A Unified Theory of Why Women Earn Less

John List and Uri Gneezy have appeared on our blog many times. This guest post is part a series adapted from their new book The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life. List appeared in our recent podcast How to Raise Money Without Killing a Kitten.”

craigslist gender graphWhen it comes to the year 1991, history books will undoubtedly focus on the first Gulf War and the dissolution of the Soviet Union, but at least domestically, the biggest change was one you probably never heard about: 1991 was the first year that women overtook men in college attainment, a trend that has only gained steam since. Today 37.2% of women between the ages of 25 to 29 have a four-year college degree or higher versus just 29.8% for men.

Yet for all the academic achievement by women, men still earn a higher wage for equivalent jobs and continue to dominate the highest ranks of society. Senior management positions? Only one in five are held by women. Fortune 500 CEOs? Just 4% and fewer than 17% of the seats in Congress are held by women. 

Scholars have long theorized about the reasons why women haven’t made faster progress in breaking through the glass ceiling. Personally, we think that much of it boils down to this: men and women have different preferences for competitiveness, and at least part of the wage gaps we see are a result of men and women responding differently to incentives.

Being experimentalists, we understood that without actual evidence, this was just a conjecture. Determined to test our idea in the field we launched a large-scale field experiment on Craigslist where we posted ads for an administrative assistant gig we needed to fill. The experiment was conducted with Jeff Flory and Andreas Leibbrandt as coauthors.  We received responses from nearly 7,000 interested job seekers from cities all over the U.S. 

After a job seeker touched base with us, we gave them more details on the way they’d be compensated. Then we asked them to provide some basic information if they wanted to be considered for the position. Half the job seekers were told that the job paid a flat $15 per hour. The other half were told they would be paid $12 an hour but they would compete with a co-worker for a $6 per hour bonus (so that both ads would pay workers an average of $15 per hour).

What’d we find? Women were 70% less likely than men to go after the job if it had the competitive pay scale. This result accords with the broader insights from laboratory experiments that others—Muriel Niederle, Lise Vesterlund, Aldo Rustichini, etc.—have found.  Of course, this estimate doesn’t apply to every type of job and every type of person in the country, but it does underscore the fact that, when it comes to competition at a potential job, women aren’t always interested in leaning in.  

If you want to explore our world further, take the Why Axis Challenge: visit www.thewhyaxischallenge.com, post a photo of your copy of The Why Axis, and be entered to win prizes, including a meeting with Uri, John and Freakonomics author Steven Levitt! Be sure to stay tuned for more posts to come, which will give a glimpse into more ‘undiscovered economics.’

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  1. Lorraine gaines says:

    I wonder, if it had to do with being a single parent. They would need the stability and assurance of the $15. Did you account for any other demographic parameters? Were the women on average younger or olderthan the men who applied, etc.

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    • Pussyfoot says:

      That’s a good point. Ordinarily it would be illegal to ask a candidates marital status, but I suppose they couldn’t sue over a fake job offering. (Or could they?)

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    • Dexterella says:

      Even if they are not single parents, males generally have the sole responsibility of earning, whereas females also have an obligation of maintaining their homes WITH their office work. [Not saying that males aren't responsible for their homes, just that females have a higher responsibility- perhaps carrying over from historic obligations]

      Maybe it was just a case of too much on their plates? Lesser competition and assured pay sounds appealing when you already have too much stress on your mind.

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  2. guest says:

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    • MRB says:

      That’s awfully hypothetical to the point of being unimportant to the conversation. Maybe the boss was male, and maybe the boss would prefer to give the bonus to the male – if and only if the woman is confident that she’d be the better employee?

      There are “disincentives” to be sure, but this looks like one that [you] are building for yourself.

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      • Guest says:

        When a demographic wants to feel persecuted and use that as an excuse for the problems in their life, they will come up with far-flung hypotheticals that strike them as perfectly reasonable to explain away much more reasonable evidence that is contradictory of their persecuted world view.

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    • Eric M. Jones says:

      Good points.

      Maybe we ought to interview the subjects involved in the experiment.

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    • pewpewpew says:

      You raise a good point, even if your argument itself is hyperbolic. I would be interested to delve into the psychologic/emotional/logical/etc… causes for these findings and see what comes out the other side. The article chalked the results up to women being less competitive, but I wonder if there is an amount of pessimism involved.

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    • guest says:

      To those who downvoted my previous comment above:

      I am transgender. I am in the unique position of growing up being raised as a female, sent the messages young women are sent, and then later living as and passing for male, with all the unexpected, unearned privileges that come with it.

      When you’ve actually lived (and passed) as both male and female, you notice far more misogyny in society than you noticed before transitioning. And the misogyny doesn’t just come from men, but from women as well. From teachers. From parents. From your own inner voice, taught to judge women more harshly. This is an experience widely shared by transgender people, both FTMs and MTFs.

      Downvoting my comment or scoffing won’t make it less of a brutally honest assessment of a unique life experience — and peek behind the curtain of society — that very few have.

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      • Linch says:

        I definitely appreciate your unique perspective, however please understand that on the internet, people cannot usually infer your life history(especially if you call yourself a “guest”), thus I hope you understand why your original comment was perceived as emotional and hyperbolic rather than a reasonable assessment given careful consideration.

        On a site like this one, pointing to scholarly data on wage differentials of transgendered individuals before and after transitioning (both FTM and MTF), for instance, will presumably be much appreciated.

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    • Hamletc1602 says:

      It seems to me that this blog post made a sweeping generalization in the last sentence, not covered by the experimental results:

      “…when it comes to competition at a potential job, women aren’t always interested in leaning in. ”

      I think it’s fair to counter with another general statement that women are generally penalized for overt competition in a business environment (by both men and women).

      A woman in this position is basically being asked to accept lower pay, or a crap work environment, with little to no chance of promotion to a management role where competition would be more likely to be rewarded.

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  3. Eric M. Jones says:

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  4. I don’t think you’re wrong, but anyone vying for an admin job is usually VERY concerned about hourly, steady pay. Just consider who holds these jobs: single moms, older single women, some single men (no kids). Security
    is most important, not opportunity.
    What would be more telling is a similar survey of management level jobs, particularly of women under 50. That will give you a more comprehensive result.

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    • meanonsunday says:

      You seem to have a false impression that this was a low paying job. $15 is the median hourly income in the US so it reflects the “typical” man or woman.

      I’m sure that women in higher income jobs are more aggressive, but so are the men.

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  5. wes says:

    A couple of decades ago a study of this topic revealed that women gynecologists only made 2/3rds as much as male gynecologists. Turned out women only saw 2/3rds as many patients.

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  6. Shane L says:

    It’s interesting as usual. There remains the question as to why men and women’s behaviours would differ on average; back to nurture or nature again.

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    • BC says:

      My own anecdotal observation is that women tend to have less confidence in their own abilities than men do. I believe that there are some studies that have also shown more overconfidence in men than in women. Perhaps, this study doesn’t reveal that women dislike competition per se as much as it reveals their underestimation, relative to men, of their ability to win such competition. I wonder whether there are any gender differences in who plays lotteries, where everyone should (rationally at least) believe that they have equal chances of winning. In any event, there would still be a nature vs. nurture debate about confidence, just as with competitiveness.

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      • linch says:

        My prior would be that less women than men play lotteries, if for no other reason than that more women are educated than men.

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      • Ed says:

        I suspect more men than women are involved in all forms of gambling. And I suspect this applies across different cultures.

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  7. Nick says:

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  8. Voice of Reason says:

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    • Angie says:

      Voice of Reason, what century are you from? There is nobody that gets a degree to become a secretary. Sometimes life gets in the way and a person with a degree has to take a job like that though.
      As a woman with a masters degree in engineering, I can assure you that women go to college for the same reason that men go to college TO ADVANCE THEIR CAREER AND EARNING POTENTIAL. I also have two daughters, that I adore, and try to set a good example of what life can be like for them if they do well in school.
      I am not a risk taker though, as the article describes. I have found myself becoming more of a risk taker as I am very comfortable in my career, and think that I deserve the equivalent accolades as my peers. I do wish that I was more of a risk taker earlier in my career though, but I was never dependent on my husband to support me.

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      • meanonsunday says:

        But there are some degrees with a much higher value than others, for example the sciences, and men continue to be the majority in those subjects.

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