Why occupation could trump sex

Adrian Furnham

There remains a great deal of debate about such things as the sex-linked glass ceiling, cliff, escalator, and the ‘sticky’ floor. But are career opportunities that much different for men and women?

Consider the world of fund management, a domain typically dominated by men. If people are asked to think of almost anyone in the financial sector – accountant, actuary, banker, investment/portfolio manager, trader – the image might be of a man, often young(ish), highly assertive, perhaps brash and risk-taking twenty-to-forty-year-old.

Yet there are women already in or breaking into this world. Some are welcome; many thrive and this is likely to increase.

But is there a sex difference in stock-picking? Is there any evidence that men outperform women or vice versa?

Women outperform men

Last year, a Goldman Sachs report found that funds managed by women are most successful. The average female-managed fund lagged its benchmark by 0.6%, while the average fund with male managers underperformed by 1,6%. The edge was still apparent when adjusted for the riskiness of different funds.

Nether sex did well, but women did less badly. Still, Goldman noted that out of the 496 large-cap funds it has analysed, only 14 have an all-female fund manager team, while 380 are all-male.

There have been various spotlights on, and awards given to particularly successful female portfolio managers. But if there is any good reliable and robust evidence that either sex seems to do better than the other, how do we explain it?

Hubris and humility

A good place to start is to see what the research has to say.

First, there are some well-established and replicated findings. Several studies have shown that hubris (of many kinds) is often associated with men, and humility with women.

Second, some studies have suggested that women are more prone to anchoring, herding and hindsight bias than men. Others that men are in general more logical and bias-resistant than women, but they have been hard to replicate.

Similar people, similar jobs

Another important issue is job selection, specifically the so-called attraction-selection-attrition theory.

Certain types of people are attracted to certain jobs (because of the nature of the work, the reward structure); those selected tend to be similar in their abilities, personality and motivation; they are then socialised and taught the work-style, corporate culture and values of those in the industry; and if it does not suit them there is attrition; they leave.

This is why there are so many similarities in people with similar jobs, and all the jokes about accountants, lawyers and sales-people. People in the same job tend to have lot in common irrespective of their sex, race or whatever. Put differently, a female pilot would have more in common with a male pilot than, say, a female nurse.

More “gender equality”

We already know that where any group has been precluded from entering a profession and the door is opened, albeit slowly, reluctantly, and very little, those who ‘make it’ tend to be well above average in the qualities that are valued.

Those in the minority must display ideal profiles and qualities. They are examined more stringently than the majority, who are already literally in the ‘old-boys network’.

If this analysis is true, and if one selection issue is bias-proneness, we can expect that women in finance are less prone to cognitive errors and decision biases, most of all over-confidence and optimism: a regular cause of poor decision making. This could perhaps also account for the Goldman Sachs findings.

Over time, as there will be more “gender equality”, the tougher selection that women go through will be reduced. The result? An equality of error-proneness. As more women become fund managers, they will eventually also become more like their male peers. Win some, lose some, eh?


A version of this article was first published in the May 2021 edition of the IPE magazine. URL: https://www.ipe.com/esg/ahead-of-the-curve-occupation-could-trump-sex/10052368.article

Published 8. June 2021

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