24 Comments

Well, look historically. Do you agree that there was a huge amount of discrimination against women by private companies?

Yet, couldn't the exact same argument have been used to argue that it didn't occur and it was all rational hiring practices?

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Since that didn’t happen, I’ve gotta believe most speculators don’t believe those studies, and so I shouldn’t believe them either.

yup. because speculators are *never* influenced by cognitive biases against information they don't like, right? right. and they're always totally rational specimens of homo economicus, and they would *never* put on blinders to inconvenient findings that challenged their egos and worldviews. and speculators of all stripes have been making such brilliant decisions about the state of the world for the last few years. we should all think just like them.

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Or another correlation scenario would be that companies flexible or unprejudiced enough to hire women already have superior management which will manifest in a variety of ways. Telling companies to improve performance by hiring women would be as pointless as telling adults to get taller by eating more.

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So did you actually make superior (risk, cycle adjusted) returns investing this way?

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I'm taking this to mean that there really is an advantage to investing in firms with high-level women executives, but investors are too rigid (probably your theory) or too prejudiced (a theory I'd include) to invest in a fund specializing in such firms. Am I correct?

IIRC, your original theory was about firms headed by women. Is there a difference between those and firms which just have a significant number of high-level women exectutives?

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I had the same thought — if there is much sexism then more female execs might indicate higher average quality of execs.

This actually generalizes well. Speaking purely anecdotally, I have observed the following, as a rule of thumb:

If a given area has a substantial demographic skew for reasons not directly related to competence within that area, members of the minority demographic will have a higher average competence than members of the majority.

Your mileage may vary.

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Yes, but since my scenario assumes the other main selection criteria is competence, your ideal return is if you simply disregard gender entirely and hire based on competence. Deliberately hiring women would be just addding counter-noise, and strictly suboptimal vs. hiring for the desired characteristic (interesting note: does the calculation change if you believe yourself less accurate at judging competence than the average?).

Note that this also largely explains the inability to trade effectively on the knowledge, or to change share price with it--if investors are looking at competence, not gender, the correlated benefits of female execs are already taken into account, and hiring less competent female execs won't accomplish anything.

The main benefit would be reduced competition for recruiting competent female execs vs. competent males.

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How about this for a simple model: women are riskier hires than men, only supra-male quality women get hired to compensate for the risk, many women blow up, and survivor bias drives the results we observe.

Possible? michael vassar?

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Surely we need a control experiment? Say, suspend anti-discrimination legislation and let men opt to have male only workforces/management teams if the wish.

Something F. Roger Devlin proposes in section 12 of his magnificent series Home Economics.

Or would that not be fair?

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Re: discriminate explicitly in the hiring process, which seems to be what’s being advocated.

The article doesn't propose sex discrimination during hiring. It proposes that businesses "stop the brain drain" - by rearranging work life, so it fits in better for women - allowing them to work from home more when they would otherwise be having monthly or maternity employment downtime. Such proposals may be unlikley to be heeded - but they would probably not violate sex discrimination laws.

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The article is pretty short on referneces - except where it comes to the male-female risk aversion difference, which is standard science.

485 of the Fortune 500 companies are run by men, 15 are run by women

http://thenewagenda.net/200...

From that, it seems as though taking risks is the way to win big.

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The finding could also be based on a different less PC reason, if men were better execs than women, but women execs make a company look better then the companies who could afford to hire women would be the most profitable ones.

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It is likely that the reason the article cites is wrong, even though the findings may be correct. If I had to hazard a guess, I would point to the problem of group think and the benefits of the wisdom of the crowd.

If this guess is correct, then the benefits flow from having diversity in the top management and not from any particular traits of women (except for them being different from the males).

Ref. Wisdom of the Crowds by Surowiecki

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I also suspect a solution is not legally feasible. I doubt these correlations would provide adequate evidence to discriminate explicitly in the hiring process, which seems to be what's being advocated.

More generally, you can't just say, "We'll put more women on our board," you have to say "We'll put this woman and that woman on the board, instead of that guy and this other one." On an individual level, it is difficult to value in the advantages of having a greater percentage of women, particularly without explicitly discriminating.

An alternative explanation is simply that more meritocratic hiring policies/decision makers will hire more women ceteris paribus, thus number of women serve as a proxy for hiring efficiency.

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It makes more sense if you interpret it as addressed to the speculators, not the firms.

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I had the same thought -- if there is much sexism then more female execs might indicate higher average quality of execs.

How does Robin know that firms like Goldman Sachs and others are not buying companies when they hire female execs and selling off when switch to more men. Could it be that GS performed the study as background to a trading strategy? Then again, why share? Maybe because they now know something more about what is going on, which would allow them to capitalize on others trading just on the information they've shared.

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