Would Women Leaders Have Prevented the Global Financial Crisis?

Some have asked whether things would have turned out differently if Lehman Brothers investment bank, which went so spectacularly bankrupt, had been Lehman Sisters, instead. Would having more women in leadership positions in finance naturally lead to a kinder, gentler, and tidier economy?

While there is an important gender angle to the financial crisis, it is not about differences in traits that men and women presumably “bring with them” to their work. In a recent paper, I discuss how low-quality behavioral research and associated media hype have caused a resurgence in stereotyped thinking about men’s and women’s financial behavior and attitudes towards risk. Yes, men and women are different, but we are not nearly as different as those literatures would have us believe.

The crucial gender angle has to do, instead, with the sorts of behaviors we have come to believe are acceptable—or even inevitable—in the realms of business and finance. Commerce is often imagined as an essentially masculine sphere of activity. Not only are men envisioned as the naturally-suited participants, but it is also masculine-stereotyped behaviors, motivations, and skills that are most expected. Participants in commerce are assumed to be aggressive, risk-taking, competitive, achievement-oriented, and self-interested. On Wall Street, the language of “Big Swinging Dicks” and “Boom Boom Rooms” just makes this a bit more obvious than usual. The rise of complicated financial derivatives and computerized trading on Wall Street also valorized the nerdy math-geek, who, again, is archetypically male. The orthodoxy within academic economics reinforces these images by promulgating an image of markets as self-regulating machines whose energy source is the self-interest of rational “economic man.”

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