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IMHO you get answers/results, I don't give a darn who or what you are You say this. And many people say it as well. But most people don't appear to really beli

IMHO you get answers/results, I don't give a darn who or what you are You say this. And many people say it as well. But most people don't appear to really believe this. To give one example: statistically speaking, women are more rational when it comes to making risk-reward assessments than men. Men are more likely to make irrational choices because they systematically discount quantifiable risk. If our institutions were rational, that would suggest that women would be well represented in the upper echelons of the finance industry: there should be many women traders, hedge fund managers, risk analysts, etc. But this is not the case, in part because Wall Street firms have developed a culture of adolescent machismo. Michael Lewis recounts in one of his books the story of extremely well paid traders who would literally have a pissing contest every afternoon: they'd all go into the bathroom and see who could piss farthest, inevitably covering bathroom floor in urine. Is it any surprise really that these intellectual giants fail to hire women despite their better risk/reward assessment skills? Is it any surprise that the economy recently imploded because banks decided to loan large sums of money without verifying any ability to repay?

yummyfajitas 16y ago
If our institutions were rational, that would suggest that women would be well represented in the upper echelons of the finance industry: there should be many women traders, hedge fund managers, risk analysts, etc. Holding all else equal, you are right. But all else is not equal. Women have the tendency to do things like not get PhDs in technical fields, vanish from the workforce for years on end, insist on a work/life balance and not be compulsive gamblers. This reduces their representation in finance. By the way, women are hardly guiltless in the housing bubble: http://www.youtube.com/watch?v=odQ7s85bk9s http://www.youtube.com/watch?v=odQ7s85bk9s
- MichaelSalib 16y ago
  Women have the tendency to do things like not get PhDs in technical fields, vanish from the workforce for years on end, insist on a work/life balance and not be compulsive gamblers. This reduces their representation in finance. Um, why does any of that matter when women would increase corporate profits? If hiring lots of women traders would increase corporate profits while at the same time decreasing the number of PhDs at a firm, why on Earth would that be a problem? Do you think Wall St firms have a legal obligation to their shareholders to maximize the number of PhDs on staff? And I've never said that women were "guiltless" in the housing bubble.
  - yummyfajitas 16y ago
    An overconfident PhD trader with no social life almost certainly will make more money than an appropriately confident mother of two just returning to the workforce after a 5 year break. You seem to be assuming that rationality with regard to risk/reward assessments is the only thing that matters as far as increasing profits. It isn't. Technical ability and effort also play a major role (as does a gut instinct, for some types of trading at least), and the institutional incentives already mitigate much of the risk of trader overconfidence.
    - MichaelSalib 16y ago
      An overconfident PhD trader with no social life almost certainly will make more money than an appropriately confident mother of two just returning to the workforce after a 5 year break. The thing about systematically underestimating risk is that it causes you to lose money relative to correctly assessing risk. Just like the vast majority of casino gamblers are idiots who lose money. By the way, most traders don't have a PhD. I can't even see how it might be helpful. institutional incentives already mitigate much of the risk of trader overconfidence. Apparently not in Iceland. Or the US for that matter. I'm pretty sure we had a recent economic collapse in which several trillion dollars of value disappeared caused in part by Wall St firms. To me, that suggests that our institutional incentives for minimizing trader overconfidence might be, you know, not good.
      - yummyfajitas 16y ago
        The thing about systematically underestimating risk is that it causes you to lose money relative to correctly assessing risk. Rationally assessing risk and correctly assessing risk are not the same thing. The former helps one to do the latter, but it is not by any means the only important component. Technical skill, time and effort also matter. A rational trader, without much skill, might correctly assess her strategy as having a 50% chance of success. An overconfident trader, with a great deal of skill, might assess his strategy as having a 90% chance of success when it actually has only a 70% chance of success. The skilled irrational trader will still make more money. To prove that hiring women would increase profits, you need to show that female traders would make more profits than male traders, not show that they are more rational. As for a PhD, most trading these days is quantitative. The era of frat boys throwing darts at a stock chart is over. Most trading strategies are designed by quants (i.e., the PhDs, sometimes ABDs, occasionally a masters in math finance), implemented by programmers (usually also having a heavy quant background), and occasionally executed by compulsive gamblers who go nuts over numbers. Most women don't fit this profile. Also, why do you believe the financial crisis was caused by overconfidence, as opposed to an incorrect evaluation of the facts?
pbhjpbhj 16y ago
>To give one example: statistically speaking, women are more rational when it comes to making risk-reward assessments than men. Men are more likely to make irrational choices because they systematically discount quantifiable risk. Firstly I think it's a bad analogy the drivers for scientific enquiry are not the same as those for financial "success". Understating quantifiable risk is not necessarily irrational. Statistically women take less risks, I'll go there with you but why try and make that about logical enquiry - in case of both sexes it is highly unlikely to be a completely logical position, we're not logical beasts. Financial market culture reflects the demands made on it - people want to be rich. If you replaced all the traders with people who were more risk-averse then those that took more risks are likely to appear at both ends of the spectrum of success, this selects more risk to achieve greater yields (for a few). It is not that males occupy the position of power in the financial world that makes these things happen it is greed and capitalism. I'm more than happy to see both of these replaced.

yummyfajitas 16y ago

If our institutions were rational, that would suggest that women would be well represented in the upper echelons of the finance industry: there should be many women traders, hedge fund managers, risk analysts, etc. Holding all else equal, you are right. But all else is not equal. Women have the tendency to do things like not get PhDs in technical fields, vanish from the workforce for years on end, insist on a work/life balance and not be compulsive gamblers. This reduces their representation in finance. By the way, women are hardly guiltless in the housing bubble: http://www.youtube.com/watch?v=odQ7s85bk9s http://www.youtube.com/watch?v=odQ7s85bk9s

MichaelSalib 16y ago
Women have the tendency to do things like not get PhDs in technical fields, vanish from the workforce for years on end, insist on a work/life balance and not be compulsive gamblers. This reduces their representation in finance. Um, why does any of that matter when women would increase corporate profits? If hiring lots of women traders would increase corporate profits while at the same time decreasing the number of PhDs at a firm, why on Earth would that be a problem? Do you think Wall St firms have a legal obligation to their shareholders to maximize the number of PhDs on staff? And I've never said that women were "guiltless" in the housing bubble.
- yummyfajitas 16y ago
  An overconfident PhD trader with no social life almost certainly will make more money than an appropriately confident mother of two just returning to the workforce after a 5 year break. You seem to be assuming that rationality with regard to risk/reward assessments is the only thing that matters as far as increasing profits. It isn't. Technical ability and effort also play a major role (as does a gut instinct, for some types of trading at least), and the institutional incentives already mitigate much of the risk of trader overconfidence.
  - MichaelSalib 16y ago
    An overconfident PhD trader with no social life almost certainly will make more money than an appropriately confident mother of two just returning to the workforce after a 5 year break. The thing about systematically underestimating risk is that it causes you to lose money relative to correctly assessing risk. Just like the vast majority of casino gamblers are idiots who lose money. By the way, most traders don't have a PhD. I can't even see how it might be helpful. institutional incentives already mitigate much of the risk of trader overconfidence. Apparently not in Iceland. Or the US for that matter. I'm pretty sure we had a recent economic collapse in which several trillion dollars of value disappeared caused in part by Wall St firms. To me, that suggests that our institutional incentives for minimizing trader overconfidence might be, you know, not good.
    - yummyfajitas 16y ago
      The thing about systematically underestimating risk is that it causes you to lose money relative to correctly assessing risk. Rationally assessing risk and correctly assessing risk are not the same thing. The former helps one to do the latter, but it is not by any means the only important component. Technical skill, time and effort also matter. A rational trader, without much skill, might correctly assess her strategy as having a 50% chance of success. An overconfident trader, with a great deal of skill, might assess his strategy as having a 90% chance of success when it actually has only a 70% chance of success. The skilled irrational trader will still make more money. To prove that hiring women would increase profits, you need to show that female traders would make more profits than male traders, not show that they are more rational. As for a PhD, most trading these days is quantitative. The era of frat boys throwing darts at a stock chart is over. Most trading strategies are designed by quants (i.e., the PhDs, sometimes ABDs, occasionally a masters in math finance), implemented by programmers (usually also having a heavy quant background), and occasionally executed by compulsive gamblers who go nuts over numbers. Most women don't fit this profile. Also, why do you believe the financial crisis was caused by overconfidence, as opposed to an incorrect evaluation of the facts?

pbhjpbhj 16y ago

>To give one example: statistically speaking, women are more rational when it comes to making risk-reward assessments than men. Men are more likely to make irrational choices because they systematically discount quantifiable risk. Firstly I think it's a bad analogy the drivers for scientific enquiry are not the same as those for financial "success". Understating quantifiable risk is not necessarily irrational. Statistically women take less risks, I'll go there with you but why try and make that about logical enquiry - in case of both sexes it is highly unlikely to be a completely logical position, we're not logical beasts. Financial market culture reflects the demands made on it - people want to be rich. If you replaced all the traders with people who were more risk-averse then those that took more risks are likely to appear at both ends of the spectrum of success, this selects more risk to achieve greater yields (for a few). It is not that males occupy the position of power in the financial world that makes these things happen it is greed and capitalism. I'm more than happy to see both of these replaced.