Why are there so few women in company boardrooms? There are, of course, many reasons. But a new paper highlights one that’s overlooked:
Gender differences in overconfidence concerning their own performance explains a significant proportion of the lack of female leadership
They established this experimentally. First, they gave 134 MBA students 150 seconds in which to add up as many sets of 4 two-digit numbers as they could.
Then, 15 months later, they split the students into 33 groups and asked them to choose a representative to do the same adding-up task, with the best representative winning money for the whole group.
Very few women were chosen as representatives; only 4 out of the 33 groups chose one, which is only half as many as would be expected.
This was not because the women were worse at adding up. Instead, it’s because men claimed to be better at the task, and so the group chose them.
This was not because the men simply lied; men and women lied roughly equally. It’s because the men misremembered their past performance. When the researchers offered the students $50 if they correctly recalled how many correct answers they got, men over-estimated their performance by an average of 2.4 answers, whilst women over-estimated by only 0.9 answers. This over-estimate of past performance led to an overconfidence about prospective performance, and hence a greater likelihood of being picked.
This is consistent with other research, which shows that overconfident people are perceived to be better than they actually are.
This suggests that gender inequality can arise not from simple discrimination, but rather from gender differences in a particular form of irrationality - a form which happens to be favoured by the market.
If this is inconvenient for those who would try to justify gender inequality, there’s something else that is awkward for those who would oppose it. As Virginia Postrel points out, overconfidence can have many beneficial side effects, so it mightn't always be a bad thing for groups to overly favour the overconfident.