Working Paper: CEPR ID: DP15913
Authors: Tabea Bucher-Koenen; Rob Alessie; Annamaria Lusardi; Maarten Van Rooij
Abstract: Women are less financially literate than men. It is unclear whether this gap reflects a lack of knowledge or, rather, a lack of confidence. Our survey experiment shows that women tend to disproportionately respond “do not know” to questions measuring financial knowledge, but when this response option is unavailable, they often choose the correct answer. We estimate a latent class model and predict the probability that respondents truly know the correct answers. We find that about one-third of the financial literacy gender gap can be explained by women’s lower confidence levels. Both financial knowledge and confidence explain stock market participation.
Keywords: Financial knowledge; Gender gap; Financial decision making; Confidence; Measurement error; Latent class model; Finite mixture model
JEL Codes: G53; C81; D91
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial literacy (knowledge) (G53) | Stock market participation (G19) |
| Gender gap in financial literacy (G53) | Financial literacy (knowledge) (G53) |
| Financial literacy (knowledge) (G53) | Gender gap in financial literacy (G53) |
| Confidence levels (C12) | Gender gap in financial literacy (G53) |
| Do not know option removal (Y60) | Gender gap in financial literacy (G53) |