The research showing that women are better investors than men has been around for a while. This is linked to the evidence that women are more risk averse than men – they tend to take less chances in general and with their money in particular.
This leads to a simple idea; that we should encourage more women to get involved in trading, both in the professional world and in the home. The reasoning is that if women are more cautious, and therefore more successful, investors then their stabilizing influence will lead to a safer and less volatile financial world. Which is a nice idea, but is probably wrong, although you'll need balls to admit it.
Sisters of Ambiguity
Probably the best known research showing the impact on trading of heightened female risk aversion is Brad Barber and Terrance Odean's Boys Will Be Boys which shows men trading 45% more than women and losing nearly a percentage point of gains as a reward for their hairy-chest, beetle-browed old-time macho foolishness. Odean and Barber posit that the cause of this difference is that age-old behavioral chestnut, overconfidence: we think they're more capable of predicting the future than we actually are (see: Sexism and the City).
The gender specific research on overconfidence tends to indicate that women are less overconfident than men on tasks where feedback is ambiguous – precisely the situation pertaining in financial markets, where today's defeat is tomorrow's victory and next month's Enron. In these situations men remain as bullishly optimistic about their ability to foresee the unforeseeable as ever, while women prefer to reserve their opinions. The idea that the intelligent trader withdraws from situations where the outcome is particularly uncertain is something we've seen before, as in the case where the better professional traders sit on their hands during periods of extreme volatility: they seem better calibrated to understand that there are times when trading is more than usually correlated with gambling (see: Craving a High: Trading on Dopamine).
Stereotypical Balls
Of course, trading rooms and fund manager roles tend to be heavily populated by men. There's lot of research and psychological theorising about why this might be. For instance, Alice Eagly and Steven Karau have proposed a role congruity model which argues that society's…
