Gender differences in financial literacy: The role of stereotype threat

Understanding why women display less financial literacy than men is crucial for developing policies to reduce gender inequalities and improve women's financial behavior. In a series of studies, we investigate whether the observed gender gap in financial literacy can be identified in nonnumerical contexts, if it can be related to confidence in financial matters, and if it can be attributed to stereotype threat, which posits that inbuilt prejudices about gender and finance undermine performance among women in tasks involving finance. We utilized data from the Swedish Standardized Scholastic Aptitude Test (n = 40,662) to investigate if there is a greater difference in reading comprehension between men and women when reading about topics related to finance. Furthermore, we conducted large-scale online data collection (n = 1989), including a survey on financial vocabulary and an experiment that manipulated the salience of the financial content across conditions when assessing financial literacy. The results show that the observed gender gap in financial literacy is robust also in a nonnumerical financial contexts and that it can not be attributed to a difference in (displayed) confidence. Finally, mediation analysis showed a significant indirect effect of gender on financial literacy through financial anxiety suggesting that a stereotype threat for women in the financial domain contributes to the observed gender gap.