CHAPTER 26
In
reviewing a recent collection of papers on Victorian investments, R. J. Morris
comments that “Gender tends to be a category rather than a relationship in
these essays . . . cultural processes are crucial to historical understanding
but they need to be examined in ^ association with economic and social
relationships” (Morris 2010: 253-4). This chapter ^
explores the tension between historical developments in
women’s economic agency as savers and investors and changing cultural views of
the relationship between gender and finance. A number of themes reappear over
time—the gendered nature of investing, and women’s preferences for taking or
avoiding risks. Is investing essentially a masculine or a feminine activity?
Does its riskiness attract or repel women? Do women take on more or less
investment risk as investors or as employees? The cultural “category,” we
argue, has effects on the economic contexts in which women are able to operate
and the opportunities made available to them, both as investors and when
employed in the financial services sector.
This chapter aims to provide
a survey of the historically changing views of women and finance, with a
special focus on women and risk. We begin by outlining the significant
historical changes in women’s financial activity from the eighteenth to the
twentieth centuries. We then contrast an eighteenth- and nineteenth-century
view of women as speculators and of speculation as “female,” with a nineteenth-
and twentieth-century view of women as cautious investors. We then move on to
the twentieth and twenty-first centuries and explore contemporary views and
evidence on women and risk. We consider two specific areas where “category”
has an impact on context: women’s investments in pensions, and their role as
workers in the financial services sector.
We find that public
perception of women investors in the eighteenth and early nineteenth centuries
was that they were speculators, and that speculation itself was attributed a
feminine character. This view of women as not understanding investment and
speculating
through emotion or through risk-seeking had disappeared by the twentieth
century. The contrasting view of women as investors rather than speculators,
with a natural preference and need for lower-risk securities, emerged in the
mid- to late nineteenth century and has prevailed ever since. In the twentieth
and twenty-first centuries, empirical evidence still points to women as less
risk-taking than men, but there is debate as to whether this is due to an
emotional preference for low-risk investment or is merely due to social and
economic factors which force women to choose low-risk alternatives. The credit
crunch of 2008 and 2009 has led to renewed discussion of women’s risk preference
compared to men. Observers have argued that financial institutions would have
taken on less risk had they been run by women, supporting the perception that
women are fundamentally risk averse compared to men, even after allowing for
socioeconomic gender differences.
A growing body of work has pointed out that women were
active as investors from early modern times. Property was a significant asset
for women as well as men from the eighteenth century onward (see, for
instance, Berg 1993 and Owens 2001 for a discussion of the extent of its
importance for women) but women also managed financial assets as they became
available. Spicksley (2007: 206) finds that single women in the seventeenth
century were very active as lenders, “more deeply embedded in the credit market
than any other social group" In the early eighteenth century, as well as
loans secured on property (Miles 1981), women’s portfolios included shares in
the new joint stock companies (Carlos, Maguire, and Neal 2009; Froide 2003;
Laurence 2009); later in the century women took up shares in canals as these
were promoted nationwide (Hudson 2001). The nineteenth century saw the arrival
of a range of new assets. Government stocks were among the most significant,
and work by Green and Owens (2003) has pointed out the very high incidence of
women’s investment in these.
Britain became “a nation of shareholders”
(Robb 1992: 3) from the 1840s onward. Throughout the nineteenthcentury, new
types of securities became available, offering fixed or variable returns.
Railroad companies’ massive flotations were a key part in this opportunity, but
other categories of shares, in particular those of banks and utilities, were
popular. And during the late nineteenth and early twentieth centuries, women
represented an increasing proportion of a growing population of individual
investors (Maltby and Rutterford 2006a, 2006b, 2007; Rutterford and Maltby
2006). For example, in a study of 47 English- and Welsh-registered companies
between 1870 and 1935, women represented 15.0 percent in number and 5.0 percent
by value of shareholdings sampled in the 1870s; by the 1930s, the equivalent
figures for women were 45.4 percent and 33.4 percent of shareholdings
(Rutterford et al. 2011).
A variety of factors increased women’s share
ownership opportunities during the nineteenth century. Under common law, wives’
wealth was their husbands’ property, but marriage settlements were popular with
the middle classes as well as the affluent: they offered wives security of
their assets and possibly control over both income and underlying investments
(see Laurence, Maltby, and Rutterford 2009: 8-9; Newton et al. 2009: 88-9). The
Married Women’s Property Acts of 1870 and 1882 allowed married women to hold
securities directly, without the need for a marriage settlement. In addition,
the increasing number of single women, first officially recognized in the 1851
census (Rutterford and Maltby 2006: 116) and still an issue after World War I,
pointed to a need for investment income for such women, many of whom were
unable to earn enough to live on (Rutterford and Maltby 2007). And, despite
exclusion from male business networks, women could take advantage of new
sources of investment information, from the increasing number of financial
newspapers and from investment manuals, some aimed specifically at women
readers (see, for instance, A Guide to the Unprotected (1863) by “A Banker’s Daughter”). There was
also increased marketing of financial services aimed directly at women: Robb
describes the provision in the US in the late nineteenth/ early twentieth
centuries of ladies’ departments and “ladies rooms” by banks and brokerage
services, promoted via advertisements in women’s magazines (Robb 2009:
123-4).
Women became increasingly important as investors. And,
as share investment became less risky over time, with long-lasting “blue-chip”
companies emerging, women began to buy ordinary shares as well as low-risk
alternatives. As early as 1903, the Chairman of Spratt’s Patent stated at the
annual general meeting that, out of 1,482 shareholders, there were “585 ladies,
who were generally investors and who were therefore, as a rule, preferable to
those who bought the shares merely as speculation” (Rutterford 2010: 9-10).
World War I had an impact on women’s attitude to investment, as they became
familiar with investment through Liberty Bonds or War Loans, which massive
marketing campaigns encouraged them to buy (Rutterford and Maltby 2007: 7-8).
By 1924, the US firm National Biscuits had women accounting for nearly half its
shareholder base and American Telephone and Telegraph Corporation (AT&T)
proudly announced that it had more women shareholders than men (Rutterford
2010: 17, 15). By the 1950s, in the UK and the US, women were increasingly
recognized as serious investors, although they still held more lower-risk
preference shares than they did ordinary shares, compared to male investors
(Kimmel 1952: 17; Rutterford et al. 2011: 172).
We now explore historical views of women as
speculators. From the early eighteenth century onward, there was anxiety about
women’s possible involvement in speculation on the stock exchange. Searle
(1998: 163-5) argues that the recurrence of these themes in the eighteenth
century can be related partly to the view that women were thought liable to be
“ill-informed” and acting on a “whim” (164) in speculating, but also because of
concern that they exposed another face of capitalism. Rather than being a
masculine, rational activity, capitalism was revealed by women’s fondness for
it as a world ruled by the goddess of fortune. Searle relates this to Pocock’s
suggestion that the investor was “a feminized, even effeminate being . . . wrestling
with his own passions and hysterias” (Searle 1998: 164). For Pocock, the
markets’ instability, their dependence on “self-generated hysteria (in the
full sexist sense)” (Pocock 1985: 112-13) was enough to condemn them.
Ingrassia in her study of the impact of the South Sea
Bubble on finance and society in the early eighteenth century argues that “the
intangible nature of speculative investment prompted representations of
stock-jobbers and moneyed men preoccupied with paper credit as ‘feminized’ creatures
guided by the fickle female goddesses who symbolically controlled the new
economic world” (Ingrassia 1998: 20). This symbolic association of investment
with feminine instability is, she argues, intensified by the growing level of
involvement by women as investors (see, for instance, Laurence 2006, 2009). A
set of playing cards produced in 1721 with the South Sea Bubble as its theme
often shows scenes of women rejoicing or bewailing the results of their
investments. The eight of spades shows a mournful woman holding a scroll that
reads, “Oh fatal blow to lose at once what through artfull charms I’ve got
these many years—undone, undone!” The caption below the picture sums up her
situation:
A Broker went
to let a lady know
That South Sea
stock was falling very low
Says she, then
what I gain in my good calling
By rising things, I find I
lose by falling. (Carington Bowles 1721)
The metaphor links her activities as a prostitute who
makes “things” rise and as an investor who loses if “things” fall. The image creates
a web of connections between women and investment—it is an activity carried out
by disreputable women, it is an activity that reflects the risks associated
with them, and, implicitly it is one that draws in men, with potentially
disastrous results.
Robb (2009: 121) sees two contrasting
reasons in the nineteenth century for concern about “financial chicanery” and
its impact on women investors. For social conservatives, it was evidence that
“the business world was too insecure for women,” for reformers proof “that an
economic system in which men held most of the cards was untenable.” But as well
as an index of danger in the markets, women’s speculating was seen as a
reflection on their character flaws. Women gambled on the exchanges partly as
the result of idleness and the need for distraction. For example, Elizabeth
Caton, a spinster, speculated between 1833 and 1845 in Spanish, Chilean
Portuguese, Argentinian, and Dalmatian bonds, as well as American banking
shares, using a mixture of sources—newspapers, friends, her banker, and
intuition (Rutterford and Maltby 2006: 126). Other women speculated out of
ignorance, naivety, or bad judgment, resulting in hasty and thoughtless
buying, possibly in an attempt to increase income to meet household needs. An
1876 journalist (Blackwood’s Edinburgh Magazine 1876: 294) described the widow left “with
£5,000 and a rising family” moving from government stock or railway debentures
(the accepted “safe” securities for women) “to some of those more highly priced
stocks which are the refuge of the widow, the clergyman and the reckless” in
order to raise her income and thereby marry off her daughters and find
employment for her sons.
As the playing-card metaphor quoted above
suggests, speculation was seen as evidence of the worse side of women’s
natures—amoral, inconstant, and heartless. Robb’s account of women’s entry into
Wall Street in the late nineteenth century identifies similar reactions. There
were claims that women could not safely invest because they lacked the ability
to identify risks and would be deceived more easily than men. But there was
also concern that the woman broker would “change her tender heart into stone”
and “crush out her human sympathies with the unfortunate and distressed” (Robb
2009: 135, quoting Fowler 1880).
Thompson (2000) quotes the view taken by
nineteenth-century French commentators that it was women’s innate lack of
self-control that led to enthusiasm for risk-taking. Feydeau described their
airy lack of concern:
one hears [the women playing
the market] laugh at times at tales of public disaster that makes the entire
nation shudder . . . sometimes also they stand there, pale and stupefied, while
all the citizens of the country congratulate each other on a victory that
should hasten the conclusion of peace. (Thompson 2000: 163, quoting Feydeau
1868)
Where
women chose to take risks, via speculation or outright gambling for pleasure,
it reflected their moral depravity. O’Connor quotes from an 1884 text on the
dangers of Monte Carlo:
every fourth player is a
woman; and such women! Hundreds of demi-monde flock here in winter from every
capital in Europe to allure and entangle well-to-do young men, who are always
found present in great numbers. Truly they represent the sirens of old, and are
infinitely more dangerous, often ruining entirely those whom they circumvent.
(O’Connor 2005: 13)
The 1870s and 1880s saw renewed stock market
speculation, during which there were claims that women were “not only frequent
but daring speculators” (Robb 2009: 131, quoting Fowler 1880). However,
Itzkowitz (2009) has argued that, by the 1890s, the conflation of gambling,
speculation, and investment began to be clarified, with a line drawn between
“fair enterprise and extravagant speculation, between legitimate commerce and
illegitimate gambling” (Itzkowitz 2009: 117). He attributes this to a new type
of financial press which emerged in the 1890s dedicated to the protection of
the investor, and to changes in stockbroking practice, in which registered
stock exchange members were distinct from disreputable bucket shops. At the
same time as investment was becoming separate from speculation, so investment
gradually came to be seen as a masculine, rational activity to which women
were essentially unfitted (see, for example, Searle 1998: 163-5). Women were at
risk of being outwitted by market practices, and so needed protection from
risk. We discuss the historical discourse on women and investment in the next
section.
In this section, we examine how the socioeconomic
context caused women to be labeled as cautious investors from the late
nineteenth century onward, and how this view first dominated and then displaced
the view of women as speculators and, indeed, speculation.
Nancy Folbre describes Victorian values as
contrasting “selfishness and altruism, the market and the family” and creating
“a sacred space in which traditional moral values remained exempt from the
demands of economic rationality” (Folbre 2009: 235). Part of the duty to this
“sacred space,” however, was the creation and maintenance of security and
order in the household’s prosperity. These were themes that appeared in writing
about women as household managers from the Middle Ages onward (see, for
instance, Laurence, Maltby, and Rutterford 2009: 11-12). Septimus Hansard,
Rector of Bethnal Green argued that women were “the great representatives of
the virtue of providence amongst the working classes” (Report of the Select
Committee on Married Women’s Property Bill 1868: para. 1146). An essential
element in working-class welfare as depicted by Smiles in his tract Thrift was the role of the woman.
He stressed the importance of mother and wife in promoting savings: “Men may
hold the reins . . . but . . . the women . . . tell them which way to drive”
(Smiles 1875: 162). The wife needed to be “housekeeper, nurse and servant, all
in one,” for if she were thriftless “putting money into her hands will be like
pouring water through a sieve” (Smiles 1875: 188). This was partly a matter of
a practical as well as a moral lead. Smiles quoted examples of thriftless
working men who had reformed their ways on discovering that the wife had a
savings account (Smiles 1875: 154, 183). Prudent investment was an intrinsic
part of household management, and this was a role that applied to the
middle-class as well as the working-class wife—see, for example, Vickery (1998:
9), who identifies “the administration of the household, the management of
servants, the guardianship of material culture and the organization of family
consumption” as part of the affluent woman’s role.
However, there has been extensive
questioning of the “separate spheres” model of nineteenth-century society which
views women as confined to the private realm of home and family and thereby
excluded from economic activity (see, for instance, Hamlett and Wiggins 2009:
707-9). Recent commentators (Beachy, Craig, and Owens 2006; Owens 2006) suggest
that it is appropriate to see investment as linking rather than separating the
private and the public spheres. According to this interpretation, it was
acceptable for women to carry out financial activities provided that these
harmonized with expectations of their behavior. It was not investment itself
that was repugnant to femininity, but certain kinds of activity that were cause
for concern. The wide activity of women as investors was reflected in
literature throughout the period (see, for instance, Henry 2007 and Maltby et
al. 2011) where it was sometimes viewed as exposure to danger and depravity
and sometimes viewed as a basis for a safe, propertied way of life.
516 JOSEPHINE MALTBY AND JANETTE RUTTERFORD
There were a number of reasons encouraging women to
make investments, related in part to their economic position and in part to
social expectations of their behavior. The nineteenth century was a period when
a reliable source of income was essential for the unprotected middle-class
woman, whether widow or single, dependent on the return she could get from
money left to her by her husband or father. In addition, there was an abiding
expectation that women would make safe investments so that they could act as a
source of support for other family members. Hall comments that daughters of the
middle class “inherited forms of property which would provide an income and
allow them to be dependent—a life assurance, an annuity, money in trust . . .
women did not operate freely in the market” (1992: 177). Women were encouraged
to make choices that were low risk and involved little intervention—investing
but not voting on their shares, rarely altering their portfolios. As suppliers
of finance, they were “important but mostly silent actors” (Petersson 2006:
49-50). Morris, for instance, views the middle-class woman as potentially the
“rescue agency” for a family network by providing relatives with access to
funds that they had been safeguarding, if, as an example, brothers’ or sons’
businesses failed (Morris 2004: 374). This made government stocks, debentures,
preference shares, or ordinary shares associated with lower-risk industries an
attractive source of predictable, albeit low, income. Low-risk investments
were therefore popular with women investors (see Rutterford and Maltby 2007).
This preference for low-risk securities continued well into the twentieth
century (Rutterford 2010).
A crucial element in accounts of gender and financial
decision-making is the view taken toward the differences between male and
female attitudes to risk. Pocock’s account of eighteenth-century comments,
outlined above, stressed the belief that risk-taking was an essentially
feminine preoccupation, but nineteenth-century writing suggested that women’s
natures were unsuited to risky choices.
The twentieth and twenty-first centuries are marked by
a continuation of the belief that women are more risk averse than men:
A lot of women have a nesting
instinct in terms of looking after their family and their future . . . [t]hey
don’t want to risk gambling their future away . . . Men want to show they are
good by finding investments which do better than the average. A lot of men like
bragging about it in the pub—when it goes right, anyway. (MacErlean 2004: 9)
Barber and Odean (2001), in an influential article,
looked at online trading on 35,000 accounts between 1991 and 1997. They
concluded that women were likely to trade less often than men and to show less
confidence in their activity. This is one of a number of studies which have
reached similar conclusions—see, for instance, Prince (1993: 179), who found
that men felt they had a greater propensity to gamble. Men were also more
likely to think highly of their competence in financial
dealings; they regarded themselves as thorough and took pride in their money
management skills. Gerrans and Clark- Murphy (2004) found that gender had a
significant effect on behavior, Dwyer, Gilkeson, and List (2002) concluded that
women were more risk averse than men, and Sunden and Surette (1998), Bajtelsmit
and Bernasek (1999), and VanDerhei and Olsen (2000) drew similar conclusions
about “money styles” (Prince 1993: 179). There is some evidence that women are
less affected by behavioral biases such as the disposition effect—greater
reluctance to sell after price falls than after price gains (Da Costa Jr.,
Mineto, and Da Silva 2007).
However, it has more recently been argued
that this view of the difference between male and female risk-aversion has been
exaggerated. Schubert, Gysler, and Brachinger (1999) have pointed out that
evidence based on experiments did not necessarily correspond with reactions to
real-life situations—for example the choice to invest or the choice to insure
against risk. Work by Hibbert, Lawrence, and Prakash (2009: 3) pointed out the
possibility that “risk aversion has been found to be inversely related to the
level of education.” They conclude that “when individuals have the same level
of education, after controlling for age, income, debts, race and the number of
children in the household, single women are no more averse than their male
counterparts” (Hibbert, Lawrence, and Prakash 2009: 30).
Bertocchi, Brunetti, and Torricelli (2010) suggest that
women’s changing views of the security of marriage, combined with expanding
work opportunities, have altered their risk aversion. A large study by
Christiansen, Schroter, and Rangvid (2010), which reviewed a 10 percent sample
of the Danish population 1997-2004, pointed to the importance of taking account
of what they describe as “background characteristics” (Christiansen, Schroter,
and Rangvid 2010: 4) in comparing male and female behavior. In particular,
“labor income risk and financial wealth” affect the decision to invest: men
invest more and more riskily to the extent that they are wealthier and higher
paid than women. This finding is echoed by Badunenko, Barasinska, and Schafer
(2009) in a survey covering behavior in Austria, Cyprus, Germany, Italy, and
the Netherlands. They conclude that:
the hypothesis that females
take more conservative investment decisions because they are by nature more
risk averse than males cannot be confirmed by the data. Other factors which
cannot be taken into account in our model may play a role, such [sic] differences
in human capital, duration of work life, knowledge of financial markets, or
even trust in financial institutions. (Badunenko, Barasinska, and Schafer 2009:
22)
Barasinska (2010) carries out a study of peer-to-peer
lending to compare the risk attitudes of male and female participants in the
market, with a view to testing the claim that “as Neelie Kroes, the EU
competition commissioner, put it: ‘... the collapse of Lehman Brothers would never
have happened if there’d been Lehman Sisters with them.’ ” (Barasinska 2010: 2). She
finds no difference in risk aversion between the groups, nor does one group
outperform the other in terms of results—loan quality, actual versus expected
cash flows, and so on.
The arguments that women are naturally risk
averse have been extensively highlighted (see, for instance, Sibert 2010 for a
recent overview). They have been variously interpreted in investment advice
and journalism. Some commentators, following Barber and Odean, argue that women
trade less often and less confidently than men but gain by their prudence
(DiCosmo 2008).
Others conclude that women are handicapped because risk
aversion makes them miss opportunities, for example:
Studies have found that women
in general are far more concerned with the fear of losing money (risk) than the
chance of gaining it (return). Women tend to blame themselves if an investment
loses money, whereas men will blame weak markets, bad advice, or bad luck.
Because of this fear of losing money, too many women put their savings into
more conservative, easy-to-understand investments—like savings accounts or US
Treasuries. (Wachovia 2012)
It
has been argued that the substantial literature which attributes higher risk
aversion to women than to men has had an impact on the advice given to women.
Eckel and Grossmann (2002: 292) warn that the belief that women are always
highly risk averse may reduce the choices they are offered, so that, for
instance, “an investment advisor may offer a different range of options to a
female than to a male investor, leading to less risky (and less lucrative)
portfolios of assets.” Roszkowski and Grable (2005: 189) similarly suggest—based
on a study of investment advisors’ estimates of their clients’ risk
preferences—that “advisors seem to overapply the stereotype that men are more
risk tolerant than women as they subjectively assess client attitudes.” The
belief in women’s risk aversion is very tenacious: the idea of low-risk
portfolios as being more suitable to women investors, current in the nineteenth
and twentieth centuries, seems to persist today, even where challenged by
empirical evidence to the contrary.
We now turn to the topic of pensions, where women’s
attitude to risk can have a significant impact on income in retirement.
Pensions represent an important object for financial planning, increasingly so
as life expectancy rises and state provision is retrenched (Clark and Strauss
2008: 848). Pensions are relevant to a discussion of finance and gender
because a number of issues affecting women and their pensions have attracted
attention from governments and from the financial services industry—the
pensions to which women are entitled, the extent to which women engage in the
planning of their pensions, their understanding of the problems involved, and
the extent to which they save/ invest for retirement. And pensions are also
relevant to a discussion of the extent to which women engage in financial
planning—how far is this seen as an activity in which women can/should engage?
Women in the UK are potentially entitled to
pensions from the state and from paid employment and/or from private savings
and investments. The state pension is dependent on the contributions paid by
the beneficiary; women’s contributions are more likely than those of men to
have been reduced by periods of unavailability for work (particularly whilst
caring for children). As a result, many women currently receive less than the
full amount of basic state pension (BSP): in 2008 34 percent of women received
60 percent or less of BSP, compared with 2 percent of men (Office for National
Statistics 2009).
Occupational and private pension contributions
will also depend on contribution levels, again affected by interruptions in
work and also the propensity to save. A survey of UK women by Sykes et al.
(2005: 3) found “little evidence of detailed, realistic, forward financial
planning . . . vagueness about how much retirement income women or their
families might need, and how much they might expect.” This was coupled with
limited knowledge and understanding of pension sources and entitlements, and an
apparently low priority being assigned to pensions (Sykes et al. 2005: 4-5).
Similar findings about women’s understanding of pensions and planning for
retirement have been made by Clark, Knox-Hayes, and Strauss (2009) and
Bajtelsmit (2006: 135). Women have also been found less likely to save, and to
save less than men. For example, the number of men who are now saving enough
for an adequate retirement income rose from 55 percent to 59 percent between
2008 and 2009, while the number of women has barely changed, increasing from 46
percent to 47 percent (Scottish Widows 2009: 1) with women saving lower amounts
of their salaries than men (8 percent and 10 percent respectively). This has
been attributed to the lower level of women’s earnings (see, e.g., Office for
National Statistics 2010) but also to women’s different outlook on saving. It
is claimed that women are more likely to save for the short term and to be more
affected by short-term (consumer) debt, and that women with dependent children
are almost twice as likely as men to stop long-term savings as a result of
having children: “12 percent of the women with dependent children we surveyed
have had to stop all pension contributions and long term savings because of
starting a family, compared to just 7 percent of men” (Scottish Widows 2009:
9).
Sykes et al. (2005: 98) argue that women
“put the needs of their family above their own” in their financial planning and
expenditure. Surveys have also found a view that “pension planning and
provision is essentially a male role linked to breadwinning” (Sykes et al. 2005:
4-5) with women generally attaching lower importance than men to financial
planning (Clark, Knox-Hayes, and Strauss 2009: 2504) Women appeared to attach
more importance to benefits such as employers’ assistance with childcare than
to occupational pension provisions (Scottish Widows 2009: 36).
These findings combine to build what
Bajtelsmit (2006: 125) describes as a “dire picture” of women’s pension
provision and prospects. What are the factors underlying this? Some seem to be
features of the employment and benefit system within which women live and work.
A contribution-based state system, in combination with female careers that are
liable to be interrupted for family needs, increases the likelihood of less
than full entitlement to BSP. This effect is likely to be intensified by the
unequal distribution of private pensions, to which the majority of women are
not entitled (Ginn 2003: 320). Women’s pensions are likely to perpetuate low
income into retirement.
Apart from lower entitlement as a result of
lower earnings and contributions, women’s pension prospects are arguably
affected by the tension between individual and household. The view noted above
reported by Sykes et al. (2005)—that pension planning is “a male role”—can be
linked with a view that a woman is part of a household and can therefore rely
on the husband’s pension entitlement. Clark, Knox-Hayes, and Strauss (2009:
2510) comment that “Some respondents are clearly influenced by the existence of
a SPOUSAL pension entitlement. This could mean that there is mutual learning
between partners. As such, the relevant retirement income planning unit could,
in fact, be the household not the individual.”
Certainly, Clark and Strauss found that
having a spousal pension increased the marginal probability that an individual
would make riskier asset allocations (i.e., allocate a larger amount to
equities) with her long-term savings, unless she was a low-income woman.
Conversely, being in a household where the spouse did not have a pension entitlement
decreased this likelihood, except for high income and older groups (2008: 861).
Women whose husbands have a planned pension feel able
to make riskier investments than those who do not—they are influenced by the
household’s pension entitlement. Again, this need not been interpreted as
evidence of essential female risk-aversion: it may be seen as evidence that
women in more affluent households believe they can take more investment risks
than those with less security. This argument is consonant with the point made
by Sunden and Surette (1998: 209) that investment choices are “driven by a
combination of gender and marital status.” This is a reflection of the added
security that may be derived from marital status, and also the better level of
information available to someone who lives in a household where there is
another investor—what Clark, Knox-Hayes, and Strauss call (2009: 2496)
“intimate . . . advisory relationships.” Once again, it is important to place
women’s investment behavior within context in order to understand it fully.
We next examine women’s attitude to risk in the
financial services sector. It could be argued that this offers an opportunity
to investigate women’s attitude to risk in a relatively gender-neutral context,
without, for example, the tension between individual and household which we
observed when examining women and pensions.
However, there is already gender difference
in the relative numbers of men and women employed in the financial services
sector. In both the UK and the US, women have taken substantial shares of
lower-paid jobs in the financial services sector but are less well represented
in the upper echelons of management. In the UK in 2009, for instance, women
accounted for 50 percent of banking sector employees but less than 2 percent of
banks’ executive directors (House of CommonsTreasury Committee 2010: 9). In the
UK, there is a gender pay gap of 60 percent in financial services compared with
a national gap of 42 percent at the level of gross earnings. When these figures
are adjusted for hourly pay, excluding overtime, the differences are even more
marked—a gap of 41 percent in finance compared with 21 percent for the economy
overall (House of Commons Treasury Committee 2010: 5). In the US, women’s
positions, it is now being claimed, are less secure than those of men, with
women suffering disproportionately in the layoffs following the debacle of 2007
onward on Wall Street. Female employment in the US finance sector has fallen
4.7 percent since December 2006, compared with 3.2 percent for men (Raghavan
2009).
In the UK, it is claimed that a variety of factors
contributed to the slow progress made by women in financial services. On the
supply side, these include a shortage of women applicants with a suitable
background in mathematics/economics (House of Commons Treasury Committee 2010:
12) and conditions of work (long, inflexible hours, lack of parental leave)
that either deter women or irretrievably interrupt their careers. (House of
Commons Treasury Committee 2010: Banyard Q53; Ogden, McTavish, and McKean 2006:
47-8). But these are, in turn, attributed to a pervasively masculine culture in
financial services which creates a working environment designed by and for men.
Presenteeism is combined with an emphasis on networking—a social life based on
work contacts (see, for instance, Confessions of a City Girl (Anonymous 2009)) of a kind
that exclude women. In both the UK and the US this underlies the pervasive
sexism that leads to repeated claims for sex discrimination (see, for instance,
Roth 2006: 24-5) and to reports by women of continuing “jokey” harassment—for
example,
Offensive sexual “advice” was
reportedly given to women, for example “keep your legs closed” to a woman in a
senior executive role working for an international bank who had just returned
from her second period of maternity leave, and a male manager suggesting that
a female member of his team should wear fishnet tights for a month in order to
get re-graded. Comments like these often get explained away as friendly
workplace banter by the men making them. (House of Commons Treasury Committee
2010: Ev 67)
A theme that recurs in discussions of women’s activity
in the financial markets is one that has been discussed earlier in this
chapter—the difference between male and female attitudes to risk. In addition
to work on women’s personal choices, a number of recent studies have considered
the activities of workers in the financial services sector. Work in this area
is summarized by, for instance, Basch and Zehner (2009: 5-7) and is a popular
theme in discussions of women’s role or absence in financial services.
In the evidence given to the 2009-10
Treasury Committee, for example, the Association of Chartered Certified
Accountants (ACCA) (House of Commons Treasury Committee 2010: Ev 34) referred
to evidence which had found that “Goal-driven (often mostly male) management
teams in the financial services industry have been blamed for a culture of
excessive risk-taking that has damaged the global banking system.” The
Downing Street Project[1]
(House of Commons Treasury Committee 2010: Ev 46) claimed that the “masculine
culture” involved “the absence of emotional input in decision-making, the
emphasis of task over relationship . . . a win-lose mindset . . . an emphasis
on hard power . . . the taking of excessive risk.”
Critics of City/Wall Street culture often go
on to argue that women’s influence would have a beneficial role on financial
services by replacing the current masculine emphasis on risk with a more
thoughtful, careful investment strategy. Charles Goodhart argued in evidence to
the UK Treasury Committee that “a very much larger number of women CEOs” would
have brought “the longer term, more cautious tendency with less of the alpha
male” (House of Commons Treasury Committee 2010: Q36). The ACCA continued its
evidence quoted above with the suggestion that “women managers tended to take
less extreme risk and to adopt more measured investment styles (which perform
well over time)”) (House of Commons Treasury Committee 2010: Ev 34).
Basch and Zehner (2009: 7-8) suggest that
women’s risk aversion is particularly relevant when markets are “highly
turbulent” as it will have a “moderating effect.” This is with the proviso,
though, that women’s style of “conservative investing and low turnover” is
likely to lead to lower returns as well as lower risk than the male approach.
Quoting Nicholas Kristof, they endorse the conclusion that “the optimal bank
would have been Lehman Brothers and Sisters.”
This theme—that men and women are
fundamentally different and need to complement each other by playing to their
strengths—is one that appears elsewhere. Altmann, in evidence to the Treasury
Committee, argues that women and men should choose different areas of finance:
This chapter has offered an overview of attitudes to
gender and finance from the early eighteenth century onward that suggests that
certain categories persist. A connection between women, investment, and
immorality—the investment market as a reflection of female unpredictability and
inconstancy—was first made at the time of the South Sea Bubble and persisted
until the end of the nineteenth century with warnings of the cruelty women
were tempted to display if allowed into the financial markets. The competing
view— that women were too risk averse to be able to enter the market on the
same terms as men—has persisted from the Victorian period to the present day
and has become the dominant theme of the twentieth and twenty-first centuries.
The Downing Street Project described the
contrast between “hard-powered—i.e. selfinterested, coercive, risky—and
soft-powered—co-operative, holistic, developmental— strategies” (House of
Commons Treasury Committee 2010: Ev 46). It is interesting to compare this
reading with the eighteenth-century interpretation of finance outlined above by
Pocock (1985: 112-13), who identifies an eighteenth-century view of speculative
finance as essentially feminine, with prices soaring and swooping like
precarious female emotions. This, he finds, changed in the nineteenth century
to the perception of commerce as a masculine activity, with the male as the
“conquering hero” (Pocock 1985: 114). Many commentators in the twentieth and
twenty-first centuries have continued to identify speculative, competitive
risk-taking as masculine, and cautious, low-risk/low-return activity as
feminine. This gender divide may, it has been suggested, have implications for
the financial advice given to women, and for the roles allotted to them in financial
services. Research has concentrated on whether this relative risk aversion on
the part of women is still present once factors such as wealth, education, and
household circumstances are taken into account, but results are so far
inconclusive. There is, however, some evidence that women lose less money and
exhibit less disposition effect when trading stock market securities. Whether
due to risk aversion or other factors, these results are of interest to the
financial services sector.
In evidence to the Treasury Committee, one
witness suggested that these were “gender stereotypes” (House of Commons
Treasury Committee 2010: Banyard Q39) that were not supported by differences in
performance. Certainly, the possibility that men and women approach risk
differently because of their “background characteristics” (Christiansen,
Schroter, and Rangvid 2010), and their human capital, still seems to be less
popular than the allocation of financial behavior to an essentialist model of
the differences between men and women. The claim made in the wake of the 2007
financial crash that Lehman Sisters would have performed better than Lehman
Brothers— because the sisters would have been more cautious and prudent—can be
readily linked with Hansard’s 1868 description of women as “great
representatives of the virtue of providence.” In both cases, women’s financial
behavior is forcibly assigned to a category: but it is still necessary, this
chapter argues, for it to be understood in the context of the economic and
social relationships within which women continue to operate.
524 JOSEPHINE MALTBY AND JANETTE RUTTERFORD
Notes
1. Which describes itself as
an initiative “to promote and enable balanced leadership between men and women
at every level of society” (The Downing Street Project 2011).
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528 JOSEPHINE MALTBY AND JANETTE RUTTERFORD
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[1] think I would advise young women to focus
on the asset management side of the business rather than the trading side of
the business. It is a lot easier for women to make progress in areas which do
not require the sort of short-term, aggressive trading but require long-term,
research focused activity. (House of Commons) (House of Commons Treasury
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There is a
strain which emphasizes another difference: that women’s attitude to financial
decision-making is marked by emotion as well as rational evaluation. Lascu,
Babb, and Phillips (1993: 81) advised that “female brokers may make substantial
inroads in the market by emphasizing their gender-related qualities of empathy
and nurturing.” This line is followed by Hersch, reporting advice on effective
investment selling to “boomer women.” The advisor needs to approach the sexes
differently: “While men tend to focus on the merits of the transaction, women
attach greater importance to developing the advisor-client relationship ...”
He also recommends that advisors select gender-specific phrases that
will help establish connections (e.g., “I know what you feel”), display
similarities (“yes, I felt the same way, when ...”) and match experiences (“let
me share how it ...”) (Hersch 2008: 62). So, the debate on gender differences
in finance continues to apply in the financial services sector as well as with
respect to investment decision-making.
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