Suppose we posit that men and women are completely identical in their ability: or more specifically, that the distribution of ability is not dependent on gender. Even under such circumstances, there are two reasons that we might expect different outcomes among men and women: (1) institutional factors, such as discrimination, cause a woman to obtain a lesser outcome than a man of similar ability; or (2) women, for whatever reason, make systematically different choices than men, perhaps because their preferences are systematically different.
In a forthcoming paper in the Quarterly Journal of Economics, economists Muriel Niederle and Lise Vesterlund use an experiment to test the second hypothesis. Specifically, they split participants (usually college students) into groups of two women and two men. They then offered each of them a simple task: adding up series of five two-digit numbers. After a few rounds of practice, the participants were given a choice. If they selected the "piece rate" option, they would earn $0.50 for each correct calculation they made, no matter how the others in their group performed. If they selected the "tournament" option, they would earn $2.00 for each correct calculation—but only if they had the most correct calculations in the group.
What happened? About three-quarters of the men in the experiment chose the tournament option, compared to about one-quarter of the women. Indeed, most of the men who in fact had performed worst in the group chose the tournament option, and most of the women who in fact had performed best in the group chose the piece-rate option. In other words, mistakes were made by members of both genders: the men were too competitive, and the women chose the competitive option too seldom.
Niederle and Vesterlund conclude by saying:
It is generally agreed that ability alone cannot explain the absence of women in male dominated fields. In natural settings, issues such as discrimination, the amount of time devoted to the profession, and the desire for women to raise children may provide some explanation for the choices of women. However, in this paper we have examined an environment where women and men perform equally well, and where issues of discrimination, or time spent on the job do not have any explanatory power. Nonetheless we find large gender differences in the propensity to choose competitive environments… Much may be gained if we can create environments in which high-ability women are willing to compete.
1. If Niederle and Vesterlund's conclusion is correct, does this mean that "winner-take-all" competitions are inherently discriminatory against women? Why or why not? If they are, what, if anything, should be done to correct the situation?
2. Academia is one area in which there exists intense interpersonal competition for top jobs—for example, tenured positions at top universities. Steve Levitt of the
3. Many economists, when faced with a problem that some call a "market failure," like to recast the problem as one of "missing markets." For example, Ronald Coase famously showed that the problem of externalities could be resolved by allowing the affected parties to bargain with one another. Is there any way to recast the inefficiency shown in Niederle and Versterlund's experiment—i.e., the fact that women shy away from competition while men compete too much—as a problem of missing markets? If so, what market is missing?