Henriette Prast

“Seven ways to knit your portfolio: can familiarity explain the gender gap in finance?”

abstract

We investigate whether the gender gap in measured financial literacy, risk attitudes and portfolio choice may be affected by a gender gap in familiarity with the language and product supply in the life cycle saving and investing industry. Familiarity is suggested by Huberman (2001) as an explanation for the home bias in investment (which is considered by Obstfeld and Rogoff (2000) to be one of the six main puzzles in economics and finance); by Merton (1987) to explain why from all available investment options savers only choose a subset, even if they have access to all information and there are no regulatory or other restrictions; and by Heath and Tversky (1991) to explain why people prefer to bet in a context where they feel competent, with feeling competent enhanced by familiarity.

We use conceptual metaphor theory (Lakoff and Johnson, 2008) to measure familiarity with the language used, and advertizing in women’s magazines as a proxy for familiarity with the stock market index. Our preliminary findings are promising.