The male ego has no need for redistribution

Women are more in favor of income redistribution than men. This gender discrepancy is only evident when earnings are uncertain and depend on one's own performance.

25.03.2021 · Economics, Social Sciences, Spatial Research · Kiel Institute for the World Economy · News · Research result

Women from Western countries are more in favor of income redistribution than men. This gender discrepancy is only evident when earnings are uncertain and depend on one's own performance. While men are usually over-optimistic about their performance, women are more realistic about theirs. Therefore, women use the opportunity of a redistribution mechanism as a hedge against poor performance and—depending on it—poor pay, even if there are no objective reasons for it.

"The psychological foundation for this type of behavior seems to be, in large part, the higher average self-confidence of men compared to women," says Gianluca Grimalda, senior researcher at the Kiel Institute and co-author of the experimental study, published in the Journal of Economic Behavior & Organization under the title "Overconfidence and gender gaps in redistributive preferences: cross-country experimental evidence." "In our research, we were able to explain 50 percent of the differences in redistributive preferences between men and women with gender differences in self-confidence."

Realistic inequality recreated in the lab

To study the demand for redistribution and the reasons for it, Grimalda and his co-authors created inequality under laboratory conditions that as closely as possible resembled a real distribution. In groups where individuals were assigned different incomes, participants were then asked to decide on redistribution for everyone, under changing conditions. Sometimes earnings depended on chance, other times on relative performance in particular tasks. Typically, demand for redistribution is lower when earnings are determined by individual performance.

Women, a key finding in line with previous research results, demand more earnings redistribution than men. However, this gender gap disappears both when the amount of final earnings is known with certainty at the outset and when earnings depend on luck rather than individual performance. "Gender differences in redistribution only emerge when earnings are uncertain and determined by relative merit," Grimalda summarizes.

Men overestimate their own performance and see no reason for redistribution

There are no significant differences between the sexes in terms of actual performance. Both men and women expect themselves to perform better on average than they actually do—a common finding in experimental social science called "overconfidence." However, men did so disproportionately more often than women, and half of the difference in preference for redistribution between men and women could be explained in this way. Grimalda: "We conclude from the results that redistribution is used as an insurance mechanism to protect oneself from earning too little if future income is uncertain. Since men are more self-confident than women, they feel less need to use redistribution for this purpose. Women are more realistic in their expectations, and for this reason demand more redistribution."

Effects on the labor market, economy and Society

According to the authors, other studies also show that gender-specific differences in self-confidence are important throughout working life, for example when it comes to the choice of math and sciences-intensive university degrees or the issue of equal pay for the same job. When exploring gender differences in the labor market, it is not only equity that plays an important role but also economic development. If women's skills and talents are not leveraged in the labor market, the economy cannot reach its full potential.

Original publication

Thomas Buser, Gianluca Grimalda, Louis Putterman, Joël van der Weele (2020): Overconfidence and gender gaps in redistributive preferences: Cross-Country experimental evidence, Journal of Economic Behavior & Organization, 178: 267-286, https://doi.org/10.1016/j.jebo.2020.07.005.

Further information and contact

www.ifw-kiel.de