There is evidence that Sweden is a very gender equal society, actually number one in the world. The economic participation and access to the financial market between men and women is nearly equal and women hold similar proportions of total wealth in stocks and bonds.
We have conducted a quantitative study to investigate differences in risk aversion and overconfidence between genders when it comes to financial decisions. Our problem formulation is: To what extent does gender affect an individual’s financial decisions, are women more risk averse? We also aim to address the following question: Are women less overconfident than men?
The purpose of this study is to determine if gender can really affect financial decisions. We investigate the relationship between risk aversion, gender and overconfidence. We have conducted this study with a positivistic view and used a deductive approach starting to conduct a literature review of theories and build the thesis from this point.
We relied largely on modern portfolio theory which has been expanded by researchers examining individual utility (risk theory or risk aversion) and behavioral aspects of investment behavior including overconfidence.
The data for the study have been collected through surveying a very narrow target population, explicitly students at Umea University. We used a strata sample with four strata units divided by gender and level of study in order to receive a wider perspective of the population; the units matched the proportion of students at Umea School of Business. To measure the statistical difference between the genders we have used a statistical Chi test.
From the empirical findings and the analysis we have been able to draw some conclusions from our study. We found that there is a tendency among women to have a higher degree of risk aversion than men.
This implies that women would take a lower risk when man aging an investment portfolio. We also could conclude that men and women are similar in their level of confidence when it comes to financial decisions.
Source: Umea University
Author: Berggren, Jonas | Romualdo, Gonzalez