Who Wears the Pants? Gender Identity Norms and Intrahousehold Financial Decision‐Making

Abstract

Using microdata from U.S. household surveys, I document that families with a financially sophisticated husband are more likely to participate in the stock market than those with a wife of equal financial sophistication. This pattern is best explained by gender identity norms, which constrain women's influence over intrahousehold financial decision-making. A randomized controlled experiment reveals that female identity hinders idea contribution by the wife. These findings underscore the roles of intrahousehold bargaining and traditional norms in shaping household financial decisions.IN THE ANTEBELLUM SOUTH, WOMEN were expected to "recognize their subordinate place and to be obedient to the head of the family" (Scott (1970)). More than a century later, gender inequality persists despite women's empowerment. To illustrate, while married women's labor force participation has surged from 2% to 73% over the past century (Fernández ( 2013)), female workers continue to face a gender pay gap of more than 20% (Blau and Kahn ( 2017)).* I am deeply indebted to my advisor, Henrik Cronqvist, for his invaluable guidance and constant support. I would also like to thank the editor, Wei Xiong, an anonymous associate editor, two anonymous referees, Jawad M.

How gender, marital status, and gender norms affect savings goals

“…While previous studies have increasingly focused on the interrelationship between intra-household task divisions and financial decision making (e.g. Bertrand et al, 2015;D'Acunto et al, 2020;Ke, 2021), this is the first study to show how practices induced by gender-normative roles appear to contribute to the gender wealth gap originating from differential savings goals. It becomes especially clear that in the scope of savings goals, gender attitudinal differences in pessimism, risk-aversion, or aspirations with respect to achieving long-term challenging economic outcomes, are clearly not intrinsic, but dependent on the gender-normative roles adopted by men and women within the household.…”

“…Closer to the scope of this study, recent work within the household finance literature has shown how gender norms also prescribe different roles for money management and financial planning. It is for instance well documented that, concerning savings for the long run, retirement planning often remains a task associated with the husband in a couple (Ke, 2018(Ke, , 2021Noone et al, 2010). Further, Fonseca et al (2012) and Hitczenko (2016) find using survey data on US consumers, that women in a couple are more likely than men to report that they are responsible for the day-to-day budget management in the form of dealing with the household short-term financial questions, shopping and paying the bills.…”

“…Related to that, a growing stream of the literature has put forward that. economic and financial behaviour, and the concomitant outcomes are underlaid by gender norms leading men and women to adopt different roles within the household (Carr & Steele, 2010; Bertrand et al, 2015; Montag, 2015; Ke, 2021). We argue that gender‐normative roles that are assigned to men and women living in a couple, may influence savings goal attitudes, and hence the way they set their savings goals.…”

“…A key aspect of this study is to explore if and how gender attitudinal differences in savings goal setting is influenced by gender roles formed within households in opposition to single men and single women who are the sole adult of their household. We presume a stronger influence of gender norms on financial attitudes within couples, resulting from the separation of financial tasks based on gender‐normative roles (Bertrand, 2011; Bertrand et al, 2015; Noone et al, 2010; Ke, 2021; Shurchkov & van Geen, 2019). We thus move beyond the view that gender attitudinal differences in investment decisions are intrinsic and explore how norms, in other words the social and cultural context, influence investment decisions.…”

“…job choice, retirement planning, investment decision) and economic outcomes (e.g. life‐time personal income and wealth) of individuals within households (Akerlof & Kranton, 2000; Bertrand et al, 2015; D'Acunto, 2015; D'Acunto et al, 2020; Ke, 2021). In line with this literature, our study shows that, for the case of savings goals, one should ignore the view that gender attitudinal differences are essentially intrinsic and unavoidable.…”