Can behavioural science 'nudge' Chilean women towards equality?

There is a shared political, academic and ethical consensus about the importance of gender equality. The gender gap in educational attainment has almost been eliminated, according to the World Economic Forum’s Global Gender Gap Report. This is a notable achievement for women’s self-determination and participation in society.

However, the economic gender gap actually worsened in 2016, the same report revealed. It will take 217 years to close, at the current rate. This is due to slow progress in labour force participation and wage equity, and the absence of women in leadership positions and on Boards of publicly-traded companies.

The paradox of a gender gap fast disappearing in education but barely improving in the workforce doesn't only affect less developed countries. Take Chile, an emerging economy noted for its institutional stability, growth, and its high level of educational attainment by women. Enrollment rates are higher for women than men in both secondary and tertiary education. But Chile has a large economic gender gap, and has been making very slow progress in closing it.

In fact, while Chile ranks 39 out of 144 countries for educational attainment and 47 for health, it ranks 117 for economic participation and opportunity. The labour participation rate for men is 22 percentage points higher than that for women.

There is significant untapped potential for women in the workforce. Higher participation rates and equal pay would not only improve economic well-being on an individual level, but would translate into significant GDP gains. For every 100,000 Chilean women entering the workforce, annual GDP would increase by an average of 0.65%, a recent study by the Chilean Ministry of Economy indicated. The country’s annual GDP would increase by 10.5% if women’s participation in the workforce equalled that of men.

The Chilean banking regulator began collecting gender-based data on the Chilean banking system and publishing an annual report more than a decade ago. In terms of access to financial products, the gender gap closed fast from 2002 to 2016. Women now use credit and savings products at nearly the same rate as men.

While women’s current account balances were on average only 52% that of men’s, saving rates were nearly equivalent, with women’s savings balances at 96% of men’s balances. Additionally, women had lower rates of bounced checks and lower loan default rates. So while women had lower credit amounts and worse credit terms, their payment behaviour was actually better than their male counterparts.

Both international data and the banking figures from Chile beg the question: if the educational gender gap has significantly decreased, what is happening once women enter the labour force? Why is the economic gender gap not mirroring the gains achieved in education? Are the gender differences revealed by the Chilean banking data simply a reflection of the income disparity between men and women, and women’s lower participation in the workforce? Or are there additional factors involved? Such a striking paradox begs further study on the causes of such economic disparity. Behavioural economics, particularly the phenomenon of unconscious biases, may give some insights.

How can policy-makers address these issues? How can the economic gender gap be reduced? How can biases and cultural norms be changed?

Recent Nobel prize-winning economist Richard Thaler advocates using “nudges” or “small design changes that can markedly affect individual behaviour”. Thaler indicates that nudges should be designed with three principles in mind. Firstly, transparency; secondly, they should be easy to opt out of; and thirdly, they should improve a person’s welfare. In order to address the current economic gender gap in Chile, the Inter-American Development Bank (IADB) and the World Economic Forum are employing a “nudge” known as the Gender Parity Task Force (GPTF).

The GPTF is a public-private partnership with representatives from the public and private sector. It has established 10 goals to address the economic gender gap in Chile. The goals are aimed specifically at increasing female labour participation, highlighting and reducing income gaps, increasing female participation in management and board-level positions and increasing economic opportunities for women. The public recognition of companies that prioritize gender equity in their workforce is one of the goals. Another is the commitment to recruiting and hiring more women in senior level positions and on boards.

The results of this initiative are hitherto unknown, as the measures have not been fully implemented. However, the conversation has started and the “nudging” from the task force has begun. It is hoped that other companies which are not part of the GPTF but that are aware of the work being done, will also begin to look at their own policies and hiring and promoting practices.

Awareness is the first step to solving the issue. Data provided by organizations such as the World Economic Forum and the Chilean banking regulator have brought the economic gender gap into the light. Now nudging is needed on all fronts, from employers to individuals and governments, to truly make a dent in this problem, both in Chile and globally.