In recent years, banks, brokerage firms and fund companies have pulled out all the stops to make women more confident about money. Prompted by surveys showing women’s feelings of helplessness around money management, discomfort with investing and greater risk aversion, the financial industry has sprouted women’s initiatives, hosted seminars and published educational brochures by the ream. We joined them, publishing a book that debunked money myths holding many women hostage to insecurity.
All to no avail. Women’s self-reported financial literacy gap is not shrinking and may even be growing, according to research by Prudential and Financial Finesse.
For the two of us—one with decades of clinical experience as a psychotherapist and an observer of gender differences, the other with a long track record of communicating financial information—this news was disheartening. For heaven’s sake, Janet Yellen is chair of the Federal Reserve. Former French Finance Minister Christine Lagarde heads the IMF, and Angela Merkel runs Europe’s most successful economy. Clearly, women don’t lack a gene for finance. Why do we as a gender come across as so inept?
Finally we have some answers. ABC News correspondent Claire Shipman and “BBC World News America” anchor Katty Kay recently published “The Confidence Code: The Science and Art of Self-Assurance—What Women Should Know,” which assesses findings and observations to make sense of a persistent “confidence gap” between women and men.
‘Feeling Like A Fraud’
Shipman’s and Kay’s curiosity was piqued during their interviews with successful women in business. “We would hear repeatedly that they felt like frauds,” Kay told us. “Or that they got where they were because they were just lucky or in the right place at the right time. We never heard this from men.”
This became the first clue that a confidence gap wasn’t just an issue for women who struggled in high-school math. “We realized that lack of confidence is holding many women back from getting where they want to go in the work world,” Kay said.
For instance, she and Shipman cited the findings of Carnegie Mellon economics professor Linda Babcock, who determined that men initiate salary negotiations four times as often as women do. When women do negotiate, they ask for 30% less than men do. Another study at Manchester Business School in the U.K. found that male business students thought they deserved to earn $80,000 a year, while women thought they deserved only $60,000. Shipman sums it up bluntly, “Women effectively believe they are 25% less valuable than men do.” (Can it be a coincidence, we wonder, that women earn an average of 23% less than men?)
Confidence Is a Verb
Men often demonstrate confidence in the workplace with high-decibel confrontation, quick decisions, a drive to win and a disregard of risk (or an appetite for it). This kind of behavior “is wholly unappealing and downright foreign to women,” Shipman said. “Most of us just aren’t comfortable throwing our weight around in a conference room, interrupting others or blowing our own horn.”
In either women or men, confidence isn’t a particular way of acting or the state of feeling good about yourself, said Shipman and Kay. One of the experts they consulted defined it as “purity of action produced by a mind free of doubt.” Another said, “Confidence is the belief you can accomplish the task you have in mind.”
Their eventual conclusion was concisely expressed by Ohio State University psychology professor Richard Petty: “Confidence is the stuff that turns thoughts into action.” Conversely, lack of confidence leads to inaction—no matter how smart or well-prepared one may be. This is the challenge many women need to overcome.
Sabotaging Their Own Competence
Women’s low confidence hurts them not just in the workplace, but in other life achievements. The irony is that by hesitating to try something they’re unsure of, they may sabotage their own hard-earned competence.
An example reported by Kay and Shipman: When psychologist Zachary Estes of the University of Milan gave computerized spatial tests to men and women, the women scored measurably worse than the men. “But when he looked at the data,” explained Shipman, “he found that women were leaving some questions blank. When instructed to answer all the questions, women did as well as men.” In other words, she emphasized, “we need to push ourselves to answer all the questions, even when we’re not sure.”
Perplexing to Male Bosses
Most men don’t understand the reasons behind women’s low confidence, only that it keeps them from achieving their best. According to WNBA coach Mike Thibaut of the Washington Mystics, female basketball players’ tendency to dwell on past or potential failures and mistakes instead of focusing on the task at hand is their biggest psychological impediment to top performance.
Shipman and Kay noted the greater appeal to a boss of a go-getter employee who doesn’t let setbacks deter him from popping in with unsolicited bright ideas, compared to another worker who does her job with quiet competence, recoils from criticism and speaks up only when she’s sure her proposals are flawless.