The female brain and economics

In my previous post (February 22nd, 2009), I lamented the fact that there are not more women in top economic posts. I ventured the opinion that, if there are indeed differences between the male and the female brain (and who can deny that, at some level, there must be), this may work to the advantage of women – and the advantage of society – where it comes to economic matters. Had women been in charge of our financial and economic affairs, we might not be in quite the mess we are in today, so I wrote.

In this context, I was interested to read a report in The Financial Times dated March 2nd and entitled “Why women managers shine in a downturn”. The article is by Michel Ferrary, a professor of business management at Ceram Business School in France. He reports that …”the more women there were in a company’s management, the less the share price fell in 2008. A significant coefficient of correlation links the two variables”.

The only large company whose share prices rose in 2008 was the luxury goods company Hermès. Its share price rose by 16.8 % and 55 percent of its management are women. And, to a lesser extent, the story is repeated with other companies with highly feminised managements.

By contrast, companies with mainly highly masculinised management saw their share prices fall dramatically. Alcatel-Lucent, which only has 8.6 % female managers – presumably the rest are males – saw a 69.3% decrease in share prices – and the story is repeated across other companies.

Among French banks, contrast BNP Paribas with 38.7% female managers and whose share price fell 39 % in 2008, with Credit Agricole, which has only 16% female managers and whose share price decreased by 62.2%.

The article traces this to the fact that women “tend to be more risk-aversive and to focus more on a long term perspective”

One would, of course, like to see statistics for other countries besides France before reaching firm conclusions. But this interesting study supports my view that the female brain may confer distinctive economic advantages, to the benefit of all, and that we should, therefore, pursue seriously having equal numbers of women in topic economic and financial posts. If we persist in having unequal numbers, then we should advantage the women and have a smaller percentage of men.