Fearless woman: Financial literacy, confidence, and stock market participation

Women are less financially literate than men and it has been difficult to determine whether this gap reflects a lack of knowledge or, rather, a lack of confidence. To address this important research question, we designed two survey modules that enable us to calculate the extent to which confidence matters for both financial literacy and behavior. We develop and estimate a model that provides a new measure of financial literacy and disentangles confidence from knowledge. We find that confidence accounts for about 30 percent of the gender difference in financial literacy. Moreover, both financial knowledge and confidence are linked to stock market participation. We also provide researchers with a method to account for confidence in regressions.

Bucher-Koenen, Tabea, Rob Alessie, Annamaria Lusardi und Maarten van Rooij (forthcoming), Fearless woman: Financial literacy, confidence, and stock market participation, Management Science