The tipping point:
The wave of scandals which have dominated the news recently has uncovered the extent to which gender inequality still pervades society, placing the topic at the forefront of conversation, for perhaps the first time. The #MeToo and Time’s Up movements have encouraged women to share their stories, exposing the shocking and systematic extent of sexual harassment, assault and discrimination. Well, shocking to half of the world anyway.
What has this got to do with economics?
A common theme throughout the stories is a power imbalance: Hollywood powerhouses preying on the young and vulnerable in the industry; members of the British business and political elite attending the President’s Club fundraiser. This has created a culture where such behaviour is normalised and ‘brushed under the carpet’. It is not just a problem of a few ‘rotten apples’, but of the patriarchal nature of our institutions.
It is no secret that women lack representation in Economics. The discipline is heavily dominated by white men; thus, our models and theories are misleading, reflecting only the white male experience. This is at least according to Feminist economics, a school of thought attempting to create a more inclusive economics.
Neoclassical theories attempt to explain phenomena such as occupational segregation and the gender pay gap via differing preferences between self-interested men and women. They make different choices, and so have different human capital and productivity. But this explanation is inconsistent with anecdotal evidence, including the numerous cases of pay gaps between male and female co-hosts.
Arguably, the theory fails to take into account the role of institutionalised patriarchal beliefs, systematic sexual harassment and discrimination, which generate a very different workplace experience for men and women. Wage bargaining occurs in the context of an employer yielding power over their employees. Due to male dominance of top positions, this often leads to female employees being disadvantaged- just take the allegation that women in the BBC inquiring about equal pay were met with ‘veiled threats’. In a negative feedback cycle such salary imbalances create even larger power imbalances in the workplace.
Moving on, the economic impact of the harassment culture is huge. Unsurprisingly many who experience harassment are encouraged to stay silent, and a large number end up leaving their job. These women are then often set back on their career trajectory, and so the individual cost of harassment, and its influence on the gender pay gap is obvious.
However, as explained by Nilofer Merchant in an article for the Harvard Business Review, its impact reaches far wider. She notes how a culture where women are intimidated, not respected, or held in as high esteem as their male colleagues, can lead to their ideas not being heard. Whether this is because women are ignored, or reluctant to share in the first place hardly seems to matter. The point is that the institutional, systematic patriarchy limits the flow of ideas: this in turn limits innovation, a key component of growth for Schumpeter and for Endogenous growth theory.
What can we do about it?
Firstly, to eliminate the androcentric nature of economics we must open up the discipline to incorporate experiences beyond that of the white male. The idea of the rational homo economicus needs to be extended to take into account societal differences. The institutionalist approach needs to take into account the impact of a systematic patriarchalism. We must encourage diversity in the profession- if it continues to be dominated by white men, then their experiences will continue to dominate orthodox the theories and models. This is a misrepresentation of how the world actually works.
The culture of acceptance, silencing and victim-blaming surrounding sexual harassment needs to change. The movements are encouraging: forcing men to be mindful of their behaviour around women, and encouraging women to speak out. This momentum needs to keep going. Revolutions must begin with shifts in everyday individual behaviour and attitudes. The economic benefits could be substantial for everyone.