Trading Stocks Builds Financial Confidence and Compresses the Gender Gap

Many studies document low rates of financial literacy and suboptimal levels of participation in financial markets. These issues are particularly acute among women. Does this reflect a self-reinforcing trap? If so, can a nudge to participate in financial markets generate knowledge, confidence and fur...

Full description

Saved in:
Bibliographic Details
Published in:The Economic journal (London) 2024-12, Vol.135 (665), p.235-263
Main Authors: Jha, Saumitra, Shayo, Moses
Format: Article
Language:English
Citations: Items that this one cites
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Many studies document low rates of financial literacy and suboptimal levels of participation in financial markets. These issues are particularly acute among women. Does this reflect a self-reinforcing trap? If so, can a nudge to participate in financial markets generate knowledge, confidence and further increase informed participation? We conduct a large field experiment that enables and incentivises working-age men and women—a challenging group to reach with standard financial training programs—to trade stocks for four to seven weeks. We provide no additional educational content. We find that trading significantly improves financial confidence, as reflected in stock market participation, objective and subjective measures of financial knowledge, and risk tolerance. These effects are especially strong among women. Participants also become more self-reliant and consult others less when making financial decisions.
ISSN:0013-0133
1468-0297
DOI:10.1093/ej/ueae076