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

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.

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Notes

  1. 1.

    This literature is surveyed in Trautmann and Vieider (2012) and in Friedl et al. (2014).

  2. 2.

    The practice of paying for only one round that is randomly determined, which is a well established practice, may contribute to an expectation formed over the entire experiment.

  3. 3.

    Hypothetical gambles may induce subjects to change the frame of reference question by question. Hill and Buss (2010) report that choices among paired hypothetical gambles vary question by question according to information about imaginary coworkers.

  4. 4.

    The reason is straightforward. Convex utility has increasing marginal utility so that the marginal utility of the high pay exceeds the marginal utility of the low pay and this difference increases as more is transferred.

  5. 5.

    There are several other papers that model social choice in closely related ways. Cettolin and Tausch (2015) show that sharing risks across individuals varies according to whether the subject is directly responsible for the risk. Croson and Konow (2009) explore the behavior of observers and participants in dictator games. Byrne and Worthy (2015) find that each gender processes information differently when rewards are delayed. Jones and Linardi (2014) report a wallflower effect as women, more often than men, attempt to mimic the behavior of others. Tyran and Sausgruber (2006) find powerful influences on redistribution from middle class observers. Rohde and Rohde (2015) show that observers care about whether risks have a common consequence and whether allocations are random or determined by seemingly random attributes of the subject.

  6. 6.

    Ning Wang recruited students to recruit other students. Recruiters were both male and female and some were students at the International College Beijing and some were not.

  7. 7.

    Instructions are available in an online appendix. Data and programs are available from the authors.

  8. 8.

    We used z-Tree to program and link the computers (Fischbacher 2007).

  9. 9.

    The exchange rate at the time was 6.6 Yuan per dollar. Conversations with students with experience living in both the US and Beijing convinced us this rate would be too high as prices in China are lower than in the US for food and student housing. The rate of 2.5 roughly equates to the price of off campus food in both locations.

  10. 10.

    New cards are used if marking cards by subjects is suspected or observed. Card marking (bent corner, thumbnail scratch) did occur, but rarely.

  11. 11.

    Complete “within subject” data are available only for part 2. Therefore these tests have 85, 90 and 54 observations respectively.

  12. 12.

    For men the p-values for the 8 point transfers are (R, BV, OB) = (0.033, 0.001, 0.543) and for women we have (R, BV, OB) = (0.017, 0.016, 0.195). The same pattern of results emerges across cultures—that is, position clearly matters if the subject may be directly affected.

  13. 13.

    The MW and KS tests reported in Figure 3 for data combining parts 1 and 2 (income levels 1–2 and 4–5) have 115 observations in China and 90 in the US. For Part 2 alone (income levels 1–5 and 2–4), there are 55 observations in China and 30 in the US.

  14. 14.

    In Fig. 4, the left-hand panels (income levels 1–5 and 2–4) report data from part 2 with 47 males and 38 females. The right-hand panels (income levels 1–2 and 4–5) combine both parts and have 78 males and 127 females.

  15. 15.

    For the panels on the left side, there are 47 male observations in the risk and behind-the-veil conditions and 30 men in the observer condition. For the right-hand-side panels, there are 78 risk and veil-data points and 48 observer data points.

  16. 16.

    The left-hand panels for part 2 have 38 risk observations and 24 observer points. The right-hand panels, with data from both parts, have 127 and 78 observations, respectively.

  17. 17.

    Traub et al. (2005) offer an independent assessment of Friedman and Savage (1948) as well as several other related theories.

  18. 18.

    The Pearson chi-squared statistic is 16.65. The associated probability of no difference across genders is 0.000.

  19. 19.

    These figures add together Friedman-Savage and risk seeking percentages.

  20. 20.

    Although we do not directly examine reputation, our results are similar to Jones and Linardi (2014).

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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.

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Correspondence to Steven R. Beckman.

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Beckman, S.R., DeAngelo, G., Smith, W.J. et al. Is social choice gender-neutral? Reference dependence and sexual selection in decisions toward risk and inequality. J Risk Uncertain 52, 191–211 (2016). https://doi.org/10.1007/s11166-016-9241-z

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Keywords

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

JEL Classifications

  • C9
  • D3
  • D8