Tackling Myths about Women ; Some Gender Differences Are Real, but Much Advice Is Based on Stereotypes

Article excerpt

Some gender differences are real, but much financial advice is based on stereotype.

Many studies and news media reports reinforce the idea that women lag behind men in understanding how to handle their money.

But experts in personal finance are challenging the common wisdom, saying that the differences in how men and women deal with finances have been overstated. Further, they say, it does no service to women to portray them as naive and in need of special help.

"A lot of the industry is flat-out condescending to women," said Helaine Olen, a financial journalist and author of the book "Pound Foolish: Exposing the Dark Side of the Personal Finance Industry."

The real problem, Ms. Olen said, is that women often earn less money than men yet live longer. They also tend more frequently than men to drop in and out of the labor force to stay at home with children.

"I'm afraid this niching of women is a way to get around the systemic problems" that need to be addressed through public policy, she said. Ms. Olen also said that some of the advice for women, like to cut back on shopping, is unhelpful at best and sexist at worst.

A 2011 Gallup poll showed that men spend $11 more a day than women, Ms. Olen wrote in her book.

Annamaria Lusardi, a professor of economics and accountancy at George Washington University and the academic director of the Global Financial Literacy Excellence Center, said the idea "that women spend more is a myth." But she said there was a clear gender difference when it came to financial literacy.

Ms. Lusardi was the co-author of a study of eight countries -- Germany, Italy, Japan, the Netherlands, New Zealand, Russia, Sweden and the United States -- that found that the overall level of financial literacy was low. According to the study, Americans had a harder time with simple calculations, but no country stood out as being particularly knowledgeable.

The study, "Financial Literacy Around the World: An Overview," was published in 2011 in The Journal of Pension Economics and Finance.

Ms. Lusardi said women in all the countries studied were less likely than men to correctly answer questions about financial literacy, particularly those that used technical terms.

The more sophisticated the question and the more financial jargon that was used, the less likely women were to answer the questions correctly, she said.

But she said the take-away should not be that women were more ignorant.

Here is one example: "Buying a single company's stock usually provides a safer return than a stock mutual fund." The answer's options are true, false, do not know or refuse to answer. (The answer is false.)

In the United States, men answered correctly 57.1 percent of the time, compared with 46.8 percent of women. In Germany, both sexes picked the right answer more often than those in the United States, but the difference between the sexes was similar, with 67.6 percent men and 56.8 percent of women scoring correctly.

But, and this is interesting, "When we took away the 'do not know' option, women were no less likely to choose the wrong answer," Ms. Lusardi said. …