Philip Lemaster’s lecture on the roles of gender and age in financial decision-making was so well-attended, he had to add extra seats.
It also helped grow his research team.
“I’ve got about six new students joining in the fall who came to the talk and were really interested,” said Lemaster, an assistant professor in Concordia College’s psychology department.
During his lecture in February, he explained that men tend to make riskier financial decisions than women, and that as both men and women age, they tend to become more conservative with their finances.
His research project, funded by a Centennial Scholars Individual Research Grant and aided by students Cassondra Thompson and Rachael Schauer, involved over 500 people, both within and outside the Fargo-Moorhead area, ages 18 to 85.
“I strategically targeted people to get equal numbers of men and women and equal numbers of people who are young, middle and older adults,” he said.
Lemaster recently talked about his research and its implications, which he plans to present at a national conference in New Orleans in November.
Q: Did any of your findings surprise you?
A: Not really. I found what I expected to.
What was the main finding of your research?
There is substantial overlap in the financial decisions that men and women tend to make, but there do tend to be differences where men are more likely to allocate money to investments, whereas women are relatively more likely than men to be more conservative with their money.
What are the implications of your findings?
Even though these differences might be small, they can snowball into a cumulative effect where over the years, over decades, men are more likely to accrue more wealth as they get older. But the thing is, women tend to accrue less wealth, and women tend to live longer, so there’s like, a poverty crisis, particularly among women in retirement.
How much of it is biological, and how much of it is learned?
All of our behavior has a biological component, but as a psychologist, I argue that if we can socialize men and women more similarly, then we can overcome these differences. We could reach parity, ultimately, in how men and women do make decisions. We could find that men and women are equally likely to take risks with their money or whatever.
Where does this difference start?
Little boys are socialized that risk-taking is encouraged. Even on the playground, risk-taking is encouraged, whereas girls are kind of shied away from that. This differential socializing that we have leads men and women to have different emotional responses when they’re making a risky decision. Men might think that it’s something more positive or thrilling, whereas women might be more uncomfortable with it.
Are there others who contribute to the difference?
Yes. They aren’t making these decisions alone. Research has shown that financial planners tend to encourage their clients into different decisions depending on their gender. They just assume that the men they’re working with are more tolerant of risk and the women they’re working with are more risk-averse.
How can we address it?
With education. This is typically thought of as a stereotypically masculine domain–in a heterosexual couple, men are going to make the business decisions, not women; women handle the day-to-day business, and men handle more of those macro, long-term business decisions. I think that we do need to do more education, for all people, but particularly for women.
The other side of the coin is that it could be that men are excessively risky and could be making maladaptive decisions that could result in them losing money. Education could also help pull them back a little bit so they make better decisions, too.
To learn more about Lemaster’s research, visit his website at http://philipclemaster.weebly.com.