Sunday, June 20, 2010
(graphic: book by David bach)
Men’s aggressive nature makes them less successful than women when it comes to playing the stock market. Researchers studied more than 29,000 men and 8,000 women who invested in stocks in the 1990s, and found men traded more but made less on their returns annually than women.
The authors of the study, published in the Quarterly Journal of Economics, noted: “Psychologists find that in areas such as finance men are more overconfident than women. This difference in overconfidence yields two predictions: men will trade more than women, and the performance of men will be hurt more by excessive trading than the performance of women.”
The disparity was even greater between single men and single women. It was determined that non-married men traded 67% more than unwed women—and lost 1.44 percentage points annually on their investments. Married men lost 0.94 percentage points more per year than married women.
-Noel Brinkerhoff
Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment (by Brad Barber, and Terrance Odean, Quarterly Journal of Economics) (pdf)
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