Advertisement

Journal of Risk and Uncertainty

, Volume 52, Issue 3, pp 191–211 | Cite as

Is social choice gender-neutral? Reference dependence and sexual selection in decisions toward risk and inequality

  • Steven R. BeckmanEmail author
  • Gregory DeAngelo
  • W. James Smith
  • Ning Wang
Article

Abstract

This article examines redistribution of income in privately and socially risky environments. A majority of women are risk averse and behave according to the Golden Rule while a majority of men are risk seeking in some part of the income distribution and treat others differently than they treat themselves. Our experiments allow subjects to increase or reduce spreads in a five-element income distribution. All changes reduce average pay so any change is costly. Changes may be made that affect only the individual subject and reflect behavior toward risk or behind a veil of ignorance that is thought to induce just behavior, or as an observer. On average women tend to reduce spreads across all conditions, treating others as they treat themselves and reducing risk and inequality to the same degree. Thus, their behavior, on average, follows a concave utility function whether applied to themselves or others. Men generally increase spreads in at least one tail of the distribution if only their pay is affected. However, men either abstain or reduce spreads to the degree others are involved and therefore reduce spreads most when acting as observers. Behavior of men cannot be described either by a concave utility function or by a function that makes no distinction between themselves and others. The gender differences conform to theories of sexual selection.

Keywords

Gender and risk Social comparison Reference dependence Inequality aversion Social reference points Veil of ignorance 

JEL Classifications

C9 D3 D8 

Notes

Acknowledgments

We thank Dean Guanhua Huang (International College Beijing, China Agricultural University) Sarah Brosnan, Lise Vesterlund, Maleiah Beckman, Laura Gee, John Bishop, Zoë June Smith, Buhong Zheng, and Gary Charness for comments on an earlier version. We also are grateful to an anonymous referee and the Board of Editors for comments and suggestions.

Supplementary material

11166_2016_9241_MOESM1_ESM.pdf (263 kb)
ESM 1 (PDF 262 kb)

References

  1. Amiel, Y., & Cowell, F. A. (1992). Measurement of income inequality: Experimental test by questionnaire. Journal of Public Economics, 47(1), 3–26.CrossRefGoogle Scholar
  2. Andersen, S., Harrison, G., Lau, M., & Rutstrom, E. (2008). Eliciting risk and time preferences. Econometrica, 76(3), 583–618.CrossRefGoogle Scholar
  3. Andreoni, J., & Vesterlund, L. (2001). Which is the fair sex? Gender differences in altruism. Quarterly Journal of Economics, 116(1), 293–312.CrossRefGoogle Scholar
  4. Arrow, K. J. (1965). Aspects of the theory of risk bearing. The Theory of Risk Aversion. Helsinki: Yrjo Jahnssonin Saatio, 90–120.Google Scholar
  5. Atkinson, A. (1970). On the measurement of inequality. Journal of Economic Theory, reprinted in Social Justice and Public Policy. Cambridge, MA: MIT Press, 1983.Google Scholar
  6. Baker, M. D., & Maner, J. K. (2009). Male risk-taking as a context-sensitive signaling device. Journal of Experimental Social Psychology, 45(5), 1136–1139.Google Scholar
  7. Beckman, S. (2006). A tax and redistribution experiment with subjects that switch from risk preference to risk aversion. Social Choice and Welfare, 26, 627–641.CrossRefGoogle Scholar
  8. Beckman, S., Formby, J. P., Smith, W. J., & Zheng, B. (2002). Envy, malice and pareto efficiency: An experimental examination. Social Choice and Welfare, 19, 349–367.CrossRefGoogle Scholar
  9. Beckman, S., Formby, J. P., Smith, W. J., & Zheng, B. (2004a). Efficiency, equity and democracy: Experimental evidence on Okun’s leaky bucket. Research on Economic Inequality, 11, 17–42.CrossRefGoogle Scholar
  10. Beckman, S., Formby, J. P., Smith, W. J., & Zheng, B. (2004b). Risk, inequality aversion and biases born of social position: Further experimental tests of the leaky bucket. Research on Economic Inequality, 12, 73–96.CrossRefGoogle Scholar
  11. Benartzi, S., & Thaler, R. H. (1995). Myopic loss aversion and the equity premium puzzle. Quarterly Journal of Economics, 110(1), 73–92.CrossRefGoogle Scholar
  12. Bishop, J., Formby, J. P., & Smith, W. J. (1991). Incomplete information, income redistribution and risk averse median voter behavior. Public Choice, 68(1), 41–55.Google Scholar
  13. Booij, A. S., & van de Kuilen, G. (2009). A parameter-free analysis of the utility of money for the general population under prospect theory. Journal of Economic Psychology, 30(4), 651–666.CrossRefGoogle Scholar
  14. Byrne, K. A., & Worthy, D. A. (2015). Gender differences in reward sensitivity and information processing during decision-making. Journal of Risk and Uncertainty, 50(1), 55–71.CrossRefGoogle Scholar
  15. Byrnes, J., Miller, D., & Schafer, W. (1999). Gender differences in risk taking: A meta-analysis. Psychological Bulletin, 125, 367-383.Google Scholar
  16. Cettolin, E., & Tausch, F. (2015). Risk taking and risk sharing: Does responsibility matter? Journal of Risk and Uncertainty, 50, 229–248.CrossRefGoogle Scholar
  17. Croson, R., & Gneezy, U. (2009). Gender differences in preferences. Journal of Economic Literature, 47(2), 448–474.CrossRefGoogle Scholar
  18. Croson, R., & Konow, J. (2009). Social preferences and moral biases. Journal of Economic Behavior & Organization, 69(3), 201–212.CrossRefGoogle Scholar
  19. Darwin, C. (1871). The descent of man. London: John Murray.Google Scholar
  20. Ermer, E., Cosmides, L., & Tooby, J. (2008). Relative status regulates risky decision making about resources in men: Evidence for the co-evolution of motivation and cognition. Evolution and Human Behavior, 29(2), 106–118.CrossRefGoogle Scholar
  21. Fehr, E., & Schmidt, M. (1999). A theory of fairness, competition, and cooperation. Quarterly Journal of Economics, 114(3), 817–868.CrossRefGoogle Scholar
  22. Fischbacher, U. (2007). Z-tree: Zurich toolbox for ready-made economic experiments. Experimental Economics, 10(2), 171–178.CrossRefGoogle Scholar
  23. Fischer, D., & Hills, T. T. (2012). The baby effect and young male syndrome: Social influences on cooperative risk-taking in women and men. Evolution and Human Behavior, 33(5), 530–536.CrossRefGoogle Scholar
  24. Friedl, A., Lima de Miranda, K., & Schmidt, U. (2014). Insurance demand and social comparison: An experimental analysis. Journal of Risk and Uncertainty, 48(2), 97–109.CrossRefGoogle Scholar
  25. Friedman, M., & Savage, L. (1948). The utility analysis of choices involving risk. Journal of Political Economy, 56(4), 279–304.CrossRefGoogle Scholar
  26. Geary, D. (2010). Male, Female. Washington, DC: American Psychological Association.Google Scholar
  27. Greiner, B. (2004). An online recruitment system for economic experiments. Forschung und wissenschaftliches Rechnen, 63, 79–93.Google Scholar
  28. Haigh, M. S., & List, J. A. (2005). Do professional traders exhibit myopic loss aversion? An experimental analysis. Journal of Finance, 60(1), 523–534.CrossRefGoogle Scholar
  29. Harsanyi, J. (1953). Cardinal utility in welfare economics and in the theory of risk taking. The Journal of Political Economy, 61(5), 434–435.CrossRefGoogle Scholar
  30. Haun, D. B., Nawroth, C., & Call, J. (2011). Great apes’ risk-taking strategies in a decision making task. PLoS One, 6(12), e28801.CrossRefGoogle Scholar
  31. Heilbronner, S., Rosati, A., Stevens, J., Hare, B., & Hauser, M. (2008). A fruit in the hand or two in the bush? Divergent risk preferences in chimpanzees and bonobos. Biology Letters, 4, 246–249.CrossRefGoogle Scholar
  32. Henrich, J., Heine, S. J., & Norenzayan, A. (2010a). Most people are not WEIRD. Nature, 466(29). doi: 10.1038/466029a.
  33. Henrich, J., Heine, S. J., & Norenzayan, A. (2010b). Beyond WEIRD: Towards a broad-based behavioral science. Behavioral and Brain Sciences, 33(2–3), 111–135.CrossRefGoogle Scholar
  34. Hill, S. E., & Buss, D. M. (2010). Risk and relative social rank: Positional concerns and risky shifts in probabilistic decision-making. Evolution and Human Behavior, 31(3), 219–226.CrossRefGoogle Scholar
  35. Holt, C., & Laury, S. (2002). Risk aversion and incentive effects. The American Economic Review, 92(5), 1644–1655.CrossRefGoogle Scholar
  36. Jones, D., & Linardi, S. (2014). Wallflowers: Experimental evidence of an aversion to standing out. Management Science, 60(7), 1757–1771.CrossRefGoogle Scholar
  37. Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263–291.CrossRefGoogle Scholar
  38. Kahneman, D., & Tversky, A. (1984). Choices, values and frames. American Psychologist, 39(4), 341–350.CrossRefGoogle Scholar
  39. Kőszegi, B., & Rabin, M. (2007). Reference-dependent risk attitudes. The American Economic Review, 97(4), 1047–1073.CrossRefGoogle Scholar
  40. Kuziemko, I., Buell, R., Reich, T., & Norton, M. (2014). Last-place aversion: Evidence and redistributive implications. Quarterly Journal of Economics, 129(1), 105–149.CrossRefGoogle Scholar
  41. Linde, J., & Sonnemans, J. (2012). Social comparison and risky choices. Journal of Risk and Uncertainty, 44(1), 45–72.CrossRefGoogle Scholar
  42. Niederle, M., & Vesterlund, L. (2007). Do women shy away from competition? Do men compete too much? Quarterly Journal of Economics, 122(3), 1067–1101.CrossRefGoogle Scholar
  43. Odean, T. (1998). Are investors reluctant to realize their losses? The Journal of Finance, 53(5), 1775–1798.CrossRefGoogle Scholar
  44. Okun, A. (1975). Equality and efficiency: The big tradeoff. Washington: The Brookings Institution.Google Scholar
  45. Pelé, M., Broihanne, M. H., Thierry, B., Call, J., & Dufour, V. (2014). To bet or not to bet? Decision-making under risk in non-human primates. Journal of Risk and Uncertainty, 49(2), 141–166.CrossRefGoogle Scholar
  46. Rabin, M. (2000). Risk aversion and expected-utility theory: A calibration theorem. Econometrica, 68(5), 1281–1292.Google Scholar
  47. Rohde, I. M., & Rohde, K. I. (2011). Risk attitudes in a social context. Journal of Risk and Uncertainty, 43(3), 205–225.CrossRefGoogle Scholar
  48. Rohde, I. M., & Rohde, K. I. (2015). Managing social risks – tradeoffs between risks and inequalities. Journal of Risk and Uncertainty, 51(2), 103–124.CrossRefGoogle Scholar
  49. Rosati, A. G., & Hare, B. (2012). Decision making across social contexts: Competition increases preferences for risk in chimpanzees and bonobos. Animal Behaviour, 84(4), 869–879.CrossRefGoogle Scholar
  50. Shildberg-Horisch, H. (2010). Is the veil of ignorance only a concept of risk? An experiment. Journal of Public Economics, 94(11–12), 1062–1066.CrossRefGoogle Scholar
  51. Traub, S., Seidl, C., Schmidt, U., & Levati, M. V. (2005). Friedman, Harsanyi, Rawls, Boulding—or somebody else? An experimental investigation of distributive justice. Social Choice and Welfare, 24(2), 283–309.CrossRefGoogle Scholar
  52. Traub, S., Seidl, C., & Schmidt, U. (2009). An experimental study on individual choice, social welfare, and social preferences. European Economic Review, 53(4), 385–400.CrossRefGoogle Scholar
  53. Trautmann, S. T., & Vieider, F. M. (2012). Social influences on risk attitudes: Applications in economics. Handbook of Risk Theory. The Netherlands: Springer, 575–600.Google Scholar
  54. Tversky, A., & Kahneman, D. (1991). Loss aversion in riskless choice: A reference-dependent model. Quarterly Journal of Economics, 106(4), 1039–1061.CrossRefGoogle Scholar
  55. Tversky, A., & Kahneman, D. (1992). Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and Uncertainty, 5, 297–323.CrossRefGoogle Scholar
  56. Tyran, J.-R., & Sausgruber, R. (2006). A little fairness may induce a lot of redistribution in democracy. European Economic Review, 50(2), 469–485.CrossRefGoogle Scholar
  57. Viscusi, W. K., Phillips, O. R., & Kroll, S. (2011). Risky investment decisions: How are individuals influenced by their groups? Journal of Risk and Uncertainty, 43(2), 81–106.CrossRefGoogle Scholar
  58. Wakker, P. (2010). Prospect theory: For risk and ambiguity. Cambridge: Cambridge University Press.Google Scholar

Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  • Steven R. Beckman
    • 1
    Email author
  • Gregory DeAngelo
    • 2
  • W. James Smith
    • 1
  • Ning Wang
    • 3
  1. 1.Department of EconomicsUniversity of Colorado DenverDenverUSA
  2. 2.Department of EconomicsWest Virginia UniversityMorgantownUSA
  3. 3.International College BeijingChina Agricultural UniversityBeijingChina

Personalised recommendations