My “Wisdom” on Diversity in Finance

The blogger wisdom series continued today with a question about diversity in finance.  Tadas asks:

It does not escape me that the entire distribution list on this “Blogger Wisdom” e-mail chain is entirely male. I have written extensively on why this is an issue for the investment industry. What, if anything, can be done to make the investment industry more inclusive?

My answer was stupid and not nearly as funny as I wanted it to be:

If the men on this planet don’t exterminate each other in the future I am certain that the women will come to their senses one day and do it for us. A perfectly efficient stock market will be the result.

In all seriousness, the extermination of men would certainly solve the problem, but that’s not happening any time soon. I’m not qualified to opine on topics like this so I won’t generalize with answers like “it’s a function of wealth and income inequality” or “women are more risk averse”.  I suspect those answers are partly true, but also gross generalizations. Instead, I’ll argue from the perspective of experience as a man.

As a young(er) man I felt an inordinate pressure to be someone who made a lot of money. I used to think that making a lot of money was my primary role in society.¹ It would not only bolster my ability to take care of those I loved, but it would bring me prestige which fed all the naive cravings of my younger ego. This started my obsessive compulsive thirst for the knowledge of money and is probably the reason why anyone cares about this website in the first place.

I felt that the only way to make a lot of money was to master what it is and how it works so I developed an insatiable desire to understand the worlds of economics and finance. So, my short answer is that I suspect women care a great deal about money and finance, but men care disproportionately due to the stereotype that men should be the “breadwinner” in a household. That’s obviously changing now and I suspect that the world of finance will look dramatically different than it does today or yesterday.  And that’s a good thing because study after study shows that women are more thoughtful and patient when it comes to the markets.  I don’t believe in efficient markets, but maybe that’s just because there are too many irrational men making them today?

¹ – Ironically, the more I’ve come to learn about money the less important I think it is. Money, after all, is little more than a tool that can give you access to certain things, many of which will have no correlation to your well-being or actual happiness in this world.  Money is absolutely necessary up to a certain point, but has a diminishing rate of return relative to overall happiness as you obtain more of it.