WOMEN
10/25/2011 01:33 pm ET Updated Dec 25, 2011

Are Women Really More Irrational When It Comes To Money?

Is the best time to shop when you're in love? A new study shows women looking for a mate may hold on tighter to their wallets.

The study, part of a research program run by Arizona State University professor Douglas Kenrick, found ties between spending impulses and evolutionary perspectives on mating.

Participants were asked how happy or unhappy it would make them to gain or lose $100, or to experience a 30-percentile boost in their financial assets, Science Daily reports. While an initial round of questions indicated that losses registered more deeply in participants’ minds across the board, gender differences emerged when subjects were asked the same question after imagining themselves in what the study authors call a "mating frame of mind" -- a romantic situation with someone they found attractive.

Jessica Li, a co-author of the study, told Science Daily: "For men in a mating frame of mind, loss aversion completely disappeared and they became more focused on wins than losses. For women, on the other hand, mating motivation led them to be even more loss averse, to focus less on possible gains and even more on the pain of loss."

These results, which will be published in the March 2012 issue of the Journal of Personality and Social Psychology, apparently contradict the stereotype that women are less rational and more emotional than men when it comes to money -- here, both genders were impacted by mood, though in opposite ways.

The study authors maintain that these reactions are in keeping with evolutionary perspective, which argues that human beings are primed to behave in ways that increase the chances that their genes will be passed down. Since women invest more of their bodies, health, and time in birthing and nursing children, it’s natural that they are more risk-averse, while men’s willingness to take a risk to stand out from the pack and attract a mate would also make evolutionary sense -- or so the theory goes.

"These new findings are controversial because they contradict the assumption that economic decisions in the modern world are determined at the conscious level. Instead, it seems that biases our ancestors developed millions of years ago affect decisions we make today -- in ways that influence our finances for years to come," Kenrick told Science Daily.

The idea that gender can influence spending habits is nothing new; a previous study by Brad Barber and Terrance Odean at Berkeley called "Boys will be Boys: Gender, Overconfidence, and Common Stock Investment" found that men traded 45 per cent more than women and, as a result, their net returns were about 1.4 per cent per year below that of women investors. The study examined stock investments for over 35,000 households over a period of six years (1991-1997) and took special note of a common male bias -- overconfidence -- that they say played a crucial role in male willingness to take risks. "The big take-away in terms of online investing: women make better investors than men," Foerster told the Vancouver Sun.

But are the ways in which men and women relate to money all tied to primal drives and the womb? Or does social conditioning have something to do with it, as well?

"Women have been taught to invest in lifestyle and children. Men have been taught to invest in things that hold value -- a house, retirement," Ruth Hayden, a financial counselor and author of "For Richer, Not Poorer: The Money Book for Couples," told Bankrate.com in a piece examining gender and spending. The Bankrate.com article argued "women, trained to nurture and seek acceptance, view money as a means to create a lifestyle," while "men, trained to fix and provide, view money as a means to capture and accumulate value." Applied to the Arizona study’s findings, this reasoning suggests that attracting a mate may be a motivator for men to risk financial losses in order to gain a valuable mate.

Whether you buy into the argument that evolution is behind the gender spending divide or see it as a byproduct of how boys and girls are raised, the research seems to indicate that our financial lives are somehow connected to our love lives. Both involve a great deal of investment -- and risk. But if men are more prone to risk and women more prone to play it safe, who is ultimately the better investor when it comes to love and money?

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