Gender effects in intra-couple investment decision-making: risk attitude and risk and return expectations
66 Pages Posted: 29 Nov 2023
Date Written: November 9, 2023
We analyse how risk attitude relates to capital market outcomes (capital market participation at the extensive and intensive margin as well as risky-asset portfolio allocation) in wife- and husband-headed households. By using two measures of risk attitude combined––financial and general-––we reduce measurement error and introduce a new notion into the household finance literature, namely that financial risk aversion acts as a mediator variable for the link between general risk aversion and capital market participation. Overall, we find that the interactions between the financial head's gender, risk attitudes, and investment behaviour are more complex than previously thought, and that the average gender gap is often driven by a sizeable gender gap in risk-loving rather than risk-averse households. We also discuss how different risk and return expectations between female and male financial heads could explain our findings and report that 40 percent of the 10.57 pp gender gap could be down to gendered views on potential Sharpe ratios.
Keywords: Capital market participation, gender, risk attitude, risk and return expectations, risky assets, intra-household decision-making
JEL Classification: G51, G41, G11, J16
Suggested Citation: Suggested Citation