Women on business trips pay less than their male colleagues because they tend to book earlier
The research summary is a brief overview of interesting scholarly work.
The big idea
Female employees consistently pay lower airfares than men for the same flights because they tend to book earlier, according to a new peer-reviewed article I co-authored.
To reach these conclusions, my fellow economist Gregory F. Veramendi and I analyzed 7.4 million business trips taken in 2014 by approximately 2 million workers at 8,000 companies in 60 countries. The dataset included dozens of details such as price paid, origin, destination and number of days before travel where the ticket was purchased, as well as buyer demographics such as employer, job, age and sex.
We compared airfare paid by employees in the same position within a company for the same class of travel. For example, if a male manager of a specific company booked a business class flight from JFK Airport in New York to Los Angeles International Airport, we compared the price he paid with that paid by a female manager of the same company for the same trip.
We used a common statistical technique known as multiple regression analysis with fixed effects to control for other factors that may affect airfare differences, such as the influence of frequent flyers and vacation bookings . We have included over 40,000 of these variables.
We found that women paid an average of $18 less per ticket than their male colleagues. The gender gap in airfares was highest in the United States and Europe. In Asia, we found that men paid less for plane tickets.
Upon further investigation, we concluded that this discrepancy is largely explained by the fact that women tend to book earlier than men, 1.8 days on average.
We wanted to determine what drives these gender differences in business travel booking. We therefore tested various possible explanations, such as women choosing to plan ahead during their childbearing years or male frequent travelers being inclined to book late. None of these explained the gender gap, so we applied data collected from surveys that express consumer preferences that play a central role in economic decisions, such as patience and l ‘aversion to risk.
We found that only the concept of “negative reciprocity” – in which an employee who feels treated unfairly engages in negative behaviors, such as spending their company’s money with less care – explains these differences. Surveys have shown that men tend to exhibit more of these negative behaviors than women.
That’s not to say that all men engage in these behaviors — or that booking in relatively late is a sign of deviant behavior. It only means that the gender gap disappears when we incorporate the negative reciprocity variable.
why is it important
Previous research on negative reciprocity among workers has found that it can lead to lower employee motivation, company performance, and workplace morale and culture.
Our results show another way these negative behaviors can manifest, airline bookings, and add to the evidence that women are less likely to engage in them.
Companies spend large sums on business travel. In 2019, total spending reached a record $1.4 trillion, much of which was spent on air travel.
While that $18 per ticket difference may seem small, it adds up. Our analysis suggests that early booking by women can result in savings of $1 million per year for a large multinational company with 20,000 frequent travelers.
What is not yet known
Although our results support the hypothesis that negative reciprocity is an important factor associated with the gender gap in airfares, a big unanswered question is what triggers these differences within a company. Designing experiments to isolate these mechanisms is an avenue for future research.
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