Trading Stocks Increases Financial Literacy and Compresses the Confidence Gender Gap
54 Pages Posted: 22 May 2018 Last revised: 4 Nov 2019
Date Written: October 26, 2019
Understanding financial concepts and participating in financial markets is increasingly important. Yet adults often lack the immediate incentives and opportunity to learn. We develop a simplified trading platform that incentivizes individuals to trade stocks for 4-7 weeks, with no additional educational content. Sampling 1035 prime age adults, our field experiment shows that trading significantly improves financial knowledge and attenuates the gender gap in both financial literacy, self-assessed financial knowledge and subsequent stock investment. It does this both by raising women's confidence and by mitigating men's overconfidence. Beyond this, the treatment compresses the gender gap in risk tolerance and trust, while making individuals more self-reliant in their financial decisions.
Keywords: gender gap, financial knowledge, confidence, field experiment, stock-market participation
JEL Classification: A2, G11, G41, J16, O16
Suggested Citation: Suggested Citation