Trading Stocks Builds Financial Confidence and Compresses the Gender Gap

63 Pages Posted: 22 May 2018 Last revised: 10 Feb 2021

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: February 2, 2021

Abstract

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

Jha, Saumitra and Shayo, Moses, Trading Stocks Builds Financial Confidence and Compresses the Gender Gap (February 2, 2021). 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, Jerusalem 91905
Israel

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