Tuesday, February 8, 2011

Vive Christine Lagarde

I have argued in several previous posts that society could profit handsomely by having a larger percentage of women in top economic posts. My argument has not been based on the demand often made, of equality between women and men. On the contrary, it is based on the biological inequality between the two sexes which, I think, is sometimes in women’s advantage and ultimately works to the advantage of society at large. In economic matters, the general tendency of women to be risk aversive and to plan for the future is a great asset when compared to the risky behaviour of men who seek instant gratification. Had there been more women in top economic posts, we may not have had the recent economic recession or not have had it with the same severity.

Now, France’s articulate and elegant Christine Lagarde, the first women minister of finance in a major industrial country, has echoed my words. Let me say at once that she has not referred to me; indeed I would be amazed if she knows of my existence. But she speaks from the same biological book as I do. In The Independent of yesterday, she is reported as having said that “the 2008 financial collapse was, at least in part… driven by the aggressive, greedy, testosterone-fuelled mood of male-dominated, hi-tech trading rooms”. In other words, the testosterone concentration inequality between men and women had ultimately worked to the disadvantage of the world economic system. I couldn’t agree more.

She added, "In gender-dominated environments, men have a tendency to... show how hairy chested they are, compared with the man who's sitting next to them. I honestly think that there should never be too much testosterone in one room." Right on the spot – due to biological inequality again!

There have been many studies on decision-making in the field of neuroeconomics. I wonder how many have factored in differences between men and women in such matters, or have designed experiments specifically to address that question. This surely would be worth doing.

Meanwhile, in Germany the head of the Deutsche Bank, who is described by the bank’s spokesman as being a “gentleman from the old school”, expressed the hope that economic boards “will be prettier and more colourful one day” when more women hold top economic posts [Deutsche Bank apparently has no women on its board].

No comment!


Margaret Bowker said...

Hello Professor. I recall discussing something like this with you back in 2009 in Portland Place and we were chatting about how people felt when making high-powered decisions about massive amounts of money. I also think boardrooms and other financial arenas would benefit from more balanced gender composition. Perhaps the attitude is changing, there seems to be increasing evidence of it lately, and there won't be the need for quotas. Although there might be a case for them, as there is in other countries, with such determination everywhere to prevent the situations that might lead to another crisis.

Seb said...

It would be great if there were no need for quotas; this would imply that people, or at least those in power, see sense. But past experience shows that they do not see sense where power is concerned, until they are made to see it. Semir Zeki

Anonymous said...

Pretty general, as feedback goes, but sincere nonetheless: I enjoy this blog! I only just found it and look forward to future posts. Thank you.

Seb said...

Thanks for your nice words. Semir Zeki

Margaret Bowker said...

Well, Christine Lagarde is just about to give her first press conference as the first female Managing Director of the IMF. I expect you're pleased, Professor, and as one involved in the women's movement in the sixties and seventies, I'm pretty pleased too.

S.Z. said...

Pretty good, isn't it.

Perhaps a good omen for the future too.

Margaret Bowker said...

And now Janet Yellen has been appointed Chair of the Federal Reserve.

S.Z. said...

Well, yes. That's great. It may even stabilize the financial markets.

And do you think that I have had some influence in this appointment, through these posts?

Oh, go on, say "yes"...let us just pretend for a moment!


Margaret Bowker said...

Yes, Yes, although I should have said that Janet Yellen had been nominated. I have found our conversations and your blogs equally as stimulating as those from the celebrated economists in Project Syndicate. I recently responded to Robert Skidelsky, INET, in his examination of power in a crisis that modern economists should be multi-faceted: experts in society, economics of course, politics and perhaps neuro-biology?

S.Z. said...

I think that some economists are beginning to show a serious interest in neurobiology. But it would also be good if neurobiologists, in turn, started to study seriously the question of greed. After all, many of te economic decisions taken have greed as their substrate. It is quite a fascinating subject.

Thanks for your comments.


m-bowker said...

July 2015 - the FTSE 100 is now 25% female, well on the way to the 30% target!