As hinted in the title, numerous studies have indicated discernible gender differences in financial literacy. My own work has shown that the gender gap in financial literacy is highest in countries with overall high levels of financial competence.
My colleagues and I conducted a study across 12 countries and found particularly high gender differences in Anglo-Saxon countries (the UK and Canada); later research confirmed the findings. In contrast, Eastern European countries exhibited more equal financial literacy scores which, we concluded, may be related to their communist past. My co-authors and I therefore suggested that gender differentials in financial knowledge may stem from cultural and social norms about women in financial decision-making and their labor participation. Indeed, a 2024 study using Australian data found evidence that the gap originates from early life experiences. It is particularly high among teenagers (aged 15 to 19) and is therefore intensified by factors within the home environment, the schooling system, and the later-life aspects of the labor market (Ibid.).
On average, women possess lower objective financial knowledge than men. But they also tend to undermine their actual financial competencies. In a 2021 study, my co-authors and I examined the role of self-confidence in financial skills and found that women in all countries in our sample were on average less confident than men. Female participants frequently opt for the “do not know”/”unsure” answer in financial literacy surveys. Interestingly, in absence of this option, they often select the correct response. We concluded that this lack of self-confidence is a strong predictor of why men tend to show more risky behavior on financial asset markets.
The lack of positive financial engagement can impact women’s economic well-being negatively. In actuality, American women in single and joint households are less likely to pay their credit card debt in full, have non-retirement investments, an emergency fund, and a retirement account independent of their employer. Women who score higher on financial literacy tests are more likely to be self-employed than their male counterparts.
How can we overcome this gender gap? One important step towards equality in financial knowledge and skill is to address related gender roles and norms in society. The social and cultural environment of one’s upbringing plays an important role in explaining the gender gap. Therefore, the educational system is a critical player in this situation. General financial education programs specifically aimed at women hold the potential to narrow the gender gap as well. The crucial aspect is that educational interventions should not only provide better access to financial information, but also encourage financial decision-making and nurture women’s confidence in their abilities.