Can social preferences explain gender differences in economic behavior?

https://doi.org/10.1016/j.jebo.2015.05.017Get rights and content

Highlights

  • Social preference types help explain gender differences in economic behavior.

  • Women are more likely to be inequity averters while men are surplus maximizers.

  • Inequity aversion helps explain why women send less in trust games.

  • Women give more to charity than men even controlling for our measure of social preference types.

  • Women prefer egalitarian pay due to both inequity aversion and low self-confidence.

Abstract

This study examines whether gender differences in some economic behaviors are due to differences in social preferences as measured by dictator allocation decisions. We find that, compared to men, women are significantly more likely to be inequity averters and significantly less likely to be social surplus maximizers. These differences in social preferences explain to a large extent why women send less than men in trust games. Inequity averters can ensure equal payoffs if nothing is returned by sending one-fourth of the endowment while surplus maximizers can increase total payoffs by a factor of three for each dollar sent. Social preferences also help explain the size of gifts in dictator games and choice of compensation method for simple tasks, however, after controlling for social preference type, gender is still influential in these decisions. Women give significantly more to charity than men even after accounting for our measure of social preferences. Women prefer egalitarian payment systems both because they are inequity averters and because low self-confidence may lead them to believe they will earn more with equal sharing.

Introduction

Experimental evidence reveals that men and women exhibit differences in economic behavior. However, the findings vary among studies and there has been little work that attempts to explain these gender differences. In their survey on gender differences in preferences, Croson and Gneezy (2009) suggest that some behavioral differences between men and women arise because women are more sensitive to context. This paper examines a complementary hypothesis: differences in some economic behaviors of men and women may be partially explained by gender differences in social preferences (ways in which people are prosocial).

Based on the experimental literature, we identify three potential gender differences that have been found in U.S. samples1:

  • Women “trust” less than men, evidenced by women sending smaller amounts as first movers in trust games.

  • Women are more generous than men, evidenced by women sending larger amounts in dictator games and donating more to charity.

  • Women prefer egalitarian payments and men prefer competitive payments, evidenced by women choosing more equal payoffs while men more often choosing competitive payoffs in games that allow subjects to choose how they will be compensated for performing a task.

Numerous laboratory studies find that men are more likely to be surplus maximizers while women are more often classified as inequity averters (Andreoni and Vesterlund, 2001, Dickinson and Tiefenthaler, 2002, Fehr et al., 2006, Kamas and Preston, 2009, Kamas and Preston, 2012b). In this study we use dictator allocation decisions to classify laboratory participants into four different social preference types: self-interested individuals; inequity averters; and two types of social surplus maximizers, efficiency maximizers and compassionate social surplus maximizers.2 While both types of surplus maximizers seek to maximize total payoffs, compassionate social surplus maximizers express greater concern about payoffs to those who are the worst off while efficiency maximizers do not. Similar to other studies, we show that men and women differ in their representation in these categories. We hypothesize that these gender differences in social preference types lead to gender differences in economic behavior.

To test our hypothesis, we first examine how social preference type affects economic behavior in trust games, dictator games, and choice of compensation experiments.3 We then test whether gender differences in these behaviors still exist after controlling for social preference types.4 While a simple classification of social preferences such as the one we offer cannot be expected to capture all aspects of preferences, we are able to use this categorization to explain some important gender differences in economic behavior.

Section snippets

Categorizing social preferences

We use the Fehr and Schmidt (1999) inequity aversion utility function, and by specifying values of the parameters, we can identify different social preference types.5

Women “trust” less than men

“Trust” has often been measured as the amount sent by the first mover in the trust or investment game introduced by Berg et al. (1995).7 The first mover is given some endowment and provided the opportunity to send some part of this to the second mover. The amount sent is multiplied by some factor (usually 3) before reaching the recipient who then can decide how much to return to the first mover. In

Women are more generous than men

In their survey on gender differences in economic decisions, Eckel and Grossman (2008) conclude that when there is no risk, such as in dictator games, women are more generous than men. However, the experimental literature on giving in dictator games has conflicting findings on whether women send more than men. If women are more sensitive to context, as suggested by Croson and Gneezy (2009), differences in experimental design may help explain the different findings in dictator games. The way in

Women prefer egalitarian payments while men prefer competitive payments

It is well-documented that, compared to men, women prefer less inequality in income distribution and are more supportive of government redistribution policies.20 However, the motivations behind these views may be complex. Self-interest would lead those with relatively low current and expected future income to be discontent with the actual income distribution and to

Conclusion

This study examines the role played by social preference types in explaining gender differences in economic behaviors. We find that differences in social preferences are important determinants of economic behavior, but do not explain away all gender differences in the cases examined. Women offer less than men in trust games partly because they are more often inequity averters, looking to equalize total payoffs, while men are more likely to be surplus maximizers, seeking to increase the size of

Acknowledgements

We would like to thank Dirk Engelmann and two anonymous reviewers for their valuable comments on this paper. We also gratefully acknowledge financial support for this project from Haverford College and Santa Clara University (Breetwor Fellowship Fund, Leavey School of Business, and University Research Grant).

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