I can’t decide whether this paper is politically incorrect

We study the relation between gender and job performance among brokerage firm equity analysts.  Women’s representation in analyst positions drops from 16% in 1995 to 13% in 2005.  We find women cover roughly 9 stocks on average compared to 10 for men.  Women’s earnings estimates tend to be less accurate.  After controlling for forecast characteristics, the difference in accuracy is roughly equivalent to four years of experience.  Despite reduced coverage and lower forecast accuracy, we find women are significantly more likely to be designated as All-Stars, which suggests they outperform at other aspects of the job such as client service.

Here is the link.  Here are non-gated versions.  The authors claim that more women don’t enter the sector because of their preferences, rather than discrimination; after all, They Win Prizes!.  Is the implication that women analysts are less productive, but men receive consumption value from voting them as "All-Stars"?  I don’t know how the voting works, but possibly the companies lobby for them, so as to show they have visible female stars.  I see the possibility of patronizing condescension in the data.  That’s not quite the same as outright discrimination, but I suspect the real story remains uncovered.  The odd mix of positive and negative discrimination that women, and some minorities, face, has not yet made its way into good models.


The trouble is that men and women are different, psychologically and biologically, in many ways (this shouldn't really need pointing out, but does!)- and therefore it is unusual for men and women to perform identically given an identical environment.

Indeed, in a situation of perfect control, all men would differ from all women, just as (if all else really was equal) all men would be taller than all women.

Minorities are different, probably, in that there may be no significant systematic biological or psychological differences between 'races' - although the fact of persistent cross generational differences between cultures (documented by Thomas Sowell and Gregory Clark, for example) may also imply that the same environment leads to different outcomes for some 'minorities'.

Save the condescension. Prizes such as II's All-Star ranking are much more correlated with compensation than accuracy at forecasting earnings (which is different than picking stocks, btw). I think there have been some papers on that, but mainly I know it from experience. If anything this paper suggests women are better for PR and marketing than men, which is mainly what sell-side analysts do. They just can't do the math stuff as well (oops! There goes my Harvard chancellorship.)

Reading the paper, the authors found that women were 1/10 of 1% less accurate than men. Is that really relevant? It seems like a mighty small number to be the foundation for entire theories of how the labor market works.

Frankly, I wonder if the authors really understand what the job of a sell-side analyst is all about. Three quarters of the job is making sure that the sales force is happy, members of which tend to be macho sales guys. Of course women are going to be at a disadvantage there, no matter how well they're able to forecast earnings.


Good analysis but I think the dynamic can be reversed. A sharp women can awe the macho, not super bright, sell side sales force. And charm the heck out of the clients, who themselves are mostly middle aged men.


There is a very obvious point going on here.

Self selection.

The women you get in broking tend to be brighter and tougher than the average woman, and brighter (and as tough as) the men.

Self selection also explains why women win more All-Stars. The women who stay as analysts are more motivated to succeed, and the All-Stars is a mark of that success.

Note that in the hierarchy of these things, analysts are seen as 'back room boys' and it is the investment bankers and the traders who are the real money spinners. And perhaps not coincidentally, mostly men.

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