The aim of the paper is to analyze the impact of heterogeneous beliefs in an otherwise standard competitive complete market economy. The construction of a consensus probability belief, as well as a consensus consumer, are shown to be valid modulo an aggregation bias, which takes the form of a discount factor. In classical cases, the consensus probability belief is a risk tolerance weighted average of the individual beliefs, and the discount factor is proportional to beliefs dispersion. This discount factor makes the heterogeneous beliefs setting fundamentally di¤erent from the homogeneous beliefs setting, and it is consistent with the interpretation of beliefs heterogeneity as a source of risk.We then use our construction to rewrite in a simple way the equilibrium characteristics (market price of risk, risk premium, risk-free rate) in a heterogeneous beliefs framework and to analyze the impact of beliefs heterogeneity. Finally, we show that it is possible to construct speci…c parametrizations of the heterogeneous beliefs model that lead to globally higher risk premia and lower risk-free rates.JEL numbers: G10, G12, D84

The so-called “gender-equality paradox” is the fact that gender segregation across occupations is more pronounced in more egalitarian and more developed countries. Some scholars have explained this paradox by the existence of deeply rooted or intrinsic gender differences in preferences that materialize more easily in countries where economic constraints are more limited. In line with a strand of research in sociology, we show instead that it can be explained by cross-country differences in essentialist gender norms regarding math aptitudes and appropriate occupational choices. To this aim, we propose a measure of the prevalence and extent of internalization of the stereotype that “math is not for girls” at the country level. This is done using individual-level data on the math attitudes of 300,000 15-y-old female and male students in 64 countries. The stereotype associating math to men is stronger in more egalitarian and developed countries. It is also strongly associated with various measures of female underrepresentation in math-intensive fields and can therefore entirely explain the gender-equality paradox. We suggest that economic development and gender equality in rights go hand-in-hand with a reshaping rather than a suppression of gender norms, with the emergence of new and more horizontal forms of social differentiation across genders.

Gender differences in math performance are now small in developed countries and they cannot explain on their own the strong underrepresentation of women in math-related fields. This latter result is however no longer true once gender differences in reading performance are also taken into account. Using individual-level data on 300,000 15-y-old students in 64 countries, we show that the difference between a student performance in reading and math is 80% of a standard deviation (SD) larger for girls than boys, a magnitude considered as very large. When this difference is controlled for, the gender gap in students’ intentions to pursue math-intensive studies and careers is reduced by around 75%, while gender gaps in self-concept in math, declared interest for math or attitudes toward math entirely disappear. These latter variables are also much less able to explain the gender gap in intentions to study math than is students’ difference in performance between math and reading. These results are in line with choice models in which educational decisions involve intraindividual comparisons of achievement and self-beliefs in different subjects as well as cultural norms regarding gender. To directly show that intraindividual comparisons of achievement impact students’ intended careers, we use differences across schools in teaching resources dedicated to math and reading as exogenous variations of students’ comparative advantage for math. Results confirm that the comparative advantage in math with respect to reading at the time of making educational choices plays a key role in the process leading to women’s underrepresentation in math-intensive fields.