• Ipek Sanri

Do women avoid risk?

In everyday life, people have to make decisions for many things. These decisions can be simple, such as choosing what to eat, or a little more complex, like which bond to buy. Depending on choices, people can be categorized as risk-averse, risk-neutral, or risk-loving. Risk lovers enjoy risky actions, and risk neutrals are indifferent between risky and safe choices. On the other hand, risk aversion is a term used to describe people who prefer lower risk, in turn, lower returning. In other words, people who avoid taking a risk and accept lower profits are risk-averse. It is common knowledge that women are, generally, more risk-averse than men. There may be many reasons for that; however, to what extent is this assumption valid? This article will summarize previous studies to understand in which circumstances women avoid risk more than men.

There are many studies to analyze people's decision mechanisms. In some studies, it has been observed that women and men make different choices. Schubert et al. implemented an experimental design such that participants made an investment and insurance decisions that involve risk (1999). They have found that female and male subjects do not differ much in terms of making financial decisions. On the other hand, when they compared the abstract gambling game results, they have found that men are risk-loving towards gains, although women are risk-loving toward losses. So, they showed that the decision frame has an impact on the financial decisions of women and men. However, one must consider that abstract experiments are less likely to reflect reality due to a lack of realism.

In line with this, Bliss and Potter (2002) have found that women fund managers hold more risky assets than men. Also, they showed that women do not underperform than men. In addition, Iqbal, O, and Baek have found that male executives are more risk-averse by engaging in higher diversification-related stock sales than female executives (2006, s. 63). They have defined risk aversion as selling stocks more frequently and they have compared the stock trading behaviors of men and women. However, at the end of the paper, they give the reasoning for men being more averse, such that men may sell more shares due to trading more often. Besides, Atkinson et al. (2003) have found that male and female managed funds do not differ much in terms of risk. Also, Masters and Meir’s (1988) study showed there were no differences in the risk-taking propensity of male versus female entrepreneurs.

On the other hand, some studies conclude the opposite. Jianakoplos and Bernasek (2007) examine household holdings of risky assets and found that single women are more risk-averse than single men. As wealth increases, the proportion of risky assets that women hold increase a little. According to Eckel and Grossman (2008), field studies showed women avoid risk more than men. Also, they supported this by both abstract gambling and contextual environment experiments. In line with this, Charness and Gnezzy (2012), claim that women are more risk-averse when making financial decisions by making smaller investments in risky assets. Frield, Pondorfer, Schmidt (2020) women in western societies avoid risk more than men in individual risk-involved decisions. Besides, some studies show risk-aversion of women in different fields. Eckel and Grossman (2008) showed sex differences in alcohol and drug use, perception of war, technology, and environmental issues.

This was a summary of some studies about the differences in risk perception of women and men. A conclusion cannot be drawn because these are the results of different experimental studies which are performed in various environments. The experiment’s design, framework, subjects’ educational and social status can change the results. What we can conclude is that women are not more risk-averse than men in general. The risk-taking behavior changes a lot. Also, age, marital status, ethnicity, education level can affect risk-taking behavior. To sum up, the risk perception of women depends on the environment and the context. In some cases, women are risk-loving, while they are more risk-averse than men in others.


Bliss, R., & Potter, M. E. (2002). Mutual fund managers: Does gender matter? . The Journal of Business and Economic Studies.

Charness, G., & Gnezzy, U. (2012). Strong Evidence for Gender Differences in Risk Taking. Journal of Economic Behavior&Organization, 50-58.

Eckel, C. C., & Grossman, P. J. (2008). Chapter 113 Men, Women and Risk Aversion: Experimental Evidence. In C. R. Plott, & V. L. Smith, Handbook of Experimental Economics Results (Vol. 1, pp. 1061-1073). Elsevier. doi:https://doi.org/10.1016/S1574-0722(07)00113-8

Friedl, A., Pondonfer, A., & Schmidt, U. (2020). Gender differences in social risk taking. Journal of Economic Psychology, 77(0167-4870,). doi:https://doi.org/10.1016/j.joep.2019.06.005.

Iqbal, Z., O, S., & Baek, H. Y. (2006). Are Female Executives More Risk-Averse than Male Executives? Atlantic Economic Journal, 63-74. doi:10.1007/s11293-006-6123-9

Jianakoplos, N. A., & Bernasek, A. (2007, September 28). Are Women More Risk Averse? Economic Inquiry, 36(4), 620-630. doi:https://doi.org/10.1111/j.1465-7295.1998.tb01740.x

Schubert, R., Brown, M., Gysler, M., & Brachinger, H. W. (1999). Financial Decision-Making: Are Women Really More Risk-Averse? American Economic Review, 89(2), 381-385. doi:10.1257/aer.89.2.381