Working Paper

The gender reference point gap

Published: 2023

This paper examines how men and women differ in their attitudes towards taking risks. In many studies women have been found to be less willing to take risks than men, and this gender difference can have an impact on economic opportunities and outcomes for women. Traditionally risk attitudes have been treated as a fixed characteristic, making it difficult to understand why these gender differences exist and how they could be addressed.

To better understand this issue, we take a different approach. We use a dataset of 853 participants (18-67 years old; average age of 42 years old) to estimate the “reference point” for men and women. The reference point is the dollar amount that a person would consider as neither a loss, nor a gain in a situation involving uncertainty—in other words, a break-even value. We find that the reference point for men is more than double the reference point for women. The fact that women are less willing to take risks could be because they have lower reference points. This explanation more accurately fits with participants’ choices than alternative explanations including that women perceive probabilities or value an additional dollar differently to men.

We believe the difference in reference points between men and women could contribute to gender-based economic inequities. Understanding the origins of these inequities can help in designing interventions to reduce or eliminate them. For example, our results raise the possibility that pay gaps may act to lower women’s expectations, lowering reference points, thus creating a perpetuating cycle. Interventions like greater pay transparency, which aim to increase women’s expectations, may be a way to break this cycle. We encourage future research in this area.

Authors

Centre Member

Agnieszka Tymula

Centre Member

Jonathan Levy

Centre Friend

Nathan Kettlewell
Xueting Wang

Citation

Kettlewell, N., Levy, J., Tymula, A. & Wang, X. (2023). ‘The gender reference point gap’, Life Course Centre Working Paper Series, 2023-08. Institute for Social Science Research, The University of Queensland. https://doi.org/10.14264/787065c