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STEM Parents And Women In Finance

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STEM Parents and Women in Finance

  • Renee Adams, Brad Barber and Terrance Odean
  • Financial Analyst Journal, forthcoming
  • A version of this paper can be found here
  • Want to read our summaries of academic finance papers? Check out our Academic Research Insight category.

See 2017 Hedge Fund Letters.

What are the research questions?

The finance profession can expand its talent pool and increase the average quality of professionals by encouraging more women to consider careers in finance (according to Stumpp 2013, women are less than 20% of investment professionals in the USA). Part of the gender gap issue comes from a lower percentage of women majoring in finance during the college years (only 30% compared to 48% in all business majors). This could be a result of different reasons such as lack of required training, avoidance of competitive environments, discrimination etc.
In this paper, the authors ask the following research questions:
  1.  Do (female) role models influence the career choices of young men and women?
  2. If #1 is “Yes,” does having a STEM parent close the math gender gap?

What are the Academic Insights?

By surveying the CFA Institute membership, the authors find the following:

  • YES- having a STEM parent or sibling raises the probability that a daughter becomes a CFA member more than that of a son. In particular, having a STEM father, a daughter is 29% more likely to become a CFA compared to a son, while having a STEM mother raises this probability to almost 48%.
  • NO- at least in relation to the PISA data, the authors do not find strong evidence that having a STEM parent closes the math gender gap.

Why does it matter?

Despite not being able to identify the connecting mechanism, this study documents that early childhood experiences have a profound influence on the career outcomes of women. Perhaps, a solution may be to provide finance professionals as mentors for girls to encourage them in pursuing a career in finance ( for instance, there is promising evidence from engineering as documented by Dennehy and Dasgupta, 2017)

The Most Important Chart from the Paper:

The results are hypothetical results and are NOT an indicator of future results and do NOT represent returns that any investor actually attained. Indexes are unmanaged, do not reflect management or trading fees, and one cannot invest directly in an index.


Abstract

We show parental careers differentially affect the future career choices of girls and boys using survey data from CFA Institute members. Among CFA Institute members, women are more likely to have a STEM parent (particularly a STEM mother) than men. Relative to the base rates at which girls and boys become CFA Institute members, STEM mothers increase the girls’ rate by 48% more than the boys’ rate; STEM fathers increase the girls’ rate 29% more than the boys’ rate. Our findings are consistent with the hypothesis that early role models, particularly female role models, influence women’s choice of finance careers.


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The post “STEM Parents And Women In Finance” appeared first on Alpha Architect.

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