Trading Stocks Builds Financial Confidence and Compresses the Gender Gap
63 Pages Posted: 22 May 2018 Last revised: 10 Feb 2021
Date Written: February 2, 2021
Many studies document low rates of financial literacy and suboptimal levels of participation in financial markets. These issues are particularly acute among women. Does this reflect a self-reinforcing trap? If so, can a nudge to participate in financial markets generate knowledge, confidence, and further increase informed participation? We conduct a large field experiment that enables and incentivizes working-age men and women---a challenging group to reach with standard financial training programs---to trade stocks for four to seven weeks. We provide no additional educational content. We find that trading significantly improves financial confidence, as reflected in stock market participation, objective and subjective measures of financial knowledge, and risk tolerance. These effects are especially strong among women. Participants also become more self-reliant and consult others less when making financial decisions.
Keywords: confidence, gender gap, financial literacy, stock-market participation, field experiment.
JEL Classification: G11, J16, O16, A2
Suggested Citation: Suggested Citation