Saturday, February 9, 2008

Margaret Thatcher Was Right

I have to admit I am not a big fan of Margaret Thatcher (I guess I was on too many CND marches to have mellowed over the years) but it does seem she was right about one thing: women are better at managing finances than men. Though she tended to overdo the homilies about 'household budgets' and 'holding the purse strings' it seems that neuroeconomics is now verifying her insight.

A recent article in the Wall Street Journal reports on a study of male and female fund managers which found that:
... female managers traded less, were more risk-averse and were more consistent in their investment style. Interestingly, the study also found that female managers received far less new cash from investors, despite generating returns that, on average, were comparable with those of male managers.
These and other insights into neuroeconomics and finance are explored in the fascinating new book Your Money and Your Brain by Jason Zweig. He finds that our 'caveman' and 'cavewoman' brains continue to shape our daily economic lives. Which begs the question: would we be experiencing the current financial crises if we had more female central bankers, hedge fund managers and finance ministers?

The answer, it seems, is probably not.

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