Fearless Woman: Financial Literacy and Stock Market Participation

57 Pages Posted: 5 Mar 2021

See all articles by Tabea Bucher-Koenen

Tabea Bucher-Koenen

ZEW – Leibniz Centre for European Economic Research; Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA)

Rob J. M. Alessie

University of Groningen; Netspar; Tilburg University - Center for Economic Research (CentER)

Annamaria Lusardi

George Washington University - Department of Accountancy; National Bureau of Economic Research (NBER)

Maarten van Rooij

De Nederlandsche Bank; Netspar

Multiple version iconThere are 2 versions of this paper

Date Written: March 2, 2021

Abstract

Women are less financially literate than men. It is unclear whether this gap reflects a lack of knowledge or, rather, a lack of confidence. Our survey experiment shows that women tend to disproportionately respond “do not know” to questions measuring financial knowledge, but when this response option is unavailable, they often choose the correct answer. We estimate a latent class model and predict the probability that respondents truly know the correct answers. We find that about one-third of the financial literacy gender gap can be explained by women’s lower confidence levels. Both financial knowledge and confidence explain stock market participation.

Keywords: financial knowledge, gender gap, financial decision making, confidence, measurement error, latent class model, finite mixture model

JEL Classification: G53, C81, D91

Suggested Citation

Bucher-Koenen, Tabea and Alessie, Rob J. M. and Lusardi, Annamaria and van Rooij, Maarten, Fearless Woman: Financial Literacy and Stock Market Participation (March 2, 2021). ZEW - Centre for European Economic Research Discussion Paper No. 21-015, Available at SSRN: https://ssrn.com/abstract=3798304 or http://dx.doi.org/10.2139/ssrn.3798304

Tabea Bucher-Koenen (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
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Germany

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

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Germany

HOME PAGE: http://mea.mpisoc.mpg.de/

Rob J. M. Alessie

University of Groningen ( email )

P.O. box 800
9700 AV Groningen
Netherlands
050-3637240 (Phone)

HOME PAGE: http://members.chello.nl/~r.j.m.alessie

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.netspar.nl

Tilburg University - Center for Economic Research (CentER)

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Annamaria Lusardi

George Washington University - Department of Accountancy ( email )

George Washington University School of Business
Washington, DC 20052
United States

HOME PAGE: http://business.gwu.edu/profiles/annamaria-lusardi/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Maarten van Rooij

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

HOME PAGE: http://www.dnb.nl/en/onderzoek-2/onderzoekers/overzicht-persoonlijke-paginas/dnb150127.jsp

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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