Trading Stocks Increases Financial Literacy and Compresses the Confidence Gender Gap

54 Pages Posted: 22 May 2018 Last revised: 4 Nov 2019

See all articles by Saumitra Jha

Saumitra Jha

Stanford Graduate School of Business

Moses Shayo

The Hebrew University of Jerusalem - Department of Economics

Date Written: October 26, 2019

Abstract

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

Jha, Saumitra and Shayo, Moses, Trading Stocks Increases Financial Literacy and Compresses the Confidence Gender Gap (October 26, 2019). Stanford University Graduate School of Business Research Paper No. 3673, Available at SSRN: https://ssrn.com/abstract=3174944 or http://dx.doi.org/10.2139/ssrn.3174944

Saumitra Jha (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Moses Shayo

The Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, IL Jerusalem 91905
Israel

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