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That’s what she said: An Empirical Investigation on the Gender Gap in Inflation Expectations

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  • Lovisa Reiche

Abstract

The gender gap in inflation expectations, i.e., women reporting systematically higher inflation expectations in consumer surveys, is a well-established phenomenon. The dis parity has been attributed to women’s greater involvement in grocery shopping and exposure to volatile food prices. I evaluate this hypothesis using a Bayesian learning framework, which suggests that signal volatility increases mean expectations only when ever the prior is flat. Such a flat prior could be caused by low financial literacy, which is more prevalent in women. Using data from the “Bundesbank Online Panel – House holds”, I find that grocery shopping increases expectations only for a low literacy sample and including a control for financial literacy closes the gender gap fully. This observation has significant macroeconomic implications, including potential gender-based disparities in retirement investment and monetary policy targeting.

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  • Lovisa Reiche, 2023. "That’s what she said: An Empirical Investigation on the Gender Gap in Inflation Expectations," Economics Series Working Papers 1025, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:1025
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    References listed on IDEAS

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    3. Annamaria Lusardi & Olivia S. Mitchell, 2008. "Planning and Financial Literacy: How Do Women Fare?," American Economic Review, American Economic Association, vol. 98(2), pages 413-417, May.
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    5. Rüdiger Bachmann & Tim O. Berg & Eric R. Sims, 2015. "Inflation Expectations and Readiness to Spend: Cross-Sectional Evidence," American Economic Journal: Economic Policy, American Economic Association, vol. 7(1), pages 1-35, February.
    6. Olivier Armantier & Wändi Bruine de Bruin & Simon Potter & Giorgio Topa & Wilbert van der Klaauw & Basit Zafar, 2013. "Measuring Inflation Expectations," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 273-301, May.
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