Would you trust a woman with your money?

Documenting gender bias in the financial world.

Tristan Botelho, a professor at the School of Management, was not surprised by his results, but he was disappointed. After scouring an investment database on which investment professionals share their recommendations, he found that women’s suggestions were viewed less, on average, than men’s.

Gender bias has been demonstrated repeatedly in the lab, but these setups generally rely on college undergraduates taking part in short studies for small rewards. Botelho was instead looking at the world of hedge funds, “where people should care about performance and only performance,” he says. “We should have seen bias competed away in a real platform, but even in this competitive setting, when there is a disincentive to consider gender, we found it.”

Botelho and his coauthor, Mabel Abraham of Columbia Business School, looked at 3,520 investment recommendations between 2008 and 2013. They placed the recommenders’ names on a spectrum from most masculine to most feminine. Recommendations submitted by someone with the definitively female name of Mary were roughly 25 percent less likely to be viewed than similar recommendations made by Matthew.

But Botelho did find one “silver lining.” The bias appeared only when investors were browsing the broad universe of recommendations and so were flooded with information; in these contexts they defaulted to superficial and gender-biased choices. But once an investor decided to study a specific recommendation, then gender bias disappeared. (The results were published in Administrative Science Quarterly.)

One clear application of these findings, says Botelho, is in the world of hiring, where it’s well known that gender bias exists. If those in charge of hiring had fewer candidates to review, this could allow them time to avoid the rushed fallback of stereotype.

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