Shaping risk preferences across time

Alison Booth, Patrick Nolen, Lina Cardona Sosa

20 February 2012



The majority of experimental studies investigating gender differences in risky choices find that women are less willing to take risks than men. This research is summarised in Eckel and Grossman (2008) and Croson and Gneezy (2009). However, these experimental studies investigating gender differences in risky choices typically do so only at a single point in time.

Why might there be gender differences?

Only recently have economists begun to explore why women and men might have different risk preferences. Broadly speaking, those differences may be due to either nurture, nature, or some combination of the two. For instance, boys are pushed to take risks when participating in risky or competitive sports while girls are often encouraged to remain cautious. Thus, the riskier choices made by males could be due to the nurturing received from parents or peers. Likewise, the disinclination of women to take risks could be the result of parental or peer pressure not to do so.

In recent research (Booth and Nolen 2012), we present a recent experimental study exploring why girls and boys might have different risk preferences. Using adolescent subjects from two distinct environments or ‘cultures’, we examine the effect on risk preferences of two types of environmental influences – randomly assigned experimental peer-groups and educational environment (single-sex or coeducational). The experimental subjects were UK students in years 10 and 11 who were attending either single-sex or coeducational state-funded high schools. We find that the gender composition of the experimental group, as well as the gender mix of the school the student attended, affected decisions on whether or not to enter a real-stakes lottery. But our experiment was conducted at one point in time, and did not track changes over time.

Do risk-taking preferences evolve in single-sex environments?

While ‘environments’ have been found in our earlier work to affect risk-taking behaviour, it is unclear how long these effects last. For example, Gneezy and List (2006) found in a different context that experimental results such as gift exchange might have only an initial effect and disappear subsequently. If environmental influences are only temporary, then changing educational pre-market factors, such as educational or training environments, may not affect gender pay gaps or under-representation of women in top jobs. For this reason, it is desirable to explore how the environment or ‘nurture’ affects longer term risk preferences.

To do this, we designed a new experiment to look at the effects of nurture over time. Our goals were to see if random assignment to a single-sex group produces effects on individuals’ behaviour immediately upon assignment and also after some weeks’ exposure to that particular environment.

The experiment

To test if single-sex classes within a coeducational environment modify students' risk-taking behaviour, we designed a controlled experiment using all incoming first year economics and business students at a British university. The subjects were asked to make choices over real-stakes lotteries at two distinct dates – the first week of term and the eighth week of term. The real-stakes lotteries were of the form used by Holt and Laury (2002), amongst others.

Prior to the start of the academic year, students were randomly assigned to classes. Our ‘nurturing’ environment is the experimental peer-group or class to which students were randomly assigned by the timetabling office. The class groups were of three different types – all female, all male, or mixed gender. Given the random assignment, there are no issues of endogeneity.

The results

We found that, on average, women are significantly less likely to make risky choices than men at both dates. However, after eight weeks in the single-sex class environment – within the larger coeducational milieu – women were significantly more likely to choose the lottery than their counterparts in coeducational groups. No such result was found for men in the single-sex groups. In other words, after eight weeks, the women in the single-sex classes were no more risk averse than men. Moreover, our results were robust to a number of sensitivity checks, including controlling for cognitive and non-cognitive skills (namely IQ and personality type).

What is the importance of these results?

The findings suggest, first, that a part of the observed gender difference in behaviour under uncertainty found in previous studies might actually reflect social learning rather than inherent gender traits. Of course this is not to say that inherent gender traits do not exist. Rather it suggests that they can be modified across time by the environment in which a woman is placed. Second, the findings are also relevant to the policy debate on the impact of single-sex classes within coeducational schools or colleges on individuals’ behaviour. Whether or not this outcome carries over into other subject areas apart from economics and business remains a topic for future research.

Where to next?

Our experiment does not allow us to tease out why these behavioural changes were observed for young women in all-female groups. Conjectures as to the reasons for the changes might include the following. Women, even those endowed with an intrinsic propensity to make riskier choices, may be discouraged from doing so because they are inhibited by culturally driven norms and beliefs about the appropriate mode of female behaviour – avoiding risk. But once they are placed in an all-female environment, this inhibition is reduced. No longer reminded of their own gender identity and society’s norms, they may find it easier to make riskier choices than do women who are placed in a coeducational class. We hope future research will investigate these hypotheses further.


Booth, AL, PJ Nolen (2012), “Gender Differences in Risk Behaviour: Does Nurture Matter?”, Economic Journal, 122,668: F56-F78.

Booth, AL, L Cardona Sosa, PJ Nolen (2011), “Gender Differences in Risk Aversion: Do Single-Sex Environments Affect their Development?”, CEPR Discussion Paper 8690.

Croson, R, U Gneezy ( 2009), “Gender differences in preferences”, Journal of Economic Literature, 47(2):1-27.

Eckel, C and P Grossman (2008), “Men, Women and Risk Aversion: Experimental Evidence”, 114:1078-1086, in Charles R Plott, Vernon L Smith (eds.), Handbook of Experimental Economics Results, Elsevier Science.

Gneezy, U and JA List (2006), “Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments”, Econometrica, 74(5):1365-1384.

Holt, Charles A and Susan K Laury (2002), “Risk Aversion and Incentive Effects”, The American Economic Review, 92(5):1644-1655.



Topics:  Frontiers of economic research Gender Labour markets

Tags:  competition, risk aversion, sexism

Professor of Economics at the University of Essex and the Australian National University, CEPR Research Fellow

Lecturer, University of Essex

PhD candidate, Department of Economics, University of Essex