I was a bit surprised to read an article the other day noting that men are less likely to wear face masks than women, despite recent Centers for Disease Control (CDC) guidance to wear face coverings in public spaces.  So, I did some searching and found some intriguing statistics on mask usage and gender:

• Several pre-coronavirus studies found a statistically higher rate of face mask usage among women during previous epidemics in multiple countries.
• An April Morning Consult poll found that 25% of U.S. men, but only 14% of women, refuse to wear masks.
• An April Gallup poll found that 67% of U.S. women, but only 56% of men, wore a mask in the prior week.
• A late April Salt Lake Tribune informal survey of local shoppers found 51% of women, but only 34% of men, were wearing masks.

Setting aside your opinion on face masks as an effective pandemic control, what would possibly cause men to be more skeptical of masks?  I’m certainly no expert, but to me, it seems like wearing a mask could be easily perceived as wimpy, or even effeminate.

There are plenty of studies showing that society tangibly penalizes men that stray from their expected gender roles including examples like:

• Male leaders who show vulnerability by asking for help are perceived as less competent.
• “Nice guys” are perceived as less hirable and have 18% lower income than “less agreeable” men.
• Empathetic women are perceived as performing better at work, while empathetic men are not.
• Men who are modest when expressing their qualifications are less likely to be hired than similarly modest women.

Because of the clear social penalties to “sensitive men”, many guys probably believe (perhaps unconsciously) that wearing a mask erodes their machismo and might have social repercussions.  And this creates a hugely obvious problem; more men will contract COVID-19 and spread the disease to others.¹  While the evidence here is too circumstantial to prove a link between gender roles and mask compliance, it’s theoretically a great example of how culture can interfere with achieving our shared goals.

Gender and Investing

You’re probably thinking why in the world is an investing blog discussing gender roles and mask usage?  The answer: if men’s view of their masculinity can drive them toward potentially life-threatening decisions, what role might masculinity play in less dire topics like investing?

Do you think that most men are better investors than women?  According to a Fidelity survey, 91%(!) of respondents believe that men are better investors.  But in fact, a mountain of evidence shows the opposite:

• A Cal-Berkeley study found that women outperformed men by a return of 0.9% per year.
• A Warwick Business school study found that women outperformed men by 1.8% per year.
• A Fidelity study found that women outperformed men by 0.4% per year.
• A user data review by OpenFolio found that women outperformed men by 0.3% to 0.4% per year over the last few years.

This investing gender gap may seem small, but when compounded over decades, it can generate substantial differences in final account values.  Further, Fidelity found that women are slightly better savers too.  When the investing and saving gaps are combined, the difference in long-term wealth growth is huge, as this graphic from the Fidelity Study shows.

Why would women be better investors?  There’s no shortage of pop-psychology commentary on this question.  For example, one of these studies cites generic research that men are more confident than women in various situations.  The study authors then draw a link between generic male over-confidence and the observation that men trade more often than women.  And trading more usually produces worse returns.

But just as the generic existence of male gender role penalties doesn’t prove a causal link specifically to men’s poor mask compliance, the generic existence of male over-confidence doesn’t prove a causal link specifically to the investing gender gap.  Maybe men are worse investors because they have more fear, greed, anger, or cognitive biases unrelated to over-confidence.

Keeping these pitfalls in mind, what might be some of the more likely reasons that women outperform men in investing?  Here are a few of the less hypothetical and more convincing reasons I found:

1. As I noted above, the Cal-Berkeley study found that men trade 45% more often than women and receive lower returns as a result.  More trading means lower returns because timing the market is impossible, and more trading increases investing costs.
2. The Fidelity study found that women’s portfolios tend to be less volatile than men’s, meaning women are investing in less “risky”² combinations of stocks, bonds, and cash.  For long-term buy-and-hold investing, lower risk typically results in lower returns.  But combining higher risk-taking with more trading (the first reason above) usually generates lower returns.
3. A Merrill Lynch survey found that only 45% of women report they are confident in their investing knowledge, as compared to 73% of men³.
4. A LearnVest survey found that women are 5 times less likely than men to name investing as their top financial goal, which suggests that women place less importance on investing than men.
5. A Wells Fargo survey found that women are 2 times more likely to say they want to be educated by financial advisers, while the Fidelity study found that 90% of women expressed an interest in learning more about investing.

While I’m not going to argue that these are the “proven” reasons for the investing gender gap, it’s interesting that all of these reasons are consistent with the four cornerstones of mindful investing (Rationality, Empiricism, Humility, and Patience):

1. Less trading by women suggests more Patience with buy-and-hold investing and more Humility about whether the next trade is likely to turn out well.
2. Less risk-taking by women suggests more Humility when trying to decide which risks are relatively prudent.
3. Less reported self-confidence about investing knowledge by women suggests Humility, while men seem more likely to feel they’ve learned enough already.
4. Placing less importance on investing suggests a more Rational perspective on financial priorities.  For example, the math irrefutably shows that how much you save is way more important than how you invest.  And many folks are objectively better off paying down debt, building an emergency fund, etc. before trying to invest.
5. A greater interest in education suggests women place a higher premium on Empiricism and Rationality.

Could it be that women are better investors because they’re more mindful than men?

Gender and Mindfulness

The internet certainly seems to think that women are the more mindful gender:

• A Brown University study found that women reaped more benefits from meditation than men, even though men in the study clocked more meditation hours on average.
• A study reported in the Journal of Women’s Health found that in the United States 10% of women practice meditation but only 5% of men.
• A literature review of research on mindfulness-based treatments for substance abuse found that 4 of 6 studies showed evidence that women gravitate more towards mindfulness or that women benefit more from mindfulness treatment.
• A Victoria University study found that in New Zealand, women reported higher levels of mindfulness than men.
• A Journal of School Psychology study found that female students were more mindful than male students after taking the same meditation class.

In case you think I’m cherry-picking these studies, I found a few studies that observed no difference in men’s and women’s levels of mindfulness.  And I found only a couple of instances where men were found to be more mindful than women, but only for one or two out of five specific measures of mindfulness.  Regardless, in my opinion, most of these studies have quality problems such as poor controls, small sample sizes, and questionable data gathering techniques.  Also, almost every popular article on this topic that I found relied almost entirely on that one Brown University Study.

Conclusions

Given the uncertainties associated with all this information, I won’t take my conclusions too far.  But the evidence is suggestive that women may be better at both investing and mindfulness for similar reasons.  That is, women may be more inclined towards rationality, empiricism, humility, and patience.  And some of these studies suggest women are more mindful in other ways as well.  However, the evidence is insufficient to tell us whether this mindful inclination might be cultural versus genetic or cause versus effect.

Many of my posts so far this year have been about investing and emotions.  And I’ve concluded that in many instances we don’t know exactly why we decide to buy, hold, or sell, and we don’t know exactly how our feelings influence these decisions.

I’ve previously covered the following surprising factors that can impact our emotions and resulting decisions:

• The timeframes we focus on
• Differences in how we assess emotions in-the-moment versus after-the-fact
• Minor situational factors that are entirely irrelevant
• What we choose to pay attention to at any given moment
• And even our genetically pre-determined temperaments.

The fact that women appear to be more mindful investors and quantitatively better investors is yet another example of how our emotions and decisions can be driven by hidden factors.  On the surface, the gender gap implies that men should beware of “masculine” thinking and reactions while investing, and women should consider whether their investing behaviors align well with the more “feminine” traits listed above.

More specifically, it seems we should all strive to:

• Be more patient buy-and-hold investors
• Approach investing risk with humility
• Keep our self-confidence in check (stay humble)
• Treat investing as no more important than it objectively is
• Keep educating ourselves even after we think we’ve learned it all.

In other words, we should all strive to invest more like women and less like men, because that means investing more mindfully and with greater success.

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1 – I’m aware that the evidence regarding masks and pandemics is equivocal, so I’m purposefully avoiding the mask effectiveness debate.  Regardless, the CDC recommends face masks in public spaces, because it at least has the potential to decrease community health risks.

2 – Here at Mindfully Investing, we don’t put much stock in the idea that volatility equals risk, for reasons I discuss here.  But the reality is that most investors are taught and believe that volatility equals risk.  

3 – Note that this self-reported confidence is different than the derailed logic train about generic male over-confidence that I discussed above.  In this case, men and women are responding to surveys about how they view their level of investing confidence, which is a step closer to a causal link as compared to saying that the literature shows men are over-confident in general.