Gender and Competition

Many complex factors contribute to the pay gap between men and women business leaders.
MANY COMPLEX FACTORS contribute to the pay gap between men and women business leaders. According to 2014 figures, only 6.5 percent of the CEOs with the highest salaries were women; moreover, their salaries were nearly 10 percent less, on average, than those of their male peers. The co-authors of a recent working paper say that men’s self-selection into more competitive careers explains a significant part of that discrepancy.

Ernesto Reuben of Columbia Business School in New York, Paola Sapienza of the Kellogg School of Management at Northwestern University in Evanston, Illinois, and Luigi Zingales of the University of Chicago Booth School of Business in Illinois conducted an experiment once used by researchers at the University of Pittsburgh in Pennsylvania. They asked a group of Chicago Booth MBA students to complete simple math equations. However, the participants could choose one of two scenarios: They could earn US$4 per correct answer, or they could earn $16 per correct answer—but only if they outperformed their peers.

In this experiment, men were twice as likely as women to choose to compete for the higher payout. In a subsequent analysis of Chicago Booth career data, the researchers found that individuals who had been previously identified as competitive in an experiment two years before were more likely to self-select into high-paying industries at graduation and remain in those industries long-term; moreover, women were more likely to choose jobs in low-competition fields such as marketing than in high-competition fields such as finance and consulting. The researchers further point out that the measures business schools use to admit students—such as the GRE and GMAT—do not measure applicants’ taste for competition, noting that “There is no relation between taste for competition and industry before participants started their MBA.”

Because this experiment was limited to Chicago Booth students, the researchers would like to see future research that examines gender difference and competition in different student populations, cultural contexts, and academic disciplines.

Download the working paper “Taste for competition and the gender gap among young professionals” at ssrn.com/ abstract=2677298.