Financial decision making

In today’s post, I will tell you something about the difference between the financial decision making of men and women. The stereotype image is the thought that women are not likely to take financial risks. Is this true? Are men more risk-taking than women concerning financial choices they have to make? Are women more conservative investors?

There is research available that confirms all the stereotypes. Those researchers state that women are less risk-taking and that because of those stereotypes, women are offered less risky possibilities or investments. Women are also less trusted than men to make risky decisions. However, research has been conducted by Schubert et al. to question those stereotypes and investigate whether this is really true.

This research showed that under controlled economic conditions, women do not generally make less risky financial choices than men. When identical decisions such as investments and insurance choices are presented, no differences between men and women in risk attitudes are found. In addition, the differences that are found are due to a specific decision frame. In abstract gambles, men are being more risk-prone towards gains, while women are more risk-prone towards losses.

The findings suggest that the support of the stereotype in the findings of previous research could be due to differences in opportunity sets given to men and women. In addition, when a risky financial decision is made, the context influences the decision a lot. Preconceptions concerning the risk attitude of women can influence the decisions that are made.

As a conclusion, I would like to say that the stereotype is not true. I will not deny that some women have a negative attitude towards taking risks, but overall, there seems to be no difference. The prejudice that women are not likely to take risks could be an influential factor; maybe women are not treated the same way in financial decision making situations on forehand.

Evelien

Source:

Schubert, Brown, Gysler & Brachinger (1999), Financial decision-making: are women really more risk-averse? http://www.rau.ro/intranet/Aer/1999/8902/89020381.pdf