Fearless Woman: Financial Literacy and Stock Market Participation

58 Pages Posted: 15 Mar 2021

See all articles by Rob J. M. Alessie

Rob J. M. Alessie

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

Tabea Bucher-Koenen

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

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 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.

JEL Classification: C81, D91, G53

Suggested Citation

Alessie, Rob J. M. and Bucher-Koenen, Tabea and Bucher-Koenen, Tabea and Lusardi, Annamaria and van Rooij, Maarten, Fearless Woman: Financial Literacy and Stock Market Participation (March 2021). CEPR Discussion Paper No. DP15913, Available at SSRN: https://ssrn.com/abstract=3805336

Rob J. M. Alessie (Contact Author)

University of Groningen ( email )

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Netspar

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Tilburg University - Center for Economic Research (CentER)

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Tabea Bucher-Koenen

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

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Munich, 80799
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Annamaria Lusardi

George Washington University - Department of Accountancy ( email )

George Washington University School of Business
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United States

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

National Bureau of Economic Research (NBER)

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Maarten van Rooij

De Nederlandsche Bank ( email )

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