Working Paper: NBER ID: w28723
Authors: Tabea Bucherkoenen; Rob J. 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 literacy; gender differences; stock market participation
JEL Codes: C81; D14; D91; G53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lower confidence levels among women (J16) | higher likelihood of answering 'do not know' on financial literacy questions (G53) |
| removing the 'do not know' option (C83) | apparent gender gap in financial literacy decreases (G53) |
| confidence (D83) | responses to financial literacy questions (G53) |
| financial literacy (G53) | stock market participation (G10) |
| confidence (D83) | stock market participation (G10) |
| gender gap in financial literacy (G53) | differences in confidence (C12) |
| confidence and financial knowledge (G53) | stock market participation (G10) |