The Nashville Business Journal (2008) reports that the current economic crisis has Americans most concerned about a steady income stream over their lifetime. The study, conducted by AXA Equitable Life Insurance (2008), polled 400 U.S. consumers (age 35-70, household income > $75k) found that men were more likely to have made changes in their investments in response to the economic downturn than women. However, women were more likely than men to rate items like "guaranteed lifetime income" and "protecting retirement income" as "extremely important." AXA Equitable's chief innovation officer Barbara Goodstein interpreted this result as increased conservatism in female investors: "Women are clearly focused on protecting retirement income and have been responding more conservatively as a result."
Ms. Goodman's reaction is consistent with third-party-risk-estimation models proposed by Eckel and Grossman (2002). Eckel and Grossman did find that women in their investment simulation were more risk-averse than men. More tellingly, perhaps, they found that both men and women underestimated other people's capacity for risk. Women especially were guessed to behave more conservatively than their actual behavior.
Honestly, I don't feel like "moving" or "not moving" your money is a necessarily conservative or risky approach, because you don't know what criteria the investors are basing these decisions on. What strikes me is the question of whether women used more "very important" ratings in general than men. That is, were men and women using the same scale when they rated the importance of items. The AXA Equitable report doesn't mention any category that men listed as more important, which leads me to speculate that these were not forced-rank choices. Further, I'd speculate that women will typically rate more items as "important", due to socialization pressures that make it more okay to express emotion.
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4 comments:
Agreed: Moving money from equities to bonds is a conservative move, regardless of what it is in response to, and vice versa. Additionally, high rating of phrases starting with "guarantee" and "protect" may be indicative of conservativism, but not necessarily: Buying treasuries is very conservative, but could fail at the stated goals unless the investments are inflation-protected. I beleive that an aggressive strategy at 35 is more consistent with the goal of guaranteeing future income than a conservative one.
It is unclear, based on a scan of the AXA press release, whether the authors just looked at whether people had moved investments or whether they also looked at where the funds were moved to. There is some implication that people were moving funds to cash, but there are conflicting statements. For example: 56 percent bought products like annuities, life insurance and stocks. This is not helpful. The first two are conservative, the latter is aggressive.
In any event, seems enough people to make it worth mentioning made withdrawals from 401(k) or 403(b) accounts. Although not a technical term, this tax lawyer refers to these investors as "idiots."
lovecraftienne
2008-12-09 07:06 pm UTC (link)
Further, I'd speculate that women will typically rate more items as "important", due to socialization pressures that make it more okay to express emotion.
Also, the social pressure of being agreeable might tend to lead women to rate something more highly, perhaps.
@lovecraftienne:
Also, the social pressure of being agreeable might tend to lead women to rate something more highly, perhaps.
I don't know. I feel like that would depend a lot on how the questions were phrased. I wonder how I would search for studies that looked for that. I believe it's fairly common to have some reversed questions, e.g.:
(Agree or disagree)
I like chocolate.
Chocolate is disgusting.
Chocolate is my favorite food.
But I wonder if there have been studies where the clear bias (and it's *RARE* indeed for me to find a questionnaire that doesn't have a clear bias) is reversed between study groups, to see who is more likely to agree with it, e.g.
Group 1:
Chocolate is delicious.
Chocolate is disgusting.
Chocolate is my favorite food.
Group 2:
Chocolate is disgusting.
Chocolate is delicious.
I don't like chocolate.
@lovecraftienne:
Gah. Can you think of a better example than chocolate? Maybe rating importance between two obviously important things would be more fair. :-\ I'm finding that I'm trying to design this experiment in my head, and it's not coming easily.
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