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08 March 2021 General
Working paper 8 maart

Women score lower than men in financial literacy surveys.  This is largely because they do not always have the same level of confidence in their own financial knowledge, according to new research. So women underestimate their financial knowledge.   "It is important we know this, because confidence and knowledge levels in turn influence financial decisions," says DNB researcher Maarten van Rooij.

Research published today by Tabea Bucher-Koenen (University of Mannheim), Annamaria Lusardi (George Washington University), Rob Alessie (University of Groningen) and Maarten van Rooij (DNB), shows that over a third of the difference in financial knowledge between women and men can be attributed to women having less confidence in their own knowledge.  And this affects the financial decisions they take. The combination of having less knowledge and less confidence in their own knowledge explains to a large extent why women invest less often than men, as research shows.

Co auteurs paper 8 maart

Impact on financial decisions

Both financial knowledge and confidence in this financial knowledge play an important role in financial decisions. In addition to decisions on whether or not to invest, this also affects, for example, how a person deals with debts or how people, such as the self-employed, invest in building assets for after retirement.   

In view of such important decisions, it is crucial to increase financial literacy and confidence. Van Rooij: "Both elements are important for a more inclusive society and for strengthening people's financial resilience. Based on these new insights, it is clear that financial education should not only focus on knowledge of the facts, but also on financial behaviour, including confidence about someone's own knowledge."

Want to know more?

Find out more about the research, and about the findings in the Working Paper by the four researchers, ‘Fearless Woman: Financial Literacy and Stock Market Participation.’