Washington - Researchers found women are less inclined to take chances than men because they are more sensitive to the pain of potential losses than to the satisfaction of potential profits.
This study was published in the “British Journal of Psychology”.
The study also discovered that men are “significantly” more optimistic than women, making them more inclined to take chances.
Dr Chris Dawson, associate professor of business economics at the University of Bath School of Management in the UK, said the findings were significant and could help explain sex-specific outcomes in several employment sectors and financial markets.
“It is widely acknowledged that men, across many domains, take more risks than women. These differences in how the sexes view risk can have significant effects," Dawson said.
“For instance, differences between the sexes in risk-taking can explain why women are less likely to be entrepreneurs, are under-represented in high-paying jobs and upper management, and less likely to invest their wealth in equities markets than men. Despite these important implications, we still know very little about why women take fewer risks than men.
“My research attempts to fill that gap. When thinking about risky choices, people tend to assess the probability of losing something alongside an evaluation of how painful that loss would be. I found that women take fewer risks than men as they focus more on the possibility of losing and anticipate experiencing more pain from potential losses,” he added.
Previous research suggests that women are more risk averse than men, and this study investigated the joint role of two psychological characteristics to explain the differences – loss aversion, the idea that losses loom larger than gains, and optimism.
To measure loss aversion, Dawson used data from 13 575 people from the British Household Panel Survey to assess how changes in household income from one year to the next predict changes in psychological well-being.
He found that income losses are less painful for men than for women, with no difference in the psychological responses to income gains between the sexes.
When asked how they saw themselves financially a year from now with expectations about outcomes under the individual’s control, men were significantly more optimistic than women.
The research indicates that this optimism may be linked to men’s overconfidence about their abilities compared to women, which previous studies have highlighted.
If women are both less optimistic about the probability of favourable outcomes occurring and less confident in their abilities than men, they will naturally evaluate a given gamble as being riskier, the research said.
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