BATH, United Kingdom — Are women less daring than men, or is this just a misconception? According to a new study, there may actually be a scientific reason why women appear to take fewer risks than men, shedding light on potential gender differences in various fields.

The study, conducted by researchers at the University of Bath School of Management, suggests that women’s aversion to risk is linked to their sensitivity to potential losses and the resulting pain.

Dr. Chris Dawson, the lead researcher, emphasizes the significance of these findings, as they could help explain the underrepresentation of women in certain professions and their lower engagement in financial markets. The study delves into the joint role of two psychological characteristics – loss aversion and optimism – to better understand risk-taking disparities between genders.

“When thinking about risky choices, people tend to assess the probability of losing something alongside an evaluation of how painful that loss would be. I found that women take less risks than men as they focus more on the possibility of losing and anticipate experiencing more pain from potential losses,” Dr. Dawson says in a university release.

Dr. Dawson’s investigation builds upon previous research indicating that women are generally more risk-averse than men. To assess loss aversion, the researchers analyzed data from the UK British Household Panel Survey, focusing on changes in psychological well-being in relation to changes in household income. The findings demonstrate that income losses are more distressing for women than men, with no notable difference in responses to income gains.

Additionally, when predicting their financial outlook for the upcoming year, men displayed significantly more optimism than women. This higher level of optimism among men may be linked to their overconfidence in their abilities, which previous studies have identified. When women have lower levels of both optimism and confidence in their abilities compared to men, they naturally perceive a given risk as more substantial.

Overall, the study indicates that women exhibit a lower willingness to take risks compared to men. Approximately 53 percent of this gap can be attributed to the higher levels of loss aversion among women, with an additional three percent attributed to lower levels of financial optimism. These factors continue to influence risk attitudes even after accounting for personality traits such as openness, neuroticism, and extraversion.

Dr. Dawson’s research sheds light on the complex interplay between gender, risk perception, and decision-making. By understanding these dynamics, we can better grasp the factors contributing to disparities in various fields. It is essential to consider how these findings can inform strategies to promote gender equality and create environments that support women’s participation and success.

The study authors categorized individuals based on their biological sex, as self-reported.

The study is published in the British Journal of Psychology.

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