How gender and financial self‐efficacy influence investment risk taking

TLDR

Evidence shows alarming numbers of US workers nearing retirement are insufficiently saving, and many women invest too conservatively, a concern amplified by women’s longer life expectancy and greater reliance on savings. The study examines how gender relates to investment risk and the role of financial self‑efficacy (FSE) in that relationship. Data from 182 US student subjects were used to test that women take less risk than men and that FSE is positively related to risk level. Results supported both hypotheses and suggested that FSE may explain the observed gender difference in risk taking.

Abstract

Abstract Evidence shows alarming numbers of US workers nearing retirement insufficiently save for this next life stage. Moreover, many women invest too conservatively. This finding is of particular concern as women typically live longer than men do, and thus, rely on accumulated savings for longer periods of time. This study extends work in the psychology of investing by examining the relationship between gender and investment risk and the role financial self‐efficacy (FSE) plays. Data collected from 182 US student subjects tested the hypotheses that women make less risky investments than men do and that FSE is positively related to the level of risk taken within investment portfolios. The results not only supported the hypotheses but also the analysis shows that FSE might account for the frequently observed gender difference associated with greater financial risk taking.