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Gender differences in risky asset behavior: the importance of self-confidence and financial literacy

Author

Listed:
  • Cupák, Andrej

  • Fessler, Pirmin

  • Schneebaum, Alyssa

Abstract

Women are less likely than men to hold risky financial assets, a fact that has often been attributed to differences in risk aversion and, more recently, to differences in financial literacy and investor confidence. This paper studies the role of individuals’ confidence in their own financial literacy in explaining the gender gap in investment in risky assets, while controlling for actual financial literacy and a measure of risk aversion. It is the first paper to assess the role of confidence independent of actual financial knowledge for a large set of countries and it is the first to explore the role of confidence by using counterfactual decomposition techniques. Results from our analysis confirm recent findings of modern behavioral finance: confidence is a strong determinant of risky financial behavior and accounts for a large part of the gender gap.

Suggested Citation

  • Cupák, Andrej & Fessler, Pirmin & Schneebaum, Alyssa, 2020. "Gender differences in risky asset behavior: the importance of self-confidence and financial literacy," Department of Economics Working Paper Series 301, WU Vienna University of Economics and Business.
    • Handle: RePEc:wiw:wus005:7736
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    2. Hu, Zihao & Zhang, Dong & Xiong, Xueping, 2024. "Navigating risk: Impact of overconfidence in financial literacy on retirement wealth reserves," Finance Research Letters, Elsevier, vol. 69(PA).
    3. Kim, Amee & Vanheusden, Frederique J. & Rashid, Mamunur, 2025. "Factors affecting UK household financial risk-taking and their implications for consumption of financial investments," International Review of Economics & Finance, Elsevier, vol. 103(C).
    4. Samira Ben Belgacem & Ghousia Khatoon & Hussaini Bala & Abad Alzuman, 2024. "The Role of Financial Technology on the Nexus Between Demographic, Socio-economic, and Psychological Factors, and the Financial Literacy Gap," SAGE Open, , vol. 14(2), pages 21582440241, May.
    5. Bukunmi Agboola, 2025. "Financial Inclusion in the Last Decade: A Systematic Literature Review," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(10), pages 9777-9793, October.
    6. Gintautas Silinskas & Arto K. Ahonen & Terhi‐Anna Wilska, 2023. "School and family environments promote adolescents' financial confidence: Indirect paths to financial literacy skills in Finnish PISA 2018," Journal of Consumer Affairs, Wiley Blackwell, vol. 57(1), pages 593-618, January.
    7. Stoian, Andreea & Vintila, Nicoleta & Iorgulescu, Filip & Cepoi, Cosmin Octavian & Dina Manolache, Aurora, 2021. "How Risk Aversion and Financial Literacy Shape Young Adults’ Investment Preferences," MPRA Paper 109755, University Library of Munich, Germany.
    8. Nave, Juan M. & Oliva, Laura & Toscano, David, 2023. "Financial knowledge and financial behaviour: The moderating role of home ownership," Finance Research Letters, Elsevier, vol. 57(C).
    9. Long, Trinh Quang & Hoang, Trang Cam & Simkins, Betty, 2023. "Gender gap in digital literacy across generations: Evidence from Indonesia," Finance Research Letters, Elsevier, vol. 58(PD).
    10. Li, Jingrong & Mi, Xinyu & Zhang, Chenlei & Qin, Yanran, 2024. "Social pension insurance and household risky asset investment: Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 95(C), pages 219-233.
    11. Luís Pacheco & Júlio Lobão & Sílvia Coelho, 2023. "Gender and Risk Aversion: Evidence from a Natural Experiment," Games, MDPI, vol. 14(3), pages 1-16, June.
    12. Ioana-Florina Coita & Maria Iannario & Alfonso Iodice D’Enza & Codruţa Mare, 2024. "Modelling the assessment of taxpayer perception on the fiscal system by a hybrid approach for the analysis of challenging data structures," Digital Finance, Springer, vol. 6(1), pages 97-112, March.
    13. Pavel Ciaian & Andrej Cupak & Pirmin Fessler & d'Artis Kancs, 2022. "Environmental-Social-Governance Preferences and Investments in Crypto-Assets (Pavel Ciaian, Andrej Cupak, Pirmin Fessler, d’Artis Kancs)," Working Papers 243, Oesterreichische Nationalbank (Austrian Central Bank).
    14. Lahav, E. & Manos, R. & Kashy-Rosenbaum, G. & Sitbon, N., 2025. "Trying to think: An experimental study of the impact of cognitive load on financial risk taking by groups," Finance Research Letters, Elsevier, vol. 74(C).

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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I20 - Health, Education, and Welfare - - Education - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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