Woman-Run Hedge Funds Perform Better

Evidence of intra-firm gender discrimination in the assignment of tasks and irrational aversion to appointing women to boards of directors is fascinating to me not only because sexism is an important issue, but because there’s a very clear and simple theoretical argument that this kind of widespread gender discrimination can’t exist. In a well-functioning competitive marketplace, firms that don’t discriminate will outperform those that do. And yet it’s obvious that systematic implicit discrimination against women is in fact widespread. So it should come as new surprise that the latest reports show that the small minority of hedge funds run by women outperform the (dismal) industry average.


More generally, massive male overrepresentation in the lucrative and prestigious finance sector strikes me as interesting because in most respects it cuts against prevailing gender stereotypes.

In typical situations, women are cast as the responsible prudent risk-managers while men are seen as much more reckless. That’s particularly true when it comes to younger people. Car rentail companies and landlords alike strongly prefer to lease to 23 year-old women than to 23 year-old men. Yet you see on Wall Street an awful lot of young men, as if the task at hand is to mount an amphibious assault on fixed German defenses or run into a burning building.