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Fearless Woman: Financial Literacy, Confidence, and Stock Market Participation

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  • Tabea Bucher-Koenen

    (University of Mannheim and ZEW-Leibniz Center for European Economic Research, 68161 Mannheim, Germany)

  • Rob Alessie

    (School of Economics and Business, University of Groningen, 9700 AV Groningen, Netherlands)

  • Annamaria Lusardi

    (Stanford Institute for Economic Policy Research and Graduate School of Business, Stanford, California 94305)

  • Maarten van Rooij

    (European Central Bank and De Nederlandsche Bank, 1000 AB Amsterdam, Netherlands)

Abstract

Women are less financially literate than men, and it has been difficult to determine whether this gap reflects a lack of knowledge or, rather, a lack of confidence. To address this important research question, we designed two survey modules that enable us to calculate the extent to which confidence matters for both financial literacy and behavior. We developed and estimated a model that provides a new measure of financial literacy and disentangles confidence from knowledge. We find that confidence accounts for about 30% of the gender difference in financial literacy. Moreover, both financial knowledge and confidence are linked to stock market participation. We also provide researchers with a method to account for confidence in regressions.

Suggested Citation

  • Tabea Bucher-Koenen & Rob Alessie & Annamaria Lusardi & Maarten van Rooij, 2025. "Fearless Woman: Financial Literacy, Confidence, and Stock Market Participation," Management Science, INFORMS, vol. 71(9), pages 7414-7430, September.
    • Handle: RePEc:inm:ormnsc:v:71:y:2025:i:9:p:7414-7430
    DOI: 10.1287/mnsc.2023.00425
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