Economics and finance, Science and technology, Social policy, Education | Australia

23 January 2013

Why are women underpaid in comparison to men? And what’s the solution? Academic, author and Australian National University Public Policy Fellow Alison Booth thinks finding the answer may mean revisiting our past. By Martyn Pearce.

There’s a saying that we all have one good book in us. But how many of us have actually tried to write that one good book, or would be brave enough to submit it to a publisher, or face the scrutiny of strangers who read it?

The idea of adulation, or riches, may be appealing, but knowing the hard work and high potential for heartache along the way, would you really be brave enough to write it? Would you take that risk?

Risk is something that Professor Alison Booth, labour economist, academic and fiction author, knows all about. Booth, a researcher in the ANU College of Business and Economics, and one of the University’s Public Policy Fellows, has never shied away from risk throughout her career – the risk of being a female academic in a male-dominated research area; the risk of expressing herself and her imagination on the pages of her books; and studying and researching the risk taking of other women – and of men – and, more specifically, why it is that in some situations women don’t take risks at all.

The answer, her research suggests, may lie in something we firmly associate with the past.

“It’s still the case that, even controlling for all factors that affect wages, women are paid about 16 per cent less than males,” she says. “About 10 years ago, some economists began saying that’s because women are intrinsically less competitive, or less willing to take risks, so they don’t get the rewards from those things.

“Of course, that raises the question: what’s the optimum level of risk aversion in people? And can the environment in which people are placed affect their risk attitudes? Actually, everybody is risk averse; it’s just various studies have shown that women are slightly less willing to take risks than men.”

Professor Alison Booth. PHOTO: StudioVogue.

Booth’s research has highlighted an important finding, and one that runs contrary to the way western society has evolved; namely, that women working with other women are more likely to take risks than women who work with men.

The academic has led two studies – both in Britain – which looked at risk aversion in women and girls and compared this to that of men and boys.

“The first study looked at kids from both single-sex schools in Essex and others from co-educational schools in neighbouring Suffolk, who were as alike as possible in academic ability, to see by what extent the girls in the single-sex schools differed. We found that the girls in the single-sex schools behaved much like boys in risk taking and competitive behaviour, but the girls in the co-ed school didn’t. It was a really robust finding.”

But put two or more economists together and you’re almost guaranteed to have a discussion about methodologies. So it was that Booth and her co-author found themselves facing a backlash over so-called ‘selection bias’.

“Scratch a labour economist and they’ll come up with the term ‘selection bias’,” she says.

“In this case, it arose because in Essex County there was a choice [about single-sex or co-ed schools] so it might only be the pushy parents that are sending the kids to single-sex schools. Therefore the girls in the single-sex schools are more competitive and risk taking, because they’re being pushed into that by their pushy parents!”

But Booth, who went to a single-sex school herself, was not about to be bowed by criticism. Instead, she devised a second, stronger test. This time, she and her co-authors persuaded the University of Essex to randomly assign all incoming first-year students in economics and business into single-sex or co-ed classes.

“So we were looking at the impact of being in a single-sex or co-ed class within the wider context of a university. We had the students do risk experiments in the first week of term, then again eight weeks later.

“The result was exactly the same as with the original experiment – we found that the girls in the single-sex classes after eight weeks were more likely to make more risky choices. The boys, and the co-ed girls, showed no difference.”

But, armed with this knowledge, what do you do next? Do you go back to the future, and start back down the road of single-sex schooling? Booth doesn’t know for sure, but she thinks it’s at least worth trying.

“If I were a policy maker I’d be very interested in doing a few pilots – perhaps randomly assigning kids into classes and tracking them to see if it works. I think there’s a lot of scope for policy in this area.”

To many, single-sex schooling, or workplaces, may seem like a step into history. But just as she doesn’t shy away from risk, Booth doesn’t shy away from the past. In addition to the ‘day job’, she is also the author of a trilogy of critically acclaimed fictional books, The Jingera Trilogy. The books track the lives, loves, beliefs and challenges of generations of people living in small-town Australia. Using pivotal moments in Australian history – Stillwater Creek’s rebuilding of the community after World War Two, the culture clashes of the 1960s in The Indigo Sky and the fallout from the end of the Vietnam War that is the backdrop to A Distant Land – the books are tales of the battle for social justice; two themes also evident in her academic work.

Booth says that it was a happy coincidence to discover that what she believes in her academic world can also spontaneously form the basis of her fictional worlds.

“I didn’t realise when I started writing that you can say stuff in fiction which might be serving the same ends as your academic writing. I’m very concerned about inequality and social injustice, and I found that in writing a novel – without ramming it down readers’ throats – one can create an environment where social issues can be explored.

“It’s not that I’m viewing the novel as educational, but I think it’s nice to be able to set a story in a historical background that might be new to people who are reading it, as well as covering social issues.”

The double life of Alison Booth that sees days spent immersed in economics and nights spent constructing fictional worlds began in 2001 when she and her sister read a book her father had written, but never published. “He wrote a novel in the 1950s about his experiences in the Second World War in the Northern Territory,” she says.

“It got favourable reports from the publisher to whom he submitted it, but when they sent it to their London office, the London office wrote back that it was too parochial. That was pretty discouraging for him, and he never wrote another book.

“My sister and I read it in 2001 and we both thought it was great. So with his permission we tried a couple of publishers and it was published in 2002.

“That really got me thinking about how nice it was for my father and how beautifully he wrote. I’d always shared with him a love of books and had written short stories (plus one awful novel when I was young), so his success sort of prodded me along.”

That experience spurred her into writing Stillwater Creek, the first book in the trilogy. Working in the evenings after work and across weekends, often late into the night, she crafted what she thought would be her only book. It was a labour of love for the labour economist. She says she never dreamed that one book would turn into three.

“I would’ve been horrified by the idea! It was such an effort getting the first one out, grown up and put to bed. I was horrified when the publisher asked for a sequel! Well, I was delighted that they wanted to buy the first book, but then it was on the condition there was a sequel.

“But in the end, I think I liked the sequel better than the first book.”

So the single book became a series of three, with the story taking on a life of its own beyond that originally envisioned by Booth. But happy coincidence, or perhaps just inspiration, has been a common thread of experiences while she’s been writing the book.

Booth says in plotting a book she initially draws up a matrix showing both the trajectory of each character and each major event. But there are still plenty of opportunities for her fictional world to throw both audience and author surprises.

“The characters aren’t based on anyone. It’s like they’re people that turn up,” she says.

“In the first book I was very pleasantly surprised when the butcher turned up – I didn’t expect him. He’s a butcher who looks at the stars each night; he’s a romantic dreamer. I’ve become very fond of him over the years.

“The other who turned up unexpectedly was the little Aboriginal girl. She turns up in an incident where she’s bullied by other kids at school, but she gives as good as she gets. I was delighted she appeared and I had no idea where she came from, although the stoning incident [she’s involved in] I myself witnessed when I was young. Kids hurling stones at the vulnerable – a migrant kid, actually. Kids can be horrible, can’t they?”

But wherever her characters come from, the twists and turns of their stories have struck chords with readers, which in turn has further inspired the author. Booth says she’s always touched that her writing has an effect on others.

“I recently gave a talk at a literary lunch and afterwards a number of people came up to talk to me. I always find these interactions very interesting, because each reader picks up something different from the books. For example, one picked up on the child abuse theme in the first book; another the Stolen Generations and so on. I find it wonderful; you really feel you’ve reached someone. At an economics seminar you never get someone saying ‘I love your paper!’” she laughs.

So with the risk, comes the reward, and – in her role as a Public Policy Fellow – that’s an economic theory she’d like policy makers to understand. For Booth, the responsibility for having good policy means policy makers paying closer attention to what academics and experts uncover and then making better choices.

One area that she thinks policy makers need to be aware of is the idea of ‘monopsonistic competition’ in the workforce – an issue that disproportionately affects women in the workplace.

“Monopsonistic competition happens in the workplace when there are only a few firms employing workers [in a particular industry]. Because these workers might have skills that are only of use in a few firms, the firms are able to exploit their monopsony position, to push down wages below what they would be paying in a perfectly competitive industry.

“It’s also the case that it could affect workers who are geographically tied to one location for family reasons. Once you send your kids to school, you’re not going to be very mobile and, typically because it’s the woman who will collect the kids from school, she’s not as mobile as her partner might be.

“Once firms know that, they’re able to exploit that information. As soon as you start taking into account the knowledge of the family circumstances of an individual, the company can use that information to take what are known as monopsonistic rents – they extract the surplus, and pay less, knowing the individual can’t search for better work elsewhere.”

For the researcher, the issue of this potential source of disparity between wages for men and women is the latest front in her research exploring the intersection of gender and economics. But in the 1980s, when she obtained her PhD, she could never have predicted she would end up researching those subjects.

“I never imagined I’d work on gender. In fact, I thought it was a ghetto that should be avoided,” she says.

“When I got my PhD, nobody was looking at gender in economics. I remember asking my supervisor and the view was that the technical issues of doing econometric work with women rather than just men was ‘just too difficult’, because women could choose whether or not to go into the labour market. The selection issue again.

“Because of that, we just forgot about half of the population. That changed rapidly in the 1990s, but to begin with people only worked on estimating the gender pay gap, without actually trying to explain why it was there. Now, I think explaining it is quite an exciting area.”

Just as her books have highlighted historical social inequities, so her research is doing the same. And if her academic and authorial work goes some way to addressing gender gaps, that’s surely a risk worth taking.

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