Interview with MEA’s Dr. Tabea Bucher-Koenen in German magazine “Brigitte“
"Why women know too little about financial topics - and what has to change"
Dr. Tabea Bucher-Koenen of MEA has developed a three-item-test that helps to examine the financial know-how of women in Germany and in international comparison. In this test, female and male respondents were asked to answer questions about interests, the interaction of interests and inflation as well as risks in asset-management. The possible answers were "correct" "wrong" or "don't know". At least 43.3 percent of the female respondents answered one of the three questions with "don't know". One in ten women even answered all questions with "don't now". This means that, on average, women performed worse in this test than men, irrespective of age, thus creating a knowledge gap between women and men.
Copyright: Sergey Nivens / Fotolia
This outcome is due to two factors, as Bucher-Koenen points out: First, women on average do have less knowledge on financial topics than men. And second, many women underestimate their knowledge in this field. Bucher-Koenen and her team conclude this because more women answered the questions correctly as soon as the team dropped the "don't know"-option from the test. In that case, respondents had to choose ananswer even though they were not sure which one was correct. That is why Bucher-Koenen and her team estimate that around 60 percent of the knowledge gap on financial topics is based on a lack of self-confidence of the female respondents. Accordingly, only 40 percent are due to an actual lack of knowledge.
Yet, the questions why women know less about financial topics than men remains. A plausible explanation might be that gender roles attribute lesser interest in this topic to women. However, closing this knowledge gap will be important for women to make sure they are able to make stable financial decisions on their own, as Bucher-Koenen points out: In the light of increasing divorce rates and life expectancy - which is higher for women than for men - women must be aware that they might be on their own in this area one day in their lives.
You can read the full article (in German) here.
T. Bucher-Koenen und A. Lusardi (2011) "Financial literacy and retirement planning in Germany" In: Journal of Pension Economics and Finance, 10, pp. 565-584. A. Lusardi, O. Mitchell, „Financial Literacy and Planning: Implications for Retirement Wellbeing", 2011