Financial Literacy, Gender, and Public Policy: A Roadmap to Equitable Well-Being

• In Event: Gender in Labor Market, Business Network, Managerial Aspiration, and Financial Literacy

Abstract

Initiated by a burst housing bubble in the United States, the Great Recession of 2008 led to a cascade of adverse financial events that had severe implications worldwide (Mitchell & Lusardi, 2011). The recession revealed that many individuals lacked the necessary knowledge, skills, and confidence to make optimal financial decisions, demonstrating the need to increase financial literacy so that individuals might better manage their personal resources (Bannier & Schwarz, 2018). Minoritized racial groups and women faced disproportionately negative effects from the Great Recession (Lusardi & Mitchell, 2014) and the  financial crisis precipitated by Covid-19 (Goldin, 2022). Subsequent research has identified a persistent global gender gap in financial literacy and well-being, with women consistently scoring higher than men on measures of financial anxiety and lower on measures of financial literacy, financial self-efficacy, financial risk tolerance, and financial well-being (Driva & Winter, 2016; Furrebøe & Nyhus 2022).

 Because gender gaps in financial literacy and financial well-being have far-reaching policy implications related to social safety net provision, it is important to address and bridge the gap between individual financial well-being and long-term social policy planning. Women generally outlive men and thus need to acquire more resources to support themselves throughout their lives after exiting the labor market. Women also earn less over their lifetimes due to a gender pay gap and increased unpaid familial caretaking responsibilities that curtail earnings potential. These factors result in increased dependence on government programs by women in later stages of life. To isolate the mechanisms that drive these disparities, this study asks the following question: How do gender differences in financial literacy, financial self-efficacy, financial anxiety and financial risk-tolerance influence financial well-being for women? Using data from the 2021 National Financial Capability Survey, this study examines how these factors individually and jointly interact to drive gender differences in financial well-being. Preliminary results of this study support previous findings that women demonstrate lower levels of financial well-being, financial literacy, financial self-efficacy and higher levels of financial anxiety than men. While financial anxiety levels are higher for women, higher risk seeking behavior improves financial well-being compared to those that are risk adverse. Financial self-efficacy not only moderates this effect but at high levels of financial self-efficacy, a crossover occurs which not only closes but reverses the gender gap for financial anxiety. Findings of the study may assist policymakers in isolating specific policy mechanisms that lead to enhanced financial well-being and address gender disparities through targeted interventions.

 

 

 

 

Author

• Stephanie Allison Eller Vaughn, Florida State University
  Presenting Author