When making financial decisions, men are more likely to focus on the bigger picture, whereas women more often pay closer attention to details.
When making financial decisions, men are more likely to focus on the bigger picture, whereas women more often pay closer attention to details.Image: ANDERSEN ROSS Getty Images (man); TOM MERTON Getty Images (woman)
Small gains now or big rewards later? The conundrum plagues every decision we make, whether we are investing or dieting. Now researchers find that men and women use different strategies to make such choices.
Researchers use gambling games to understand what we do when immediate rewards are pitted against long-term gains. Most of these games find no major differences in how men and women play. An experimental setup called the Iowa Gambling Task (IGT), however, finds consistent—and large—differences between the behavior of men and women: men are better at figuring out the strategy that reaps the bigger payoff.
Players are given four decks of cards, and they choose one card at a time from any deck they want. Each card has a win or loss amount on it, and each deck has its own unique payout pattern. Two of the decks contain cards that dole out large or frequent rewards, but consistently choosing cards from these decks leads to losses in the long run. The other two decks provide a modest amount of cash per win but less loss over time, so they offer long-term gains for players who pick from them most frequently. These patterns are carefully obscured so that the winning strategy is not obvious.
A review published in February in Behavioural Brain Research finds that men focus on the big picture, watching their total earnings and quickly homing in on which of the decks will lead to gains in the long run. Women focus on details such as the frequencies of wins and losses for each deck, missing the overall impact each deck has on their total balance. Sensitive to losses, women tend to switch to a different deck as soon as they are pinged with a setback, making it more difficult for them to identify the prize deck.
The strategies reflect underlying differences in activation in the orbitofrontal cortex, a region involved in decision making and the associated expectation of positive or negative consequences. During the task women have more activity in the medial part of this region, involved in regular patterns and immediate reward, whereas men preferentially engage the top, dorsal area, implicated in irregular patterns and long-term reward.
“When people think women make errors in these tasks, it's more that they're gathering information,” says lead author Ruud van den Bos, a neurobiologist at Utrecht University in the Netherlands. Women's detailed exploration makes them more attuned to changes. If, for example, the rules of wins and losses for the decks were switched midtask, women would clue in to the new patterns more quickly than men. Van den Bos says the IGT happens to be designed so that the long-term strategy is best, but in decisions where knowing the details counts, women may have the advantage.
Because real decisions are much more complex than lab games, van den Bos emphasizes that neither strategy is inherently better; both are necessary and useful in daily life. He also points out that in the IGT some women perform like men, and vice versa. The dividing line is often blurry when it comes to female- and male-typical behaviors. “By disentangling the biological from the societal, we can understand how differences can be turned into advantages,” van den Bos says.
This article was originally published with the title Men and Women Gauge Risk Differently.