Three Theories About That Pay Gap

It is no news. Women, the world over, earn less than men. Some of the famous gender pay gap is due to women’s professional choices, and to baby breaks. But this paper by Gillian Paull shows that, even when you carefully account for baby breaks, education and sector (and more), there still is a gap left.

What. The heck. Is That Gap??

Theory Number 1

Women don’t negotiate – at all, or don’t negotiate well. Employers know this, and rationally, take advantage of it by paying less than they would to a man (who can be expected to negotiate). A lot of popular books look into this, and its potential remedies, like Know Your Value by Mika.

I am sure this explains part of it, but not all. How about

Theory Number 2

Women are not allowed to signal success. This one is my favorite, and the one of which I seem to have most anecdotal evidence. Time and again I see men recount their successes. Not offensively so, but certainly confidently, and always attributing success to their own achievements. Never, really never, have I seen a man in the workplace attribute his success to luck or fate. When women signal their own success, it provokes smirks, mockery, or criticism. Cohorts of middle management feel entitled if not right-out divinely called to chip away at that evil woman’s assertiveness.

The women in my sample have ended up with one of three results: (i) They stop signaling. Their assertiveness leaves them never to return, and they go on producing successes no one ever attributes to them. This is the most frequent outcome, which naturally also results in lower wages. (ii) They withdraw and leave jobs until they find an environment that is fairer in its assessment, or they create it themselves in a start-up. This is somewhat rarer and can take a long time. And the rarest outcome is that (iii) women stay where they are, put their chin up and face the criticism right on. Those that are successful with it sometimes have an older male supportive colleague that negotiates their fate like an old-testament dad would the future of his daughter.

Some women have looked through the dynamics of i-iii and made a conscious effort to stay at iii. Several of them are very senior.

Theory Number 3

Women do not know their value. And they don’t know that they don’t know it. The most striking example I read about is this one. In the world of fashion and fast cars, models and women with similar exceptional beauty attend VIP parties without charging for their presence, while the VIP ‘friend’ that brokered their attendance gets a juicy commission.

Before I write myself into a complete rage, let’s spend that energy on a solution.

# 1 Remedy

Wake up, and sisterize. What about the following strategy, ladies: (i) realize that in many situations you are not paid (enough) when you should be, (ii) act in solidarity with each other and enlist as many friends as possible when making your claim for higher pay. The good old fashioned trade unions have been shown to work some way towards reducing gender pay gaps. But even without formal unionization, an informal united front of women (let’s call it sisterization) that share information and claim payment at value should go a long way.

This takes the humble realization that we are replaceable. Whenever we are not, we can negotiate as monopolists. But when we are, it takes a sisterhood.

Emotionally unavailable?! 3 Steps out of The Rut

You know what the words mean, I am sure. But let me briefly illustrate.

Thelma is an attractive woman in her late thirties. She has had several boyfriends, but always something was missing. She has been going out with Jack for nearly two years – exclusively but without any physical expression of love. Not even holding hands. Jack, a successful 45 year old, is also still living with his parents in their large house and has a hard time contemplating moving out. – Sensibly,  Thelma left before they hit the two year mark. The only people she has been attracted to since were still in a relationship.

What is going on here? Well, Jack is not really available for an exclusive relationship; his heart is safely parked at his parents’. But Thelma neither: she unconsciously picks people who could never offer a full, durable, emotional relationship. Where there’s no relationship, none can be broken. True risk safely avoided.

What do economists make of this? What is an ‘emotionally unavailable’ person doing in economic terms?
She is not on the market. She is not buying, let alone investing. Keeps her money safely in a low or no interest savings account, while she goes through the motions of shopping. We are talking about an extreme risk aversion here, that for tops is unconscious. The aversion is so high it keeps you out of any chances of a substantial return on your investment. Risk averse people want insurance. Thelma and Jack insure against the essential risks of amorous relationships by keeping healthy amour out; the true mutual connection.

How doe we get the amour back in? What can be done?

  • Step 1 would be to make the process conscious. Instead of unconsciously avoiding productive risks, Thelma and Jack would consciously avoid them. Nothing wrong here, if that makes them happy.
  • If it doesn’t make them happy, then in the medium run, step 2 would mean a realistic assessment of the risks of investing. Are they sizeable? Certainly. But not higher for oneself than for others. (Thelma needs to reality check her self esteem. And correct upwards. One way to do this is to avoid people that drag us down with reproaches and criticism. Sometimes this means creating distance to formerly close chums. And creating more proximity with friends that lift us up and appreciate us.)
  • Step 3 would finally entail some stepwise and careful and proactive risk taking. Without inbuilt insurance. But with the option to dial back at any step if needed.

There are no guarantees. You may be hurt.

Or you may bond forever.

Holidays without A Better Half? – A 5-Step Survival Plan

I am not quite sure I should be writing this. After all, I am *everything but* without a better half. I have the world’s hunkiest husband, who is currently playing with two adorable little wild beasts on the corridor.
But, boy, do I remember how it was without him. In fact, it is a recurring nightmare that I have: being unmarried and having to decide among a bunch of unpalatable ex-es. These are nightmares that feel quite real. During the dream I genuinely forget that I am married. It’s scary and lonely. And the options look between dour and unfeasible. A group of friends and family that stand around, bewildered and without understanding, does not help.  – And then I wake up next to The Man and feel like singing Handel’s Alleluia, multi-voice.

In other words: dears, I know what I am talking about. Been there. You are not alone. From the vantage point of someone in safe haven, but with a good view of the ups and downs of single-hood, here comes my survival plan for your holidays:

1 – Read the biography of a great single man or woman. (There are MANY. Composers, writers, poets, politicians, successful entrepreneurs – each century has had a few, of both genders.) Take a step back from the couple focus.
2 – Promote this idea to your family: not everyone needs to have a partner. You may use evidence from the biography you are reading. (You don’t have to believe this yourself, but the real bunch that you want to take a step back is your family.)
3 – Focus on yourself. Pamper yourself, become yourself – just better. Train the muscles you’d wish you had, or the skill you’d like to have. Schedule a makeover with a pro, or a friend whose taste you trust. Beautify your best side.
4 – Be the person that is missing from another person’s life. This need not be ‘somebody’s partner’, but another helping hand at the family dinner, or with your cousin’s little wild kids, the community activities of the season, or in the places that lack staff during the holidays but are bitterly needed: hospitals, soup kitchens, hospices, nursery homes, orphanages. You will never know how much you are appreciated till you try.
5 – Number three and four should keep you busy already. But if you have some downtime left: dream. Sit down with yourself and make your personal wish list for the next year. Stick to a maximum of three wishes total if possible. If that includes a partner, work on it and be specific: what are his/her five non-negotiable traits. Promise yourself you won’t accept a second date with someone that does not meet them. After all, dating is about spending one’s time wisely and economically for best results. That’s called optimization.

Happy Holidays!

Love from your Economist.

Power, Commitment and Dating: 5 Lessons from Jean Tirole

Jean Tirole recently received the prize in memory of Alfred Nobel for Economics, for his work on firms’ market power. Understanding how his sharp insights translate into the world of dating took me considerable mulling over, although it now feels obvious upon hindsight.

You probably all remember a beau that casually dated many women at once, “stringing them along” without making up his mind on who he should become exclusive with. Or a woman that nourished many admirers’ hopes for a long time, without settling with any one, but also without letting any one of them pursue another woman. Such is the nature of power in the dating market. And Tirole’s insights are highly relevant (and make for wicked strategies, actually).

Here are five key lessons:

1. People with power in the dating market can effectively ward off competitors. For a description of what that might look like, see above, and dig in your high school memories.

2. You can tell commitments from non-commitments, even in a powerful person. True commitments are actions that are hard to reverse. For example, if she moves house to be near you, that would be a commitment. As would be a publicly announced engagement, or, of course, marriage. Declaring the relationship exclusive to close friends, and to any admirers or former dates probably also counts. However, spending time with you, being intimate, and/or being generous with you, is no commitment. It can be stopped at will.

3. Dating market power is hard to maintain. Warding off a competitor is costly; it will take time and effort to string along that one woman that is already turning her head towards someone else, or that one admirer that is about to give up.

4. But power can be broken. If put under the right kind of pressure, the monopolist beau or belle will behave as if powerless. If the above described effort to maintain power is altogether more painful than losing that person from one’s circle of influence so to speak, then the powerful dater will let his subject move on. So the trick is to push the boundaries: if you are the competitor, i.e. the dating market entrant that would like to snatch one worthy date from the circle around the beau, just keep the lady of your intentions as busy and entertained as you can. It needn’t be with dates; if you have other avenues to meet her or engage her along her interests, even without you being involved (sports clubs, work, volunteering, your friends etc), do so. Make sure the monopolist beau will have a hard time keeping up (or finding spare minutes in her calendar). If she is not his favorite, he will let go.

5. Building up that kind of dating power from scratch can be a ton of work. Obtaining uniqueness in the dating world, to the extent that one can exercise market power, is comparable to  investing until securing a patent. What could those investments look like in the dating world? Building up a network, organizing social events, fun activities and gatherings, attracting and hosting interesting conversations…are all activities that enhance popularity and thereby dating power. It might also help to hit the gym three times a week until in ship shape. In some cases Miss or Mr monopolist may have a huge advantage on these accounts; too huge for anyone to follow. If a potential follower fails to realize (aka be impressed by) the size of the task, a stiff competition can ensue and the leader effectively be leapfrogged. Ha!

No guarantees when you apply any of this in real life…

Stop Worrying About The Kilos: Shapely Women, These Are Your Times!

Are you worried about those thighs? Does your bum look big in that? Well, if yes, rejoice.

A British study has recently found that men under pressure prefer shapely women. The researchers split a group of about 80 men randomly into two groups of about forty participants.  (The fact that the split was ‘random’, e.g. by lottery, is important. This means that each man had an equal chance of ending up in either group. And that the groups can be expected to be fairly similar after the split; similar in things you can see (like height, weight..) and and things you cannot see (like motivation, mood..). This is why true economists lurrve this type of experiment. But I digress…)

One group was asked to solve maths puzzles in front of a critical jury (howzat for being put under pressure), the other didn’t have to do anything. Both groups were then, independently, asked to rank pictures of women for attractiveness.

And lo and behold, the stressed out men preferred heavier built women. (The relaxed men preferred slightly underweight women.) Men under pressure need love handles. The researchers think this is because weight signals age and maturity and stressed men would appreciate the help of a mature partner. Yours truly thinks men also unconsciously know that those thighs come in handy in times of hunger or other economic distress.

This is consistent with another trend: in times of economic crises, the centrefolds in Playboy show heavier and older women than in times of growth. In economic drought, heavier women are hot, thinner women are not.

So, to the extent that the world is still recovering from the recent depression (which it is), your type, darling, sets the trend. 

 

There Is Just No Man!

I don’t know about you, but I have just met one beautiful and accomplished single woman too many. There are three, no, wait, four, acquaintances on the top of my head, spanning the twenties to the forties, who are stunningly gorgeous, pleasant characters, academic and professional high achievers – and single. And it’s not that they want to be; they just happen to be single. They would love a man that is a good match for them, but there doesn’t seem to be anyone eligible around.

What is happening here? Well, Your Economist has three theses on what’s going on. And three antidotes.

  1. Don’t be too modest. Many beautiful high achievers, I am sure, have been told from an early age to be humble and self-effacing. To counteract the stunner effect with an overdose of modesty, so their classmates and relatives can bear the sight and sound of them. That trick may have worked for social integration, but it is a killer on the dating market. Robust evidence shows that popular and outgoing girls are asked out the most. So, darling: get yourself on that pedestal. Be the one to announce the student union activity, the new task force at work, or the new charity project at church. You want to be that girl behind the mic that has all the eyes and ears on it for a moment.
  2. Cast your net widely. If you are ‘rare’ on any trait (rare beauty, rare intelligence, rarely sporty, rare height…) whoever matches you will be equally ‘rare’. If there are not enough eligible people where you roam, roam in other places: go online, visit that aunt on the other coast, let your friends set you up. Let go of the thought that the internet and blind dates are for losers. They are not. They are for choosers.
  3. Make. Time. If you live a lifestyle that only works for a childless single, then that’s what you’ll end up being. If you work endless hours and weekends; if your scarce leisure time is planned out without flexibility, then where will a partner and maybe a family fit in? When will your radar be relaxed and clean enough to register Mr. or Mrs. Right, and recognize them as such?

No guarantees. But these three potions should let an eligible man or two appear.

Germany: Flirt like Champions

3 Teutonic Techniques To Consider

The soccer championships were a joy to behold. Well, mostly. And most media outlets agreed that the right team won in the end, pointing out new and old reasons that might have made the German Mannschaft strong. The media’s love affair with Germany is not yet over; suddenly the country is supposed to be good at about anything. So what about dating?

A solid tradition of romanticism not withstanding, Germans aren’t exactly famous as lovers. One reason may be that they don’t really flirt. It may feel too light weight in a country where every puddle has depth. So this is what Germans do when approaching a relationship. (Caution, the claims of this entry are based on a selected sample of barely 30, including interviewed friends and personal anecdotes. My own passport confirms the qualification to comment, by the way.)

  1. Be an open book. As the Spiegel once eloquently analyzed, Germans signal interest by opening up about themselves, their experiences and views – the more personal the better. This can happen pretty fast, also in completely sober persons, and strike the uninitiated as emotionally incontinent. But Your Economist approves. It cleans up the information asymmetry early on and lets you know what you are in for.
  2. Expect mutuality, and forget double standards. If you want to date a German, you need to e.g. let go a little of the ‘man pursues, woman responds’ notion. German men will expect women to call or write about as regularly as they do, or otherwise assume there is no interest. Your Economist approves. Mutuality makes for a well negotiated pareto optimum.
  3. Prefer action over words. When the time is right to initiate the relationship, most cultures use some form of declaration, i.e. one side or both put their feelings into words. This is true for most Latin cultures, both of the Americas and even Scandinavia if you believe Knausgaard. But not Germany. Most Germans reveal their feelings as (subtle) actions first.  – From the Economist’s perspective, this is a double-edged sword. It is efficient, for sure. But actions can carry many meanings and thus be misunderstood, probably to a higher extent than language. The more transparent contract may be the one with words.

Bottom line, these three principles will help you score a few goals. But improvement is always possible.

The Price of Naptime

You know what’s the best time of the day? If you are a parent of young children that is. Naptime. Those 1-2 hours in the afternoon they nod off and let you be. One good hour for mum and dad to do what they want, alone or, together. Read a book, write a blog, engage in a passionate conversation. Essential. Restoring. For body, mind, soul – and sanity.

Of course, this one hour is only worth so much because the other hours of the day are filled with toddlers’ laughter, their crazy and creative ideas, needs, energy and wisdom. It is a clear case of diminishing returns. Given that this is one hour only, it is valued highly. One hour more would still be fun, two hours more (of productive solitude) would be helpful, but three kid free leisure hours would probably max out the fun, and any further minute would be boring and lonely.

Ok, just wanted to quickly get this message out before a little chocolate stained finger tries out my keyboard, as the soft steps on the corridor seem to announce…

 

Dating in the Times of Piketty – part II

This is the second part of our musings on dating in a more unequal world. As we discussed in part I, we have a few relevant case studies, both historic (feudal Europe) and contemporary (countries with largely Western culture and relatively high inequality, say parts of Latin America). Still, both sets of cases do not fully reflect the situation developed Western nations are gliding into according to Piketty.

Let’s see what is different and what that means for us.
Different from feudal Europe:

  1. Agency of women. In contrast to Jane Austen’s times, women now have voting rights, full property rights, can marry and divorce as men can, and are active in politics and business. The first born daughter may well end up running the family business. (No need to smash the entail, Lord Grantham.) We also know that women, on average, tend to be more left leaning in politics than men. Summing up, this means on the one hand, that hypergamy will likely be an attractive option for both genders (see part I) and courtship patterns may change. Not only will we see groomed young women queuing and trying to prove their virtues to the Mr Darcys, we will also see groomed young men queuing and trying to prove their virtues to, say, Paris Hilton. On the other hand, women’s agency has shifted the political center to the left. This makes it more likely that the bottom 99 percent will oppose an unequal world and vote for a politician that can offer a credible route out of it. Finally, it will also mean that men and women overall have more occasion to meet and mix, at university and work, say.
  2. Wealth is mostly represented by capital, not land. Capital can grow; land only up to a limit. So overall, social mobility in Piketty-land should not be quite as restricted as in Austen-land.
  3. Internet, social media. Any return to inequality will be well documented and well known. The fact that Piketty stirred up the world in so short a time, even the fact that I can write and share this very blog, are witnesses to this change. The average people can see the rich people’s life style more easily, more completely and can choose to covet or to criticize it. Facebook is not exactly a paragon nexus of social mobility, but certainly more so than an Austenian ballroom. The fact that average yours truly is facebook friend with some royalty, as well as heir/esses gives reason for hope. Mrs Bennet’s duty is still valid, but got a little easier. The wealthy networks are more infiltratable.

Different from both feudal Europe and quasi-feudal contemporaries:

  1. Smaller families. This should, on average, make it a bit more difficult to spread inherited capital widely. There are simply fewer heirs and heiresses to marry off.
  2. Longevity. The overall life length is of relatively little interest. What matters is the length of productive life, which seems to expand only slowly or not at all. A longer productive life would give more opportunity to run business risks and thereby accumulate wealth; more opportunity for social mobility. Still, longevity alone already means a longer time span in which heirs need to stand on their own two feet, before cashing in.

Despite all these differences, our main prediction from part I remains. Marriage will be more important a means to access wealth than it is now. And wealth will therefore play a larger part in choosing our partner. The downside is, obviously, that loveless marriages are likely to become, once again, a distinct and accepted possibility.

If Piketty is Right – What Does That Mean For Dating?

I assume by now you have read the buzz about Thomas Piketty’s recent book (for example here or here). There has been some debate about his results, but that seems to be settled. His main scary prediction is that most developed nations seem to be headed for a very unequal world, with few people owning most of the wealth and passing it on through inheritance, and most people owning relatively little and not having the chance to amass wealth through their own work.

Now, what does this mean for dating? In his book, Piketty painted a return to the (economic) world of Jane Austen. We won’t see a complete return to Jane Austen in the dating world, because gender roles have changed, and clear-cut male/female roles have blurred since then. But let’s go through the possible outcomes for an average person vs. a rich person, not distinguishing different impacts for men and women for now.

Average wo/man

You will face a world where your chance of getting rich through marrying the right person (a rich heir/ess) are much higher than today, and of getting rich by getting employed and working hard are lower than today. You still have a chance of getting rich through entrepreneurship, but the odds are probably not better than today.

In practice, this means that the skill of detecting rich heirs and infiltrating their networks successfully are now more highly valued; and the skills needed to succeed academically and professionally decline in relative value. At the same time, wealth of a partner may become more important relative to his/her other traits.

As a matter of case study, we could compare the dating arrangements in countries that currently have a fairly equal wealth distribution (say Northern Europe) with those that don’t (some Latin American countries). Let me confess that I, an average woman, have dated in both contexts. And what I have seen largely shows that rational human beings adapt to the distribution of wealth. ‘Marrying well’, ‘eligible bachelor’, ‘a catch’ – are all acceptable expressions to use in the unequal, but not so much in the more equal world. Family and friends share knowledge on wealth-related eligibility of young men, and this is clearly a highly ranked trait in the less equal world. Networking is proactive, and relationships are cultivated with people of influence (Austen would write ‘consequence’.) Academic and professional advancement is still fostered and valued, but also because it allows mixing in the right circles. In the more equal world, such considerations would be more criticized and sometimes consciously ruled out.

This is also reflected in the content of popular TV. Hypergamy (women marrying up) is a big theme in most Telenovelas, still prevalent in Sex and the City but not so much in Lindenstrasse or let alone Wallander. In the literature, Saint-Paul skilfully shows that hypergamy (women marrying up) increases as inequality increases.

Rich wo/man

You will likely face a longer queue of suitors (suitresses?) than nowadays. And many in that queue will have a (legitimate and rational) economic motivation as part of the package. If you want to sort out the suitor that is free of such concerns, you may need a more elaborate selection mechanism than nowadays. Think of Portia, the rich heiress in the ‘Merchant of Venice’. The correct suitor chose the leaden box over the gold and silver ones. Or of Turandot, who wanted to single out the smartest by a tough riddle. And then correctly married a refugee. Fighting through a hedge was good enough for Sleeping Beauty (and that example doesn’t really count because she married a social equal). From the male perspective, Cinderella‘s shoe as a selection mechanism may be hard to replicate. Natural beauty, on the other hand, seems to rain equally on all social classes. And some talents can be tested (Rapunzel‘s singing voice). Effectively, all hypergamous women and men in the fairy tales had to prove their true character through a complex action. Which is why some hard work will still pay off.