Can quotas help tackle the confidence gender gap?

Quotas — in politics, business, or education — are a heavy-handed way to banish gender discrimination. They increase female representation, but at what cost?

In March, Germany became the latest country to instate boardroom quotas. Starting in 2016, the government will require 30 percent of board positions at some of Germany’s largest public companies to be filled by women (companies will also produce plans to increase the number of women in executive roles). But even supporters of women’s equality questioned if the new law was a good idea.

The classic case against affirmative action is that it taints those it tries to lift up. Forcing businesses to hire women (or political parties to nominate women) deprives women of the chance to prove they could have earned their positions on their own merits. Defenders say that affirmative action policies compensate for discriminatory attitudes that undervalue women’s true abilities — they even a tilted playing field. Both these arguments take for granted that the number of talented women is fixed.

Now, new research into the roots of gender inequality has suggested a surprising argument for giving women an artificial boost. Experiments show that policies like quotas can draw out a substantial number of qualified, but otherwise shy women who would never have put their name in the hat.

Far from being an enemy of meritocracy, affirmative action might even enhance competition by attracting a more talented field of applicants. It’s the Lean In theory for giving women preferential treatment.

“There’s this false assumption that affirmative action rules keep the applicant pool the same,” says Matthias Sutter, an economics professor at the University of Cologne, who has studied this phenomenon in lab experiments. “No, no — we find that quotas really create new incentives for high performing women to enter. They change the set of applicants. They draw in the best performing women.”

This case for affirmative action has its origins in a recent theory about why women earn less than men on average. Traditional explanations for the gender pay gap blame discrimination, or women’s household responsibilities, or the lack of flexible leave policies. But a growing body of research suggests that some women might inadvertently contribute to the problem by being reluctant to submit themselves into competitive environments.

In a now-famous 2007 experiment, economists Muriel Niederle and Lise Vesterlund gave men and women five minutes to solve as many simple addition problems as they could. Every correct answer was worth 50 cents. This was a gender-neutral task. On average, men and women solved about the same number of puzzles in the time allotted.

Next, the researchers made random groups of four, each with two men and two women. Everyone was given a new option: Instead of doing the solo math exercise, where they were paid 50 cents per right answer, they could participate in a contest. If they solved more problems than the other three members in their group, they would get paid quadruple — $2 per correct answer. If they didn’t win, they wouldn’t earn anything.

Not only were men more than twice a likely as women to select the tournament option, but even among the highest-performing men and women, there was a gender gap in competitiveness. About 80 percent of top-scoring men elected to compete. By contrast, less than 40 percent of top-scoring women did. These women could have earned a lot more if they had only gotten into the game. Instead, the contest winners were overwhelmingly men.

“Often, we think of affirmative action as something that counteracts discrimination, past or present,” says Niederle. “The interesting thing here is that we get these big gender differences when there’s no discrimination.”

Share of female directors of companies in each country’s main stock index, October 2014. Source: Calalyst via Bloomberg.

This phenomenon has been replicated in experiment after experiment, in both the lab and in the field, in several nations, and with adults as well as with schoolchildren.

These tendencies can have real-world consequences. Niederle and her colleagues have found that in the Netherlands, girls who behave competitively in the lab are also more likely to choose to study math and science, which in the Netherlands are more prestigious fields — and more male-dominated. A 2015 study published in the prestigious Review of Economic Studies showed that women are much less likely to apply to jobs where their salaries are tied to how well they perform relative to their co-workers.

One explanation for all these results is that men are far more confident in their abilities than women, and far more likely to overestimate their talents. The gender gap in confidence is believed to be one reason why qualified women hesitate to put themselves up for promotion, while men will apply even if they don’t meet all the job requirements. It also helps explain why women are less likely to compete, Niederle says.

But even between men and women who have similar regard for their own abilities, the men in these experiments are still more eager to choose the competitive option. “It’s not only how good you think you’re going to be,” Niederle says, “but also how much you would enjoy beating out all the others.”

If we think that lack of confidence, or lack of competitive grit poses a serious hindrance to women in the workforce, one solution is to cultivate women’s inner swag. That has been the goal of a number of motivational books, most famously, Facebook executive Sheryl Sandberg’s Lean In.

The research points to a complementary approach. There’s a surprising exception to the evidence on women being less competitive: When the genders are segregated, women become just as likely to compete as men. For whatever cultural or psychological reasons, Niederle says, “women are much happier to compete with other women.” The mental roadblocks disappear.

In a 2013 paper with colleague Carmit Segal, Niederle and Vesterlund revisited their 2007 study, this time with a twist. In groups of six — three men and three women — subjects still faced a choice between earning a steady 50 cents a problem, or entering a competition to get paid many times that.

But now the competition had two winners, and in some cases, there was a quota: One of winners was guaranteed to be a woman. This quota rule changed the way that women thought about the competition. To win, women only had to beat out the other women in their group.

Faced with a gender neutral competition, only 31 percent of women chose to compete. But faced with a contest that guaranteed a winning spot to a woman, over 80 percent of women entered.

“Although some high-performing men drop out of the competition, many women come in, and the overall number of high-performing participants in the entry pool is barely affected,” the researchers write.

Niederle and her co-authors performed this experiment on 84 adult men and women in a lab at Harvard Business School. In a paper published in June, Sutter, the University of Cologne professor, and his colleagues repeated the experiment with 588 schoolchildren in Austria, confirming the same results.

Even among boys and girls as young as ten years old, there were dramatic differences between the rates at which the different genders chose to compete — differences that were erased after a quota rule was instated. The effects were pronounced among the girls of the highest ability. Without the quota, about 35 percent of these girls competed. With the quota, over 70 percent of these girls entered the competition.

“We find that quota rules encourage the best women to really go for it,” Sutter says.

Employers often say that gender imbalances persist in workplaces because qualified women are much harder to find than qualified men. It’s implied that affirmative action policies would be harmful to companies because they would force hiring managers to lower their standards in order to meet gender quotas.

But these studies and other evidence suggest that many qualified women simply don’t apply to jobs. Men might believe that they’re competing in a fair market for jobs, but it’s likely that many of their toughest rivals are disqualifying themselves at the starting gate. The recent research suggests that affirmative action policies can actually be an asset for companies if they can help attract a larger pool of talented women.

In the corporate quota debate, an oft-cited example is Norway, which passed a law in 2003 requiring public companies to have boards that were at least two-fifths women. Between that year and the deadline in 2006, Norwegian boardrooms quadrupled their female representation from around 10 percent to over 40 percent. Opponents of corporate quotas point to evidence that the average quality of board members decreased — the incoming women tended to be less experienced and less credentialed than the men. There were obvious reasons for this: Norwegian companies had very little time to expand their pipelines for female talent. Decades of preferential treatment for men couldn’t be undone in an instant, and it’s likely that Norway tried to change too much too quickly.

But, strikingly, the women that did get shoehorned onto boards as a result of the new law were more talented and experienced than their predecessors. The qualification gap between women and men on corporate boards actuallyclosed in the years after the law was passed, according to a 2014 paper from economists Marianne Bertrand, Sandra E. Black, Sissel Jensen, and Adriana Lleras-Muney. As the researchers write, it seems that “previously untapped networks of top business women were activated by the policy.”

In other words: Despite glaring and persistent inequities in its corporate culture, Norway still had a surprisingly rich cache of talented women executives. Companies just had to start looking for them.

This article is published in collaboration with The Washington Post. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Jeff Guo is a reporter at The Washington Post.

Image: A Women meets with her team at a headquarters. REUTERS/Sukree Sukplang.