Notre Dame psychology professor Anre Venter broached the issue of gender inequality in investment careers during a talk Tuesday in the Mendoza College of Business. The talk was sponsored by the Smart Women Securities ND chapter, a new club modeled after an organization at Harvard that aims to develop skills in financing and investing.
Venter began his talk with an overview of his experience in the business world, which he said included nine years in human resources and management without much focus on investment banking.
“I have to begin with an intellectually honest statement. I know almost nothing about behavioral economics and even less about the psychology of investing,” Venter said. “However, growing up as a white South African in an extremely conservative and sexist society, I know a lot about sexism.”
Acknowledging the degrees of institutionalized sexism in the workplace, Venter analyzed career prospects for women in business.
“As a social psychologist, I find that environments influence behavior even more than our own personalities do,” Venter said. “Women have to be aware that the work environment is a male-dominated, patriarchal world where men are used to making the decisions.”
In the field of investment banking, only 25 percent of positions are held by women, with about 11 percent in management and a mere 3 percent in the role of CEO. Discrepancies in pay are also prevalent, and Venter said women earn less directly after finishing MBA programs than equally-qualified men — as little as 79 cents to every dollar.
To make sense of this inequality, Venter cited 15 studies in which participants were given money to invest in testing peoples’ aversions to risky and ambiguous investments.
“In the most extreme case, men invested 80 percent of what they were given while women invested 48 percent,” he said. “The tendency holds up across the board: men took greater risks and women were more risk-averse. Women dealt with ambiguity better than men and invested more in uncertain stocks.”
Despite the differences in risk-taking, Venter said women investors outperform their male counterparts by 2 to 3 percent, and the reason involves biology.
“Testosterone levels are linked to irrational levels of exuberance in trading,” he said. “When men lose, they lose big.
“With only 10 percent of the testosterone of men, women are less emotionally attached to their trades and less likely to hold onto bad stocks. They tend to make less on the way up but lose less on the way down.”
Venter said this data could suggest a need for more women in the field of investing, even though fewer women are entering the sectors of finance and investment banking.
The male-domination of the field, Venter said, may have to do with men being favored in the performance review process that determines raises and promotions.
“The tendency of male reviewers to provide other men with more help, guidance and mentoring creates an ‘old boy’s club’ in which woman have a more difficult time advancing,” he said. “Women in advising roles just tend to be in less powerful positions than men.”
Venter said women entering into careers in investment banking may be able to create change, but not without difficulties.
“When you’re a junior-analyst, [you’re] thinking you’re going to change the system when you enter. But, five years down the road, once you’ve been socialized into it, affecting change will be that much harder,” he said.
