Lehman Sisters? Probably

New research suggests women are just as dangerous as men.

Finally, a proper study on the matter: knowing you're a girl won't tell us much about your gambling habits. The study in question comes from a paper released by Bundesbank, and finds gender to be a poor predictor of risky investment. I've always thought this, so to avoid repeating myself, here's something I wrote last year on the subject:

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 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.

In that article I referred to a study from Stanford, which looked at how women's behaviour towards risk changes as a result of gender stereotyping.

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.

Any differences in financial risk-taking owed a great deal, I suggested, to social conditioning.  Now Bundesbank's paper addresses the matter more directly. The reserachers looked at households in Austria, the Netherlands, Italy and Spain, and found that a great predictor of risk-taking behaviour was not in fact gender but age. As subjects got older, their tendencies to make risky choices fell gradually, (the steepest fall was between the late teens and 30s). Gender did not have that much impact - and crucially, varied according to social factors. In Italy, where sexual inequality is seen as higher, gender had more influence on attitude to risk.

Clearly, there is more evidence to be gathered, but it seems to be mounting up.

 

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The tale of Battersea power station shows how affordable housing is lost

Initially, the developers promised 636 affordable homes. Now, they have reduced the number to 386. 

It’s the most predictable trick in the big book of property development. A developer signs an agreement with a local council promising to provide a barely acceptable level of barely affordable housing, then slashes these commitments at the first, second and third signs of trouble. It’s happened all over the country, from Hastings to Cumbria. But it happens most often in London, and most recently of all at Battersea power station, the Thames landmark and long-time London ruin which I wrote about in my 2016 book, Up In Smoke: The Failed Dreams of Battersea Power Station. For decades, the power station was one of London’s most popular buildings but now it represents some of the most depressing aspects of the capital’s attempts at regeneration. Almost in shame, the building itself has started to disappear from view behind a curtain of ugly gold-and-glass apartments aimed squarely at the international rich. The Battersea power station development is costing around £9bn. There will be around 4,200 flats, an office for Apple and a new Tube station. But only 386 of the new flats will be considered affordable

What makes the Battersea power station development worse is the developer’s argument for why there are so few affordable homes, which runs something like this. The bottom is falling out of the luxury homes market because too many are being built, which means developers can no longer afford to build the sort of homes that people actually want. It’s yet another sign of the failure of the housing market to provide what is most needed. But it also highlights the delusion of politicians who still seem to believe that property developers are going to provide the answers to one of the most pressing problems in politics.

A Malaysian consortium acquired Battersea power station in 2012. Initially, it promised to build 636 affordable units. This was pretty meagre, but with four developers already having failed to develop the site, it was still enough for Wandsworth council to give planning consent. By the time I wrote Up In Smoke, this had been reduced to 565 units – around 15 per cent of the total number of new flats. Now the developers want to build only 386 affordable homes – around 9 per cent of the final residential offering, which includes expensive flats bought by the likes of Sting and Bear Grylls.

The developers say this is because of escalating costs and the technical challenges of restoring the power station – but it’s also the case that the entire Nine Elms area between Battersea and Vauxhall is experiencing a glut of similar property, which is driving down prices. They want to focus instead on paying for the new Northern Line extension that joins the power station to Kennington. The slashing of affordable housing can be done without need for a new planning application or public consultation by using a “deed of variation”. It also means Mayor Sadiq Khan can’t do much more than write to Wandsworth urging the council to reject the new scheme. There’s little chance of that. Conservative Wandsworth has been committed to a developer-led solution to the power station for three decades and in that time has perfected the art of rolling over, despite several excruciating, and occasionally hilarious, disappointments.

The Battersea power station situation also highlights the sophistry developers will use to excuse any decision. When I interviewed Rob Tincknell, the developer’s chief executive, in 2014, he boasted it was the developer’s commitment to paying for the Northern Line extension (NLE) that was allowing the already limited amount of affordable housing to be built in the first place. Without the NLE, he insisted, they would never be able to build this number of affordable units. “The important point to note is that the NLE project allows the development density in the district of Nine Elms to nearly double,” he said. “Therefore, without the NLE the density at Battersea would be about half and even if there was a higher level of affordable, say 30 per cent, it would be a percentage of a lower figure and therefore the city wouldn’t get any more affordable than they do now.”

Now the argument is reversed. Because the developer has to pay for the transport infrastructure, they can’t afford to build as much affordable housing. Smart hey?

It’s not entirely hopeless. Wandsworth may yet reject the plan, while the developers say they hope to restore the missing 250 units at the end of the build.

But I wouldn’t hold your breath.

This is a version of a blog post which originally appeared here.

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