The gender pay gap is a little bit like climate change: We may never stop arguing about whether, and why, it exists. The latest contribution to the debate comes from three professors who argue in a new paper that women earn less than men because they are less competitive.
Women who graduated from the University of Chicago’s Booth School of Business start out earning $26,000 less than men; over time they choose to work in low-paying industries, says the study (PDF), published this month at the National Bureau of Economic Research by professors at Columbia University, Northwestern University, and Chicago. What makes woman opt out of lucrative industries? They don’t want to compete with people in a math game.
The researchers asked more than 400 first-year Booth MBAs to take part in a tournament in which they would add several numbers for two and a half minutes. They were given a choice between a straightforward payout of $4 for every correct answer and a riskier proposition offering $16 for each correct answer, but only if they did better than everyone else in their group. Sixty percent of the men opted for the competitive version of the game, compared to 33 percent of women.
When they graduated, in 2008, the study participants who had chosen to duke it out with their classmates ended up earning $21,000 more than people who just wanted to get consistent payments for correct answers. When the researchers took “taste for competition” out of the picture, 10 percent of the pay gap between men and women disappeared. MBAs' appetite for a good math battle also affected their choice of industry, the researchers found. Competitive MBAs initially opted for consulting and finance, two very lucrative professions, and they stayed in those professions longer than more timid peers, who chose lower-paying fields.
Does this mean that women stand to gain less than men from the same degrees through their own fault? If you search “gender pay gap,” you might be persuaded that the answer is affirmative. Still, that broad takeaway doesn’t jibe with data that we’ve spent a lot of time analyzing at Bloomberg.
In October, we published the findings of a survey conducted as a part of our annual ranking of business schools, which looked at the wide difference in pay between women and men at business schools across the globe. Using a sample of 12,773 alumni, we found that women started out earning nearly as much as men; eight years after graduation, they were taking home a median of $35,000 less.
Men did tend to flock to professions with the highest salaries. But even when women went into high-paying fields, they were underpaid. In finance, for example, the typical woman took home $53,200 less than men. They were paid less with no regard to the jobs they held. Women in marketing at banks earned $7,000 less than men did. Women in investment banking netted $115,000 less than their male counterparts.
Even when women want to compete for the brawniest corporate jobs, it seems, they do not win the fattest paychecks.