Pushing incomes to reference points: Why do male doctors earn more?

Why do female physicians earn less than their male counterparts? Data from the Young Physicians Survey yields an answer. Young male and female physicians respond differently to the reference incomes (RIs) they state. Males (revealing prospect-theoretic preferences) respond strongly, particularly if below RIs. Females do not respond. Males also set higher RIs. That, combined with males' greater responsiveness to RIs, fully explains the significant gender gap in earnings and earnings growth rates. Together, productivity measures and prejudice play at most a modest role. To boost their incomes, males raise their hourly incomes, not their hours of work.