The Three E's to Reach Equality: Education, Employment and Entrepreneurship

At this week’s WAPPP seminar, Monika Queisser, the Head of the Social Policy Division at the OECD's Directorate of Employment, Labour and Social Affairs, made the economic case for gender equality. Her presentation "Progress and Policies to Achieve Gender Equality in Education, Employment and Entrepreneurship," was based off of the OECD 2012 report of a similar name. The report focuses on what Queisser calls “the three E’s” – Education, Employment and Entrepreneurship.

Education is a top focus of the report because it’s the pathway to employment across the world. The OECD reports that more girls are attending school than ever before. Every one-year increase in a population’s average education level accounts for a 9% increase in GDP per capita. But not all education is created equal. Women are severely underrepresented in STEM, where graduates have the most potential for future earnings and career development. Currently, 70% of engineering graduates are men. This contributes to the persistent global pay gap. Women earn an average of 16% less than men, and this gap rises to 21% among top wage earners.

Queisser argued that gender equality strengthens the labor force and boosts the economy for everyone in turn. The aging population and falling fertility rate in most OECD countries currently leads to a shrinking labor force. To remedy this, there is a need for more migration and/or for women to participate at higher rates. We must break down the economic barriers that are holding women back from full participation, Queisser argued. More women need to work, and those that want to should be able to work full-time.

The report found that when a couple has their first child, women tend to start reducing their paid work hours, while men start increasing them. Women make up for this loss in paid hours by increasing their unpaid work. Though policies could and should help change this, a cultural shift is also necessary. Even in countries with progressive maternity leave policies and strong social welfare, such as the Netherlands, there is still a cultural norm for women to work part-time.

In the report, the OECD laid out recommendations to achieve gender equality in these three areas. Gender equality in education attainment and choices should be promoted, though Queisser admitted that it's hard to alter the choices that children make because of deep-seated biases in our culture. Increasing the number of women in decision-making positions, instituting paid maternity leave, actively reduce the wage gap and implementing family friendly policies for women who are self-employed are all crucial for achieving gender equality in these areas. In addition, countries are encouraged to produce gender-specific data and monitor progress on this issue.

In closing, Queisser said her central question is always how the countries that are doing well got to where they are today. She used a popular example for how policy can dramatically change culture. Iceland, which created a positive tax credit for second earners who are women in the 1960s, consistently tops the World Economic Forum's Global Gender Gap Index. Queisser, a self-described optimist, argued that a combination of improved policy and shifts in our cultural norms could bring us closer to gender equality in this century.

Photo Source: OECD

Risky Business: How Environment Affects Women's Decision-Making

The concept of risk as a major factor in decision-making has been thoroughly examined since the 2008 financial crisis began. In this week’s WAPPP Seminar, “Risk in the background: How Men and Women Respond,” risk was examined using the lens of gender to better understand the causes and effects of the choices individuals make. Alexandra van Geen, a 2014-2015 WAPPP Fellow and Assistant Professor at Erasmus University's School of Economics in the Netherlands, discussed her research on the effect that gender has on risk-taking in different contexts.

While acknowledging that previous research states women are generally more risk averse than men, Professor van Geen pointed out that this assumption is based on experiments involving isolated risks. Decisions to take risks rarely occur in isolated situations, however, due to the fact that there is both background risk (current risk) and realized risk (past risk) to consider. Instead, van Geen sought to measure the effect that gender has on risk in more realistic decision-making situations.

In a study conducted at Harvard’s Decision Science Laboratory, 160 students split evenly by gender were placed in an experiment where a third party threw a die to determine each student's payoff. To simulate what van Geen refers to as “background risk,” each participant had a 50% chance of receiving either $2 or $30. In addition, there were two fixed sum groups, one that received the low payout of $2 and one that received the high payout of $30, automatically.

Some of van Geen’s findings confirmed what many already understand to be true about gender and risk: as a baseline, women are more risk averse and less risk-seeking than men. However, van Geen found that women take more risks after receiving the fixed sum or with the presence of background risk, i.e. the roll of the dice in the experiment.

This reduction in risk aversion can be explained by women's sensitivity to the income effect, as in, the potential to earn money without risking a loss. In fact, the effect of income and potential income from past wins (via winning in the dice roll) eliminated gender differences in risk-taking altogether. One potential explanation for this is that women are more sensitive to income because of their higher baseline risk aversion. Additionally, men may narrowly frame a decision and not consider past or present risk in the same way that women do.

The income effect does not explain all the behavior around risk, however, van Geen argued. The effects of the experience of winning in and of itself was also examined. Winning produces several outcomes: (1) emotion, (2) subject expectations (i.e. belief an individual will keep winning once they have, or "gambler's fallacy"), and (3) an elevated level of hormones, namely testosterone. This study found that men increased their risk-taking after winning, despite the fact that there was no apparent income effect on men, indicating that it was the experience of winning itself that altered future behavior.

From these experiments, van Geen concluded that women experience an income effect that reduces risk aversion, while men don't experience an income effect at all. This effect is transient, however, and women eventually return to their baseline risk preferences. The presence of background risk also decreases women’s risk aversion but not men’s, which can also be explained by the effects of income and potential income. Lastly, men increase risk-seeking behavior after winning, while there is no effect for women.

Risk can have serious impact on decision-making, which in turn affects policy, van Geen argued, closing with a few potential policy implications of her research. Policy changes could encourage women to make riskier microfinance investments that lead to better outcomes, while behavioral nudges could discourage male day traders from being overconfident and seek too much risk after a win. Understanding how context affects gender's relationship with risk may help us close these micro-gender gaps, which could then chip away at larger inequities.

Are Two a Crowd?

Supreme Court Justice Ruth Bader Ginsburg has discussed how she was often confused with Sandra Day O’Connor when they sat on the Court together, despite not looking alike and holding significantly different ideological views. It’s important to note that this mistake was not made by passersby being interviewed on late night television but by the lawyers arguing before the Court itself.

This is one of many examples that Professor Denise Lewin Loyd employed at this week’s WAPPP seminar, "Are two heads always better than one? Stereotyping of minority duos in work groups," to explain the unique problems that individuals who are part of the minority on boards, task forces or committees often face. Loyd, an Associate Professor of Business Administration at the University of Illinois at Urbana Champaign, argues that in many cases, being part of a minority duo on a larger team is even worse than being the only minority.

Past research indicates that single minorities within a group are often subject to “token pressure,” whether in the form of increased visibility, stereotyping or pressure to assimilate. Loyd conducted a study of 228 students on the issue, which concluded that this token pressure leads to discomfort, demonstrating that it’s a negative experience for the minority groups in question.

Though we might assume that token pressure would decrease when another minority member is added to the group, there is evidence to the contrary. Research featured in the Harvard Business Review even suggests that the presence of two women on a board may be seen as a subgroup and that those individuals have to give extra care to not look like they're conspiring.

Professor Loyd tested this hypothesis via an experiment she conducted with colleagues Mary Kern of Baruch College, CUNY and Judith White at Dartmouth. Using avatars, Loyd et al collected responses from 170 male participants to see how they viewed women in different settings in which they were the minority. Participants were asked to read a narrative involving a female employee who was part of a team where she was (1) the only woman, (2) one of two women or (3) one of three women on a team of seven, ten or 14. The decision-making and production tasks assigned were relatively agnostic so as to control for the fact that certain tasks may be perceived as more masculine or feminine.

Loyd et al found that women were viewed as significantly less potent and marginally warmer as part of a duo than while acting solo. While there are some limited situations where warmth is advantageous, being perceived as less potent is a clear negative. As part of a trio, women were not seen as less potent but were perceived as marginally warmer than as a duo. A second study involving female-minority groups performing a complex task revealed that men gave female duos worse performance evaluations, despite no significant difference in completion time and quality.

This research suggests that there is something uniquely negative about being part of a minority duo in a larger group. The phenomenon could be partly explained by the claim that minority duos make the category to which they belong more salient to the greater group. This could be a concern for women, who while still significantly underrepresented on corporate boards and in public office, are slowly gaining ground.