Women are better at investing than men. Fact?

Statistics are having their day, but it is still the words – both in a global pandemic and in women’s investing – that tell the story

Calling out Coronavirus on its gender bias

If nothing else, we can safely say that the Coronavirus is giving professional statisticians their 15-minutes of fame (oh go on then, make that 15 weeks… in all probability). A pleasing bit of radio journalism caught my ear on a programme called ‘More or Less: Behind the Stats’ this morning, where a (female) reporter relayed her findings to the (male) presenter on the way that Covid-19 is playing out differently in men and women around the globe.

Taking a tongue-in-cheek approach to the stats that indicate higher infection rates and deaths in men than in women she pronounced that this showed that “Men are the weaker sex” and that women’s immune systems are more effective because ‘Women are more precious”. By making light of it in this way, she allowed the presenter to pick her up on her interpretation of the numbers so that she could go on to give more scientific – and less nuanced – explanations as to why the differences are being seen. It got my attention, anyway.

Numbers do not talk – we do

It also got me thinking about the role of statistics generally and our innate desire to make patterns from information. The problem with this, I think, is that we tend to accept that it is the numbers that are telling the story – speaking for themselves, as it were. Whereas, in fact, numbers do not talk. We do. And our choice of language is nearly always subjective.

Each story has its own agenda

If the headline tells us that ‘More men than women are dying due to Coronavirus’, we have a seemingly factual sentence. But if we compare this to ‘Fewer women than men are dying due to Coronavirus’ we have a subtle difference. They are equally factual but the former makes it all about the men while the latter makes it all about the women. Consider now ‘More men than women succumb to the virus’ – this implies a weakness on the part of the men; whereas ‘’Fewer women than men succumb to the virus’ implies a strength on the part of the women. Each one of those proclamations could claim to be the story that the ‘numbers are telling us’ – and yet each story has its own agenda.

Women are better investors than men

Which brings me to my own headline ‘Women are better investors than men’. I’ve seen this a lot recently – and have even been guilty of perpetuating a similar ‘conclusion’ myself. It’s cropping up in the narrative to studies and surveys that show higher performance figures in portfolios held by women than men over comparable timeframes. On its own it implies a greater level of active skill and judgement being applied by women – conjuring an image of a she-wolf of Wall Street. In fact, this is an interpretation where the words – not the numbers – are doing the talking.

A judgemental bias at work

Even when there is an attempt to explain the numbers in more grounded terms (often it is the lower number of transactions and a ‘leave well alone’ approach adopted by the women that works in their favour, rather than their stock-picking ability) there’s a judgmental bias at work. We compare the two genders’ approaches by framing the men as, at best, ‘meddlers’ and, at worst, being in thrall to a hubris that allows them to believe they can beat the system. This might, incidentally, all be true, but it’s not the numbers that tell us that. It’s us.

A need to focus less on assumptions about women and money

I know that it is the words – the story – that gets our attention. A headline showing only numerical data won’t cut through our ‘This had better be interesting or I’m not… hmm…interested’ barriers. But it leads to the kind of generalisations that can be unhelpful when we are trying to make changes. If we want more women to take an interest in investing for their futures, we probably need to focus less on making assumptions about women’s attitudes to money (I’ve seen cringeful suggestions that because we are all Earth Mother types our natural instincts for protecting our young make us pathologically disinclined to take risk…) and more on educating in a way that makes us feel that our lives are relevant. To say that women are better investors than men is playing the very same competitive game that drives the men to ‘meddle’ with their portfolios because they think they know best. Frankly, we should know better.

What does ‘better’ mean, anyway?

In any case, I wonder if we are looking at the ‘good, better, best’ framework for investing in the wrong way. Is it always the case that if you have made more money than someone else you are the better investor? What about someone who invests throughout their life and always achieves the financial goals they set out to achieve versus someone whose lifelong investments have shown better percentage performance but who has failed to fulfill their own targets? Who is the better investor there? And what about the growing numbers of investors who want to use their capital as a force for good in the world by investing in sound, commercial companies that are pushing the boundaries of technology and social responsibility to improve lives and the environment? Is this ‘better’ investing than going for the best returns possible? I don’t have the answers but I do believe that those of us in the finance industry with advisory roles should be asking ourselves these questions if we are to promote a service that is not – and never should be – one-size-fits-all.

Women have been woefully overlooked

The kind of investing I’ve referenced there is known as ‘sustainable investing’ and is a topic I will return to in the not-too-distant future. Meanwhile I want to point anyone interested in statistics towards the bestselling book by Caroline Criado Perez, ‘Invisible Women’. I do it scant justice by summarising it as an enormously thorough and insightful look at the consequences of having not collected separate data for women and men from all sectors of society for generations. The way that women’s lives, bodies and circumstances have been woefully overlooked in policies, products and medicines will come as no surprise to any woman who has ever missed the second act at the theatre whilst queuing for the toilet (note the singular). But the manifold ways in which all of the gender biases that continue to exist affect women around the world is eye-watering.

An unforeseen consequence of Covid-19

In all of this I can’t help wondering whether an unforeseen consequence of Covid-19 might be a new determination in the world of statistics and data-collection to consider properly how men and women have different responses to things. It will be a predictable shame if it has to be a situation where the men are suffering a worse outcome than the women that brings about that much-needed change.

31 March 2020


All opinions expressed are those of Carole Haswell and do not constitute financial advice