Why do young women report lower confidence in financial decision-making than young men?

Studies show a persistent gender gap in financial self-efficacy starting in adolescence. Analysis of data from the Youth Longitudinal Cohort Survey showed a 15-point gap in reported confidence regarding financial investments among 16-year-olds, which widens to 28 points by age 22.

Why does this self-efficacy gap exist?

One reason is lower representation of women in senior financial roles. The principle of social modeling suggests seeing representative peers makes individuals more likely to pursue these domains. When women see few female role models in finance, they are less likely to envision themselves as capable financial actors.

Another factor is self-perception. Multiple self-report surveys have shown that:

• young women tend to rate their financial literacy as significantly lower than young men's
• when objective finance questions are presented, female respondents perform almost identically to males
• women are highly likely to select the "unsure" or "don't know" option on surveys, even when they possess the correct knowledge.

This suggests that women’s lower self-reported scores are driven by a lack of confidence rather than a lack of competence.

A 2021 study by the Utrecht Institute revealed a strong correlation between female economic empowerment indicators and women's self-reported financial confidence. Countries ranking highest in economic gender parity, such as Norway, Iceland, and New Zealand, displayed the smallest disparity in self-efficacy scores.

(Source: Adapted from a contemporary social science magazine article)

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One methodological issue raised in this article is the validity of research using self-report.