.

  4. This is a very interesting and creative post. i think that employees on Wall Street do face pressure to take risk and because of that, a lot of the employees are male. I think that men are more likely to take risk arising out of nature vs. nurture. In the past, boys have been encouraged to play outside, climb a tree and when they get hurt it’s justified by the boys will be boys attitude. It’s assumed that boys will take risks on the playground, for example by trying to jump from a higher spot than anyone else. From a young age girls have been told that certain activities aren’t ladylike, and nice girls don’t always have to win, nice girls don’t get into heated arguments on the playground and nice girls don’t do things that are too risky. I think there are more men on Wall Street than women because of the culture in which we are raised. I think that the culture in which children are raised is moving away from these gender specific stereotypes, but their presence can account for why men are more inclined to take risks. Just as there were those few little girls on the playground ready to jump from just as high as the boys, there are those few women on Wall Street ready to take on just as much risk as the men.

  5. I’m going to step out on a limb here and be the first guy to comment on this post about the risk-taking nature of us guys. I want to immediately comment on Brooke’s post and say that there is always two sides to topics like this one. There can usually be evidence to support both. Molly you should definitely ask Brooke to look at her paper and address some of the points she makes in her paper. Brooke’s perspective will help you argue the strengths of your paper and also discuss certain weaknesses of your argument that need further research.

    Something that immediately came to mind when reading this post was that not the link between men and risk-taking behavior, but the link between risk-taking behavior and Wall Street. From books that I’ve read and personal observations, to really make money on Wall Street you have to take on risk. You won’t make much money playing it “safe” on the Wall Street or just putting your money in government bonds. So whether you’re a man or a woman risk-taking is the name of the game on Wall Street. Now there may be a link between men and risk-taking behavior, but what type of risk-taking? I did a quick Google search and found the study Gender Differences and Their Influence on Thrill Seeking and Risk Taking. The small study on risk-taking activities found that there are certain risky activities that men are more likely to take and there were risky activities that women were more likely to take part in. The one point they argued was the that men were more likely to partake in illegal activities. That point should be a major factor in you argument Molly.

  6. I appreciate all of your feedback! I would love to find some information about the pressures that Wall Street employees face in their positions/careers. Is is the intense pressure surrounding these positions that deters women from occupying them? Do women tend to shy away from high-pressure jobs? Or are they deemed incapable of performing such jobs well? Lots to think about….

  7. You have some very solid research here to establish the foundation for your paper.

    AS Middleman says, this kind of question can often have evidence on both sides of the issue. It may be worth looking for research that disputes the risk-taking link to men. Moreover, human behavior is usually a complex mix of biological and social. Hence, the socialization and gender roles of men may be as relevant as testosterone. WOmen also have some testosterone, but does that make them more risk tolerant?

    At the same time, it is a simple fact to ascertain that Wall St is dominated by men and by a certain kind of man. Are there any countries where this is less true? How did they fare?

  8. […] Theory blog site from one of Jordi’s previous classes, I came across a blog entitled “Blame it on the Beard“ that discussed the effects of gender inequality on Wall Street and why the blog author, […]

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