Content uploaded by Michael Joseph Roszkowski
Author content
All content in this area was uploaded by Michael Joseph Roszkowski
Content may be subject to copyright.
A preview of the PDF is not available
Gender Stereotypes in Advisors' Clinical Judgments of Financial Risk Tolerance: Objects in the Mirror Are Closer Than They Appear
Abstract
A sample of 183 financial advisors and 290 advisory clients was used to determine the degree of correspondence between advisors' subjective clinical judgments about their clients' financial risk tolerance and the clients' actual financial risk tolerance. The correlation between the estimates and the actual measures was 0.41. It was further determined that advisors overestimated the risk tolerance of men and underestimated the risk tolerance of women. This distortion could not be attributed to income or wealth differences between the males and females.
... Gender stereotyping is common when measuring an investor's level of risk tolerance (Roszkowski & Grable, 2005;. It is generally believed that male investors are more risk-tolerant than their female counterparts (Dickason & Ferreira, 2018;Gibson et al., 2013;Roszkowski & Grable, 2005;. ...
... Gender stereotyping is common when measuring an investor's level of risk tolerance (Roszkowski & Grable, 2005;. It is generally believed that male investors are more risk-tolerant than their female counterparts (Dickason & Ferreira, 2018;Gibson et al., 2013;Roszkowski & Grable, 2005;. Some researchers argue that the prevalence of male risk tolerance levels may be attributed to culture and upbringing of children (Larkin et al., 2013;Slovic, 1966). ...
... This risk-tolerant behaviour has also been previously found in the South African context by Jackson (2007), Brick et al. (2012), and Lawrenson (2017). Literature suggests that female investors are associated with lower levels of financial risk tolerance, and male investors with higher levels of financial risk tolerance (Dickason & Ferreira, 2018;Gibson et al., 2013;Roszkowski & Grable, 2005;. ...
Research relating to the influence of investor’s demographic factors and personality traits on financial risk tolerance receives increasing attention. Financial risk tolerance refers to the degree of uncertainty an investor is willing to bear, with regards to the financial risks taken on. The investor’s personality refers to the stable characteristics an individual tends to display in any given situation. Personality traits may therefore also be considered as a driver in investor financial decisions. Understanding the influence gender and personality traits have on an investor’s financial risk tolerance, will assist in predicting their financial and investment decisions with regards to their asset portfolios. The purpose of this article is to develop a structural equation model for investment firms to more accurately profile their female investors, considering their personality traits, level of risk tolerance and level of education. Results from this study are in line with previous investment and portfolio management research. Results indicate that male investors are more risk-tolerant than their female counterparts. Furthermore, investors’ level of education significantly influenced their level of financial risk tolerance. Personality traits were found to influence female investors financial risk tolerance.
... Generally, other authors in different contexts have found similar results (Eckel and Grossman, 2003;Wagner, 2007;Koellinger et al., 2013). Roszkowski and Grable (2005) found that men are seen by society as more risk tolerant than they really are, and women as less tolerant than they can be in reality. Similarly, " Eckel and Grossman (2003) and Siegrist et al., (2002) demonstrated that both men and women often consider men more risk tolerant than women, and that women tend to believe that men have a lower fear of failure than men consider themselves to have". ...
The major endeavor of this research paper is to assessing the impact of Social and Demographic Factors on Female Entrepreneurial Intention in Pakistan because women constitute 50% of the population of Pakistan. Data for research paper was acquired from the database of GEM 2012 APS Global Individual Level. The female entrepreneurial intention was a dependent variable while demographic perceptions, Socio-cultural perceptions, Individual perceptions, and Perceptions of economic opportunities were independent variables. Four logistic regressions were employed to test ten hypotheses. Model 01 revels that the role model and self-efficacy have a significant and positive effect on EIs while, surprisingly, fear of failure was also found significant predictor of female entrepreneurship in Pakistan. The results of Role model, Self-efficacy and Perception of Economic Opportunities are positive and significant predictors of EIs among females. From Socio-Cultural Perceptions, Career Choice and News in Media have a negative and insignificant relation with EIs while, status and Respect perception has been found strong predictors of EIs among Pakistani females. Model 4 includes demographic variables of age, occupation and education. All perceptions (age, education and occupation) have negative impact on female EIs. In order to promote female EIs, the Government of Pakistan has to play an instrumental role in promoting entrepreneurial environment in country. In this connection, female-specific training programs, business support centers, promoting successful female entrepreneurs through print and electronic media are some common areas where GoP can work, and finally, making a conducive environment when females can run their business indecently.
... However, many gender stereotypes are inaccurate because of exaggerations which inflate actual gender differences to appear larger than they truly are (Roszkowski and Grable, 2005). For women, the consequences include internalizing the sense of an inferior competence (Bonnot and Croizet, 2007) which can be incorporated into their self-perception. ...
Purpose
This study aims to investigate whether gender predicts financial inclusion and whether education can fill the gender gap in financial inclusion when controlling for the effects of supply side factors of financial inclusion in low-income economies.
Design/methodology/approach
This study aims to investigate whether gender predicts financial inclusion and whether education can fill the gender gap in financial inclusion when controlling for the effects of supply side factors of financial inclusion in low-income economies.
Findings
The findings provided support for the gender gap in financial inclusion using the most basic measure of financial inclusion. However, using formal savings and access to credit, the gender gap hypothesis is not supported. Moreover, the results revealed that education reduces the gender gap in the basic form of financial inclusion. However, this study could not find any significant difference between men and women's financial inclusion in terms of saving at a bank or borrowing from a bank though men tend to save more than women informally.
Originality/value
The current study contributes to the literature by examining the role of education in the relationship between gender gap and financial inclusion when controlling for the effects of heterogeneous infrastructure and the supply side factors of financial inclusion among the selected countries.
... Thus, statistical discrimination may arise as women tend to be viewed as less able to make the risky decisions that may be necessary for a firm's success. Moreover, as shown by and Roszkowski and Grable (2005), women are likely to be perceived by brokers and financial advisors as more prudent investors and therefore offered investments with lower-risk/lower expected returns. ...
Global discourse is geared towards greater accountability and regulatory oversight of banks to promote sound financial systems and charter value. The authors applied dynamic pool panel analysis to investigate the relationship between risk governance and financial performance among African global banks spanning the years 2015 to 2020. They find significant positive association between financial experts on risk committee and bank profitability. The results further reveal that risk committee activism as a proxy for risk committee effectiveness significantly increase bank profitability. Therefore, stakeholders must prioritize regular risk committee meetings and attach importance to risk committee compositions with finance experts on the majority. Additionally, this study offers policy implications for regulators and bank mangers to clearly define risk committee financial experts and minimum financial experts required to serve on the risk committee.
... As female investors are likely to live longer than male investors, they are more likely to rely on their investments and their expert advisors for a longer period (Garnick, 2016). However, prior research on financial advisors finds female investors receive less risky portfolio recommendations than male investors with the same stated risk preference, leading to lower returns for female investors (Bhattacharya et al., 2020;Grable & Lytton, 1999;Roszkowski & Grable, 2005;Schubert et al., 1999;Wang, 1994). This paper extends prior ethics and gender literature to examine how an unsophisticated investors' gender interacts with a sell-side equity analyst's gender to affect their processing of the analyst's advice. ...
We examine whether an unsophisticated investor’s own gender interacts with gender of a sell-side equity analyst to affect the investor’s judgment. Prior research shows two potential sources of gender-based discrimination that affect female investors. First, female investors’ advisors offer less risky hence lower return portfolios to female investors than to male investors with similar risk preferences as female investors are perceived as more risk adverse. Second, female equity analysts are subject to greater barriers to enter and advance in investment firms that act as if they believe clients prefer male investment advisors in a male stereotypical occupation. Using two experiments, we use the judge-advisor framework to predict and find that investor’s gender and analyst’s gender jointly influence investor’s judgment. Specifically, female-female analyst-investor pair generates the strongest reaction to analyst’s advice compared to any other analyst-investor pair, everything else equal. Further, we find that efforts to highlight equal gender performance activates gender stereotypes that reduce female investors’ receptivity to female analysts’ advice. By linking the two previously different sources of discrimination we show that they reinforce each other and find that attempts to “level the playing field” by emphasizing gender performance parity may have unexpected results.
... Generally, other authors in different contexts have found similar results (Eckel and Grossman, 2003;Wagner, 2007;Koellinger et al., 2013). Roszkowski and Grable (2005) found that men are seen by society as more risk tolerant than they really are, and women as less tolerant than they can be in reality. Similarly, " Eckel and Grossman (2003) and Siegrist et al., (2002) demonstrated that both men and women often consider men more risk tolerant than women, and that women tend to believe that men have a lower fear of failure than men consider themselves to have". ...
The major endeavor of this research paper is to assessing the impact of Social and
Demographic Factors on Female Entrepreneurial Intention in Pakistan because women
constitute 50% of the population of Pakistan. Data for research paper was acquired from the
database of GEM 2012 APS Global Individual Level. The female entrepreneurial intention
was a dependent variable while demographic perceptions, Socio-cultural perceptions,
Individual perceptions, and Perceptions of economic opportunities were independent
variables. Four logistic regressions were employed to test ten hypotheses. Model 01 revels
that the role model and self-efficacy have a significant and positive effect on EIs while,
surprisingly, fear of failure was also found significant predictor of female entrepreneurship in
Pakistan. The results of Role model, Self-efficacy and Perception of Economic Opportunities
are positive and significant predictors of EIs among females. From Socio-Cultural
Perceptions, Career Choice and News in Media have a negative and insignificant relation
with EIs while, status and Respect perception has been found strong predictors of EIs among
Pakistani females. Model 4 includes demographic variables of age, occupation and education.
All perceptions (age, education and occupation) have negative impact on female EIs. In order
to promote female EIs, the Government of Pakistan has to play an instrumental role in
promoting entrepreneurial environment in country. In this connection, female-specific
training programs, business support centers, promoting successful female entrepreneurs
through print and electronic media are some common areas where GoP can work, and finally,
making a conducive environment when females can run their business indecently.
Keywords: Entrepreneurial intention, Fear of failure, Knowledge of other entrepreneurs,
Perception of capabilities, Logistic Regression and Global Entrepreneurship Monitor (GEM)
... For example, a lower willingness to take risks among women might be the cause of the under-representation of women in high-paying jobs that provide remunerations based on the company's performance and occupations [8]. In the investment world, financial advisors might underestimate women's risk tolerance and suggest conservative portfolios that produce a lower rate of return [9]. ...
Attitude toward risk plays a vital role in an individual’s financial decision-making and well-being. Past studies have found significant association of age and gender with risk tolerance. However, studies on the factors affecting the underlying mechanism are scant. The purpose of this research is to test whether cognitive functioning mediates the association between age, gender, and self-assessed risk tolerance. Using the 2014 wave of the Health and Retirement Study, path analysis was conducted to test the hypothesized model. Results revealed a negative direct association between age and risk tolerance. Moreover, the study also found a lower level of risk tolerance in women. A bootstrap-based confidence interval revealed that a significant portion of the relationship between age and risk tolerance was mediated by cognition. However, the gender difference in risk tolerance was not explained by cognition. Financial planning practitioners and policymakers should understand the contribution of cognitive functioning toward the difference in risk tolerance in older populations and implement strategies to reinforce cognitive functioning to mitigate the adversity of a low level of risk tolerance.
... In other words, advisors do tend to exaggerate thedifferences, which means that they are stereotyping." (Grable and Roszkowski, 2005). Yao & Hanna (2003) states that risk tolerance is influenced by recent events. ...
304 | P a g e 3 0 S e p t e m b e r 2 0 1 9 w w w. g j a r. o r g ABSTRACT The purpose of this study is to examine whether there is a significant difference in the level of Financial Risk Tolerance of employees in Financial Institutions with that of employees in Non-Financial Institutions in Sri Lanka. A sample of internet risk assessment survey respondents was considered.A composite index using the values for answers was developed to measure Financial Risk Tolerance of respondents with the help of a Likert-scale. The study employed descriptive statistics and one way Analysis of Variance test (ANOVA) to compare the levels of risk tolerance between the respondents of the two sectors, i.e. Financial Sector employees and Non-Financial Sector employees.
In this chapter, the author examines the influence of gender on financial risk tolerance. The risk tolerance is assessed by the instrument developed by Grable and Lytton in a sample that includes 272 postgraduate students of the University of Porto (Portugal). The results show that males are significantly more risk-tolerant than females, even after controlling for factors such as the economic status and educational levels of the respondents' parents. The gender differences seem to be essentially driven by a higher proportion of males with high levels of risk tolerance. Moreover, belonging to a household with a high level of annual income contributes to increase the likelihood of exhibiting high levels of risk tolerance. In the total sample, the levels of risk tolerance are lower than those reported in similar studies. Overall, the author documents that there are significant gender differences in financial risk perception.
The authors conducted a meta-analysis of 150 studies in which the risk-taking tendencies of male and female participants were compared. Studies were coded with respect to type of task (e.g., self-reported behaviors vs. observed behaviors), task content (e.g., smoking vs. sex), and 5 age levels. Results showed that the average effects for 14 out of 16 types of risk taking were significantly larger than 0 (indicating greater risk taking in male participants) and that nearly half of the effects were greater than .20. However, certain topics (e.g., intellectual risk taking and physical skills) produced larger gender differences than others (e.g., smoking). In addition, the authors found that (a) there were significant shifts in the size of the gender gap between successive age levels, and (b) the gender gap seems to be growing smaller over time. The discussion focuses on the meaning of the results for theories of risk taking and the need for additional studies to clarify age trends.
Differences between women and men in attitudes toward risk are well documented across a variety of situations and environments. Studies have found women more likely to perceive a situation as risky. Women also exhibit greater risk aversion in their choice behavior and lower valuations of risky prospects. Women are found to have less risky portfolios of assets than men, and they report a lower propensity to assume financial risk than men. Regardless of whether or not there is a significant sex difference in risk preferences, important consequences may arise if there is a perception of greater risk aversion on the part of women. If women are, rightly or wrongly, stereotyped as more risk averse, this can lead to statistical discrimination, which could adversely affect women in many aspects of their lives. This paper addresses both the question of sex differences in risk preferences and the question of whether a person's sex is read as a signal of risk preference. Subjects are presented with five gambles and asked to choose which of the five they wish to play. The gambles include one sure thing; the remaining four increase (linearly) in expected payoff and risk (measured by the standard deviation of expected payoff). Each subject also predicts which of the five gambles each of the other subjects would choose for herself. Three different choice environments are tested: gamble and investment frames with the possibility of losses, and a gamble frame with no losses. We find that women are significantly more risk averse than men in all three settings, and predictions of both women and men tend to confirm this difference.
The accuracy of in-group and out-group variability judgments was examined by comparing those judgments with the variability of self-ratings provided by random samples of group members. Following B. Park and C. M. Judd (1990), perceptions of both group dispersion and group stereotypicality were examined in 116 college students (58 business majors and 58 engineering majors). Accuracy was examined both by within-S sensitivity correlations and by simple discrepancies between perceived and actual variability estimates. In-group–out-group differences in sensitivity were shown, particularly for judgments of stereotypicality. These differences were related to differences in the degree to which out-group variability is underestimated relative to in-group variability (i.e., the out-group homogeneity effect). Out-group stereotypicality judgments were overestimated, supporting the view that out-group stereotypes are overgeneralizations. Whether dispersion judgments were over- or underestimated depended on their measurement.
The purpose of this study was to develop a paramorphic representation of the clinical decision-making procedure used by psychologists in combining IQ and adaptive behavior information to arrive at a diagnosis of degree of mental retardation. The data consisted of the clinical judgments formed by 8 psychologists on 180 mentally retarded individuals. The psychologist-assigned levels of mental retardation classifications were regressed on IQ and 23 domain scores from the Adaptive Behavior Scale. IQ alone had a correlation of .83 with this classification. A linear combination of IQ Independent Functioning, Vocational Activity, Physical Development, and Economic Activity resulted in a multiple correlation of .87. Various interpretations of these results are discussed.
Monte Carlo simulations were conducted to examine the degree to which the statistical power of moderated multiple regression (MMR) to detect the effects of a dichotomous moderator variable was affected by the main and interactive effects of (a) predictor variable range restriction, (b) total sample size, (c) sample sizes for 2 moderator variable-based subgroups, (d) predictor variable intercorrelation, and (e) magnitude of the moderating effect. Results showed that the main and interactive influences of these variables may have profound effects on power. Thus, future attempts to detect moderating effects with MMR should consider the power implications of both the main and interactive effects of the variables assessed in the present study. Otherwise, even moderating effects of substantial magnitude may go undetected.
This special issue of the Journal of Personality and Social Psychology: Attitudes and Social Cognition addresses issues of the measurement and the malleability of implicit prejudice and stereotypes. The findings raise fundamental questions about the assumptions underlying the assessment of implicit prejudice, particularly with regard to the widely used Implicit Association Test (A. Greenwald, D. McGhee, & J. Schwartz, 1998) and the assumption of extant models of prejudice and stereotyping that implicit biases are automatically and invariantly activated when perceivers come in contact with members of stigmatized groups. Several of the articles show that contextual manipulations produce reductions in implicit manifestations of prejudice and stereotyping. The articles in this issue, in challenging conventional wisdom, are thought provoking and should be generative in the field's ongoing efforts to understand the role of implicit (and explicit) processes involved in prejudice and stereotyping. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Three studies tested basic assumptions derived from a theoretical model based on the dissociation of automatic and controlled processes involved in prejudice. Study 1 supported the model's assumption that high- and low-prejudice persons are equally knowledgeable of the cultural stereotype. The model suggests that the stereotype is automatically activated in the presence of a member (or some symbolic equivalent) of the stereotyped group and that low-prejudice responses require controlled inhibition of the automatically activated stereotype. Study 2, which examined the effects of automatic stereotype activation on the evaluation of ambiguous stereotype-relevant behaviors performed by a race-unspecified person, suggested that when subjects' ability to consciously monitor stereotype activation is precluded, both high- and low-prejudice subjects produce stereotype-congruent evaluations of ambiguous behaviors. Study 3 examined high- and low-prejudice subjects' responses in a consciously directed thought-listing task. Consistent with the model, only low-prejudice subjects inhibited the automatically activated stereotype-congruent thoughts and replaced them with thoughts reflecting equality and negations of the stereotype. The relation between stereotypes and prejudice and implications for prejudice reduction are discussed.
A QuickBASIC program for estimating the statistical power to detect the effects of dichotomous moderator variables using moderated multiple regression (MMR) is available. The program runs on IBM and IBM-compatible personal computers and estimates power based on specific values for (a) total sample size, (b) sample sizes across the two categories of the hypothesized moderator, and (c) correlation coefficients between predictor and criterion scores for each of the two moderator-based subgroups. The compiled run time and source code versions of the program can be obtained from the first author.
Two groups of experts, financial analysts and weather forecasters, were asked to predict corresponding events (the value of the Warsaw Stock Exchange Index and the average temperature of the next month). When accounting for inaccurate judgments, we find that weather forecasters attach more importance to probability than financial analysts. Although both groups revealed the overconfidence effect, it was significantly higher among financial analysts. These results are discussed from the perspective of learning from experience.