Sex wars and the city

Martha Gill's Irrational Animals column.

There's a persistent opinion knocking around that blames the financial crisis on one small molecule: testosterone. It is testosterone, apparently, that makes traders go feral as stocks rise, taking bigger and bigger risks until Lehman Brothers happens, or someone falls out of a window.

Women, then, goes the argument, are safer traders -so let's fill trading floors with the ladies. Naturally cautious, milder creatures, they make better investors. If women ruled the world, continues the logic, getting jovial now, lighting its pipe - there would be no stock-market crashes, and probably no, like, wars, either.

The argument is, on the face of it, pro-women. After all, it's saying women are good at something; they're good at not being overconfident. But is it feminist? Not really. Broad behavioural generalisations based in biology rarely do women much good. Along with "risk aversion" goes "less competitive" and "less confident". Banking may need these traits but they aren't attractive to employers, and it's damaging to saddle an entire gender with them.

So the argument isn't particularly feminist. But perhaps more interestingly, neuroscientists are starting to find that it isn't particularly true, either. It seems risky decision-making has more to do with confidence than gender. Being a woman, evidence suggests, only affects trading behaviour
as far as it's used to deplete your confidence. If you're told your gender doesn't like risk, it's surprisingly hard to go away and bet a million on the stock exchange with the right sort of swagger.

A recent study at Stanford University took 53 men and women - some bankers, some undergraduates - and gave them 14 risky choices. In each choice, a participant could either make a punt for a high sum, with a greater risk of failing, or go for a low-risk, low-pay option. The more frequently someone chose the safe option, the more risk-averse they were judged to be.

When the experimenters brought up gender stereotypes before the trial, women became overwhelmingly more cautious, whereas men took more risks. When such stereotypes were not used, men and women performed almost equally.

For the men, just knowing that women were negatively stereotyped made them confident enough to take riskier gambits. Expose a woman to typecasting and you knock her self-belief enough to produce the opposite effect.

Swat team

How can women avoid the problem? It's quite hard. The experimenters think even the process of shrugging off stereotyping - just thinking, "Nonsense, you total knob" - robs you of just enough energy to affect your decisions. They call it "ego depletion". Swat away a couple of negative comments and your next decision is more likely to be a safe one.

The study is provocative, not least because it invites extrapolation. After all, it's a bit of a coincidence that qualities "natural" to women - trying to please people, avoiding conflict, being self-deprecating - would be equally "natural" to any dominated and therefore less confident group.

I'm tempted to make the link.

Women: not as safe as all that, Getty images

Martha Gill writes the weekly Irrational Animals column. You can follow her on Twitter here: @Martha_Gill.

This article first appeared in the 02 April 2012 issue of the New Statesman, France is my enemy

Photo: Getty Images
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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.