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Analyzing Gender Differences in Financial Investment Behavior from a Psychological

Androgyny Perspective

Michelle Kaplan

Advised by Professor Benjamin Le

Haverford College

Fall Semester 2021

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Introduction

General societal beliefs suggest that money is not everything; the Beatles captured the

notion when they sang, Can’t Buy Me Love. Personal finances, however, influence one’s life

greatly, and a negative financial state often leads to a stressed life with far reaching implications

on health, education, relationships, enjoyment, and fulfillment. Implementing a successful

income management process is an essential component of financial well-being, and a proper

investment strategy helps one grow their wealth and avoid these pitfalls. Investing is a privileged

money management strategy as people need to have a surplus of income to invest after covering

expenses. A significant predictor of a person’s investment behavior is their gender. Gender

influences impact many aspects of life, often resulting in disadvantages for women. Specifically,

gender differences are evident in financial investing and affect the investment behavior of both

males and females (Hira & Loibl, 2008). The inequities of men and women have lasting effects,

and the differences in investing behavior of males and females are an outcome of the unbalanced

treatment. When analyzing male and female investment behavior, it is clear that historically

entrenched, negative gender roles and stereotypes challenge women’s financial future. Resources

directed to remedy these inequalities will help women overcome the barriers that have impeded

them from being equally successful investors.

Before considering the gender differences in investment behavior, women start

financially hindered because of the gender pay gap (Heilman & Kusev, 2017) and their longer

life expectancy (DeVaney, 2008). Since women live longer and have lower incomes, the

productivity of their investment portfolios is even more crucial than that of men. Nevertheless,

female investing tendencies, imposed by gender stereotypes, produce lower results in the current

investment format. The forthcoming, comprehensive literature review will establish the ways
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gender differences have influenced investment behavior. The concentrated topics include gender

differences in risk, financial literacy and knowledge, investment preferences, overconfidence,

retirement savings, and financial security. First, I introduce gender differences in general risk

taking and then focus on disparities of risk tolerance regarding finances. I then consider the

implications of variation in male and female financial literacy and knowledge. After discussing

aspects encompassed by the two dominant factors, risk tolerance and financial literacy, I take a

feminist economics perspective to observe the influence of gender stereotypes and

sociodemographic factors on the behavioral finance choices of men and women. Finally, I

explore components of investment behavior in people’s older age, such as retirement savings and

financial security.

Following the thorough literature review, I propose a new lens to evaluate gender

differences in financial investment behavior and its relevance to real world practices; it is the

concept of psychological androgyny. Psychological androgyny stems from the belief that an

individual's level of masculinity and femininity are independent, meaning a person can operate

freely between both dimensions (Dean & Tate, 2017). Psychological androgyny itself refers to

individuals having strong personality traits attributed to both males and females—they are high

in masculinity and femininity (Dean & Tate, 2017). The notion that masculinity and femininity

are unrelated to one’s biological sex shows the psychological value gender has in understanding

one’s investment behavior. Ultimately, I anticipate psychological androgyny is adaptive

regarding investment behavior because if one has a mix of high levels of masculine and feminine

traits, they benefit by balancing the investment advantages of each gender.

Longer lifespans and lower incomes combined with feminine gender stereotypes towards

investing create significant financial challenges for women. In order to improve investing results
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for women, they need to establish a strong investment strategy and take greater agency. A

potential point of intervention on gender differences and investment behavior is psychological

androgyny. By overcoming strict gender lines, individuals can exist on a two-dimensional scale

of masculinity and femininity and benefit from favorable investment tendencies typically

associated with each gender.

Gender Differences in Risk Taking and Financial Risk Tolerance

Women are generally less likely to take risks; they are more risk averse, which is to have

lower risk tolerance (Byrnes, Miller, & Schafer, 1999). Risk tolerance is “the willingness of an

individual to engage in a behavior where there is a desirable goal, but reaching the goal is

uncertain and accompanied by the possibility of loss” (Grable, 2008; 3). While women are more

risk averse, they will take risks but prefer to avoid them. Their tendency to avoid risks can be

advantageous at times yet often holds women back. A circumstance qualifies as risk taking when

“the behavior in question could lead to more than one outcome, and some of these outcomes are

undesirable or even dangerous,” and undesirable outcomes are considered losses (Byrnes et al.,

1999; 367). A major difference exists between male and female willingness to accept financial

loss, with males showing a tendency to accept more financial risk (Baker & Haslem, 1977).

Therefore, women have higher levels of loss aversion than men, which contributes to their risk

aversion, meaning women feel losses more powerfully than gains (Christie, 2018). Risk and loss

aversion seem to be negatives, but they can be positives as risk taking can be adaptive or

maladaptive. Risk taking is maladaptive whenever the advantages of taking a chance are far less

likely to occur than the potential dangers, and risk taking is adaptive when the possible gains are

much more likely to happen than the undesirable option (Byrnes et al., 1999). People who learn

to navigate the type of risks to avoid and to pursue are more successful than those who do not.
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Gender differences in risk taking are exposed as people strive to conquer the conflict of deciding

which risks they should and should not take (Byrnes et al., 1999).

Risk Taking Theories. There are three categories of risk taking theories. The first

explains why some people regularly take risks and others avoid risks. An example pertaining to

gender differences is the Risk as Value hypothesis (Kelling, Zirkes, & Myerowitz, 1976), which

states that naturally lower levels of arousal in men and the socially instilled belief that risk taking

is a highly valued masculine tendency motivates high levels of risk taking for men (Byrnes et al.,

1999). The second category explains the differences between situations that promote risk taking

and risk aversion. A well known example is the Prospect Theory (Kahneman & Tversky’s, 1979)

which states that a risky option presented positively is preferred to a sure thing. Choices framed

negatively cause preferences to shift to the sure thing over the risky options (Byrnes et al., 1999).

The third category of risk taking theory contains models that illustrate why certain people take

risks in certain situations. Arnett’s (1992) theory describes one's level of risk taking as dependent

on sensation seeking and an individual’s cultural restriction on risk taking (Byrnes et al., 1999).

This has led to research on men taking more risks than women in most cultures because men are

higher sensation seekers. Under this category of risk taking theory, a sociobiological perspective

argues that risk taking is an “attribute of the masculine psychology” (Wilson & Daly, 1985). It

stems from the male-centric, competitive demands of primates, supporting the idea that men are

more likely to take risks when competition is involved (Byrnes et al., 1999).

Gender differences in risk taking evaluated by the three categories show that males are

more likely to take risks than females (Byrnes et al., 1999). Both males and females have

maladaptive risk taking tendencies—males take more risks even when it is evident that it is a bad

idea to take the risk, and females are less likely to take risks even when it is a good idea (Byrnes
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et al., 1999). This conclusion suggests that men tend to encounter negative consequences more

often than women, and women experience success less often than they should. With men

innately taking more risks, they can rebound from failure more easily, while women’s low risk

tolerances contribute to their struggle to reach the progress level of men. These deductions

support the recommendation that psychological androgyny would be adaptive to men’s and

women’s risk-taking behaviors as the mix of masculinity and femininity would encourage one to

make responsible risk choices. Additionally, gender differences in risk taking are greater when

subjects have to actually carry out the behavior rather than make a hypothetical choice (Byrnes et

al., 1999). This is essential to understand when addressing risk taking in the financial investment

realm because women are less likely to pull the trigger on actually making a risky financial

choice.

Financial Risk Tolerance. Risk tolerance is commonly applied to investment behavior

and is the maximum amount of uncertainty a person is willing to accept when making a financial

decision (Grable, 2008). A person's risk tolerance is significant as it influences a wide array of

personal financial decisions. Risk aversion is impactful in the long run and makes a more

extreme difference in investing in the short run (Grable, 2008). It is important to invest in stocks

and other high return investments because even if a person is not risk tolerant, in the long run,

stocks are less risky and associated with higher wealth accumulation (Grable, 2008). Risk

aversion tends to decrease as wealth increases (Mittal & Vyas, 2009). Women have less wealth

than men, owning 32 cents of every dollar that men own, and it is even less for women of color

(Traflet & Wright, 2019). For those whose risk aversion takes over, the chance of living in

poverty in the future is more likely as forgoing high return investments puts people at a great

disadvantage (Grable, 2008). Women prefer to invest in bonds over stocks, and the consequences
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of women investing based on their low risk tolerance and not investing in stocks leads to

financial suffering (Grable, 2008).

Risk Tolerance Factors. Since risk tolerance significantly impacts an individual's

financial choices, it is critical to be aware of the factors that determine one's risk tolerance.

Grable (2008) expands Irwin’s (1993) and Loewenstein et al.’s (2001) work and develops a

conceptual model of factors that influence risk tolerance that has three groups—biopsychosocial

factors, environmental factors, and precipitating factors. Biopsychosocial factors are inherent

traits that a person has little or no control over, including gender (Grable, 2008). Environmental

factors result from influences in one's social environment (Grable, 2008). Precipitating factors

are aspects of a person’s life that affect their risk assessment by impacting their decision-making

process or causing them to adjust their typical risk tolerance level (Grable, 2008).

Biopsychosocial and environmental factors are both predisposing factors, and considering them

along with precipitating factors in a single framework offers a complete picture to comprehend a

person’s financial risk tolerance (Grable, 2008).

Female Specific Risk Tolerance Factors. It is essential to analyze all the risk tolerance

factors and their relationships when investigating the gender differences in financial investment

behavior. Females are more prone to loss aversion, mental accounting: using subjective criteria

like intent for amounts of money to separate money into separate accounts, anchoring: basing

estimates off a familiar starting point or anchor, availability: overvaluing the most recent

information compared to all necessary information, regret aversion: feeling that a different

decision from the past could have been a better choice, and representativeness: considering past

prices as representative of future prices (Christie, 2018). All six of these female behavioral biases

influence their tendency for lower risk tolerance and hinder the success of their investment
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portfolios. Additionally, women describe themselves as risk averse, but at times they take on

more risk than the preferences would otherwise imply (Marinelli et al., 2017).

Gender-stereotyping negatively affects female self-perception and alters their risk level

assessment, leading them to believe that they are less risk tolerant than they truly are and

decreasing their practiced risk tolerance level (Marinelli et al., 2017).

Confidence and Information Processing. Women’s confidence levels and information

processing techniques translate to their lower risk preference in financial investment choices.

Women are less confident and, in turn, more risk averse in masculine domains, even though they

have an equal ability to perform (Mittal & Vyas 2009). In reference to my proposal, this shows

how psychologically androgynous women can benefit when investing because the viewpoint of

investing being a masculine field is less intimidating for them. Overall, women are more risk

averse than men due to their lack of confidence in investing, and even when they extensively

process financial information compared to men, they still trade less (Christie, 2018). In contrast,

men’s higher risk tolerance causes overconfidence and higher susceptibility to prospect theory

(Christie, 2018). Women also have a different information processing style than men. The

selectivity model suggests that women are more detail-oriented and want to consider all relevant

information before making a choice, explaining that women are more methodical in their

investment decision-making process (Mittal & Vyas, 2009). This opens up space for more

negative information cues to arise, resulting in women sensing further downside of risky

investment strategies and learning into their higher loss aversion perspective. On the other hand,

men do not process as many information cues, making decisions more quickly and riskier (Mittal

& Vyas 2009).

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Investment Portfolios and Investment Styles. There are apparent differences in male

and female investment tendencies expressed in their investment portfolios. Higher risk tolerance

for men correlates with their willingness to invest in standard, less risky, and sophisticated,

riskier financial products (Bannier & Neubert, 2016). In comparison, women’s risk tolerance

level is only positively related to standard investments, which displays their lower risk tolerance

level does not have a relationship with riskier, sophisticated products (Bannier & Neubert, 2016).

In terms of portfolio diversification, men invest a higher percentage of their high-growth assets,

and women invest more in bonds (Lascu, Babb, & Phillips, 1997). The gender breakdown shows

that women have a lower income and less money invested than men (Lascu et al., 1997). Men are

more risk tolerant, and their higher risk tolerance relates to their longer investment horizon—the

length of time one holds an investment. Male investments are often driven by

speculation—focusing on much riskier investments that get higher returns in a shorter amount of

time (Marinelli, Mazzoli, & Palmucci, 2017). Women’s lower risk tolerance derives from their

investment intention, simply to increase income (Marinelli et al., 2017). Men’s investment

behavior results in riskier investment portfolios that include more stocks, more frequent trades,

and autonomous selection of singular financial products, as they are more likely to forgo

consultation with wealth management services (Marinelli et al., 2017).

Despite the differences in male and female risk levels during the investment process, the

quality of both genders’ portfolios is similar (Marinelli et al., 2017). This suggests that, at times,

the overly risky style of men and the low risk style of women is maladaptive to each of their

portfolios, showing another reason why psychological androgyny is the most advantageous

combination. The high masculine and feminine traits balance maladaptive behavioral tendencies

that hurt investment portfolios. Lastly, the similarity in male and female investment portfolios
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indicates that, in actuality, their economic status reflects the differences in their investment

process and risk levels (Marinelli et al., 2017). However, men have higher income and wealth

levels, as established due to the gender pay and wealth gaps. Therefore, men remain in a superior

position and perpetuate gender differences in risk tolerance and investment behavior because

men are often in better financial standing than women.

Age and Investment Return Expectations. The extent of gender differences in

investing varies based on age and context (Byrnes et al., 1999). Males express gender differences

in investing early as men begin investing at a younger age than women (Lascu et al., 1997). Risk

tolerance decreases with age because the ability to suffer a damaging loss at an older age reduces

significantly, with older people needing to ensure financial security through the end of their lives

(Chaturvedi & Joshi, 2019). Both genders reported that their involvement in saving and investing

gradually increased as they got older (Hira & Loibl, 2008). Regardless, more women than men

saw an increase in investment in response to a singular, significant life event (Hira & Loibl,

2008). The largest gap between the genders was women increasing their investment in response

to divorce. Expected returns influence risk tolerance by incorporating the anticipated profit or

loss an investment will create. There is an association with expected returns and age, monthly

income, and marital status for women (Chaturvedi & Joshi, 2019). When investing at young and

inexperienced ages, men expect to see high returns and invest aggressively to meet the

expectations. The influence of expected returns and age illustrates a combination of elements that

carry weight in the debate between gender differences and risk tolerance.

Investment Preferences. Men and women in Turkey have different investment

preferences, and the women’s lower wealth impedes them from holding riskier portfolios

(Bayyurt, Karışık, & Coşkun, 2013). The male investors prefer riskier common stocks and real
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estate, while the females prefer to invest in safer time deposits and gold (Bayyurt et al., 2013).

Based on the perceived risk levels in Turkey of the investment tools, the research shows that

women are more risk averse than men. This highlights that research implemented in both

developed and emerging countries concludes that women are more risk averse than men. It is

also important to note that investment in real estate requires higher amounts of capital.

Therefore, Turkish women might not have enough financial resources to invest in real estate and

do not have access to the same tools for wealth growth as men.

Satisfaction with Life. Males and females have differences in satisfaction with life

(SWL), which impacts their risk tolerance and investment decision-making. Financial advisors

should consider SWL when managing clients’ portfolio risk levels (Dickason-Koekemoer,

2019). The more dissatisfied investors are with their lives, the less likely they are willing to take

on high-risk investments; therefore, low life satisfaction contributes to low-risk tolerance, and

high life satisfaction contributes to high-risk tolerance (Dickason-Koekemoer, 2019). Male

investors have higher life satisfaction than females—a potential explanation for men’s higher risk

tolerance (Dickason-Koekemoer, 2019). Additionally, female investors are only willing to

tolerate higher risk in extreme situations—when they are extremely unsatisfied with their lives or

highly satisfied with their lives (Dickason-Koekemoer, 2019). These revelations are significant

because they unveil that SWL contributes to risk tolerance and is another explanation for the

differences in risk tolerance of males and females. The findings also specify under what

conditions females will invest in risky financial choices and how the female relationship of SWL

to risk tolerance puts them at an inferior investing place compared to males. Females are

especially at a disadvantage because males are generally more satisfied with their lives and tend

to have a more optimistic outlook instilled by gender stereotypes that devalue female lives.
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Gender Differences in Financial Literacy, Financial Knowledge, and Financial

Self-Efficacy

Financial Literacy and Knowledge. People’s level of financial literacy and financial

knowledge impact their risk tolerance levels and investment behavior. Financial literacy, wealth,

and education are reasons why women exhibit less risk-taking than men (Dwyer, Gilkeson, &

List, 2002). When controlling for investor knowledge of financial markets and investments,

gender’s impact on risk taking is significantly weakened, pointing to financial literacy as a factor

(Dwyer et al., 2002). Wealthier, more educated investors tend to take on more risk than less

educated and less affluent investors (Dwyer et al., 2002). Generally, women are less financially

educated and less wealthy than men, so they take less risk in their investments choices, resulting

in fewer riskier, higher returning assets (Dwyer et al., 2002). Gender gaps in financial knowledge

and literacy are significant, demonstrating that women are at an investment disadvantage because

they are less risk tolerant due to their lower levels of wealth and financial education (Dwyer et

al., 2002).

The behavioral finance field helps psychologists comprehend how emotions and

individual characteristics influence investors’ behavior (Shafi, 2014). Behavioral finance

research shows that women have a much lower level of financial literacy than men, and investors

with higher income had more investment knowledge than investors with lower income (Shafi,

2014). Both of these ideas connect as men typically have higher incomes than women. Since

income is a strong predictor of financial literacy, this explains why women have lower financial

literacy. Financial literacy positively influences female financial behavior, and specifically,

women entrepreneurs had a relatively high level of financial literacy (Andarsari & Ningtyas,
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2019). However, these results are not necessarily consistent among females that are not

entrepreneurs. Financial literacy and knowledge are valuable to understanding investment

behavior, especially in females, as financial knowledge is a high indicator of one's financial

well-being (Andarsari & Ningtyas, 2019).

Investment Information Searching. Differences exist in male and female financial

investment information source selections and how frequently they use them (Loibl & Hira,

2011). Financial investment information source usage is influenced by investment action,

investment interest, financial satisfaction, investment stress, consultation with financial advisors,

investor attitudes towards financial advisors, and investor socialization; these elements are also

as a generic set of predictor variables for gender stereotypical behavior (Loibl & Hira, 2011).

Women generally conduct lower information searches (Loibl & Hira, 2011). Yet, women are

higher search investors if they have heightened investment interest, investment action, greater

risk tolerance, as well as a critical attitude toward financial advisors (Loibl & Hira, 2011). Men

are higher search investors based on factors such as minority status, higher education, higher

household income, heightened levels of risk tolerance, investment action, investment interest,

investment stress, and limited consultations with investment advisors (Loibl & Hira, 2011).

Higher self-confidence and risk tolerance indicate a more intensive search strategy and

consumption of a wider variety of investment information (Loibl & Hira, 2011). As previously

reviewed, past work indicates males have higher risk tolerance and self-confidence in investing;

males are overall higher search investors, which significantly increases their financial knowledge

over females. Understanding what influences men’s and women’s financial information

acquisition process helps create strategies to target both genders with investment information to
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increase their financial literacy (Loibl & Hira, 2011). Increasing women’s investment

information search behavior will help level the investment playing field with men.

Actual versus Perceived Financial Literacy. The difference in men’s and women’s

actual versus perceived financial literacy impacts their financial risk taking, including their

investments in standard assets (stocks and real estate funds) and risker sophisticated assets

(discount certificates, hedge funds) (Bannier & Neubert, 2016). Men have a significantly higher

level of actual and perceived financial literacy than women, which results in higher risk tolerance

and superior investment behavior. Both actual and perceived financial knowledge are positively

associated with standard investments for men, but the positive association only occurs with

actual knowledge for women (Bannier & Neubert, 2016). In contrast to standard investments, the

decision to invest in sophisticated assets is more strongly correlated to perceived financial

literacy for men and especially women (Bannier & Neubert, 2016). Notably, the research

explicitly demonstrates that it is crucial to raise women’s actual and perceived financial literacy

to grow their risk tolerance to investing and improve their investment portfolio.

Emotional Intelligence. Emotional intelligence significantly influences investment

behavior with financial literacy and gender as moderators (Munir et al., 2018). Emotional

intelligence and investment behavior are positively related, and financial literacy and gender

individually moderate the relationship between emotional intelligence and investment behavior

(Munir et al., 2018). Individuals who control their emotions can make better and effective

investment decisions than those who are less emotionally intelligent, and the same applies to

those with more financial knowledge (Munir et al., 2018). Additionally, education on finances is

valuable because it increases cognitive abilities, so males and females can improve their financial

well-being by making healthier investment decisions (Munir et al., 2018).

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Financial Literacy Program Evaluation. Establishing a comprehensive method for

evaluating financial literacy programs is important as it ensures that the targeted demographic of

people are supported and that the education tools are effective (Fox & Bartholomae, 2008). The

purpose of obtaining the program evaluation feedback is to see how current programs can

improve and assist people in starting new programs. A financial literacy program provides

“individuals with the knowledge, aptitude, and skill base necessary to become questioning and

informed consumers of financial services and manage their finances effectively” (Fox &

Bartholomae, 2008; 47). A challenge for many financial education organizations is showing if

their program makes a difference by highlighting specific feedback from various programs and

demographics, so the evaluation component acts as a road map to determine the success level of

the program. Fox and Bartholomae (2008) highly recommend Jacob’s (1988) five-tiered

approach to evaluation as a basic guide for organizations and agencies delivering financial

education programs. The framework has evaluation steps at each stage of the program, including

preimplementaion, accountability, program clarification, progress toward objectives, and

program impact (Fox & Bartholomae, 2008). Attention toward the effectiveness of financial

literacy programs is vital as higher levels of financial literacy increase risk tolerance,

self-confidence, and the quality of investment decisions of both men and women. Financial

literacy intervention programs should implement Jacob’s (1988) evaluation method.

Financial Self-Efficacy. Women’s financial self-efficacy relates to their financial

behavior, specifically by impacting the type and number of financial products that women hold

(Farrell et al., 2016). Financial self-efficacy is the self-assuredness or belief in one’s own

financial management capabilities (Farrell et al., 2016). Financial-self efficacy is just as crucial

to one’s financial future as financial literacy and knowledge because if a person does not believe
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in the information they have and how to use it, then it does not hold a lot of meaning (Farrell et

al., 2016). Women with higher financial self-efficacy are more likely to invest in

positively-signed financial products (investments, mortgages, and savings) and hold two or three

of the products. In comparison, women with lower financial self-efficacy are more likely to

invest in negatively-signed financial products (credit cards and loans) and have both debt-related

products (Farrell et al., 2016). Women’s self-assuredness in their own ability to manage their

finances is significant, and women’s self-confidence, especially in a male-dominated field, is

often threatened and lowered by gender stereotypes. Therefore, it is essential to focus on

bridging the discrepancies in financial outcomes between men and women caused by their

varying levels of financial self-efficacy. The gap in male and female investment results supports

a psychologically androgynous investing mindset, with higher levels of masculinity contributing

to greater confidence and financial self-efficacy.

Feminist Economics Perspective on Investment Behavior

Feminist economics critiques traditional behavioral economics, focusing on gender

awareness and inclusivity (Sent & van Staveren, 2019). Under feminist economics, a feminist

perspective analyzes behavioral economic literature on gender differences, presenting a new

outlook that concentrates on the influence of social structures through power relations and

institutions (Sent & van Staveren, 2019). The implications of gender roles, gender beliefs, and

gender stereotypes on investment behavior are widespread (Sent & van Staveren, 2019).

Findings reflect that men tend to have stronger gender beliefs than women, demonstrated by men

having a higher perceived contribution to input on family investment decisions and perceiving

themselves as less conservative than women (Lascu et al., 1997). Additionally, women’s

cooperative behavior is driven by men’s asymmetric gender beliefs and not by the naturally
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generous behavior of women (Sent & van Staveren, 2019). The powerful gender beliefs of men

have helped create and keep the patriarchal society intact that hinders female empowerment

concerning investment behaviors. Gender biases influence expectations of economic decisions

and the behavior of one’s future self, having a disproportionately negative effect on females

(Sent & van Staveren, 2019).

Women face impediments when investing in the stock market (Kaur & Vohra, 2012). The

deterring factors pertain to the psychology of women, stereotypes affecting women, and their

weaker economic status (Kaur & Vohra, 2012). The specific reasons pushing women to withhold

involvement in the stock market include “gender discrimination, limited access to use available

information, misperceptions of investment advisers, less human capital investment, greater

family responsibilities, shorter work life, differences in wealth and the expectation of inheritance,

lack of confidence, faulty retirement system, lack of optimism, cumbersome procedure and

formalities and a risk averse attitude” (Kaur & Vohra, 2012; 290). Women have different

investment information needs than men; meeting those needs will support the growth of women's

financial literacy and improve their financial self-efficacy and investment behavior (Kaur &

Vohra, 2012). Therefore, women need to be provided with the proper financial information and

strategies to help them invest in the stock market and lower barriers.

Gender Pay Gap. A gender pay gap exists between men and women, and the pay gap

stems from gender stereotypes and women tending to avoid salary negotiations compared to men

(Heilman & Kusev, 2017). Women are paid less than men and accept jobs at higher rates,

including unfair offers (Heilman & Kusev, 2017). The gender pay gap is even higher for minority

groups (Heilman & Kusev, 2017). It is important to note the greater disadvantage of minority

women groups as they are crucial to discussions surrounding demographic factors impacting
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investment behavior. It is essential to consider the intersectional relationship between gender and

race because delineating the identities from one another is challenging and theoretically

impossible. Further exploration into the investment behavior of minority women should ensue.

Financial Advisors. Financial advisors who work with millionaire investors make

slightly different investment portfolio recommendations to their female and male clients

(Baeckströom, Silvester, & Pownall, 2018). Attribution theory applied to behavioral finance

shows that financial advisors rated female millionaires as having less control over their

investments relative to males (Baeckströom et al., 2018). Attribution theory states that

individuals are consistently more likely to attribute positive outcomes to themselves and negative

outcomes to external causes (Baeckströom et al., 2018). Female advisors recommended the

lowest risk portfolios to female investors; however, there was no evidence suggesting that female

investors are viewed as less knowledgeable (Baeckströom et al., 2018). Overall, there were no

significant differences in the risk levels of portfolios recommended to male and female

millionaires (Baeckströom et al., 2018). Advisors interpret the needs of female millionaire

investors differently than male investors, which is influenced significantly by the gender of the

advisors and attributional bias.

Gender influences the investment strategies of males and females and the characteristics

that influence a consumer’s financial advisor gender preference (Lascu et al., 1997). Women are

more risk averse than men and less confident and knowledgeable in investing, so they prefer

speaking with financial advisors over men (Hira & Loibl, 2008). Consumers who prefer female

advisors have lower income, less money invested, consider themselves more conservative, and

favor safer investment vehicles (Lascu et al., 1997). Consumers who prefer male advisors are

younger, more risk prone, and invest more of their assets in risk-high return products (Lascu et
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al., 1997). Women’s investment behavior tendencies and the disadvantages females face when

investing lead to lower commission rates for advisors who have female clients (Lascu et al.,

1997).

Women Empowerment and Stress. The investment behavior of women in Coimbatore

city impacts their social empowerment (Santhiyavalli & Usharani, 2014). As noted, women are

more risk averse, conservative investors and prefer low risk investments even though the returns

are lower (Santhiyavalli & Usharani, 2014). The investing process provides confidence and

empowerment for women, granting them independence and control over their lives for the long

term (Santhiyavalli & Usharani, 2014). The positive effects of women’s empowerment through

investing are essential because it shows a reason for intervention to promote healthy investment

behavior and knowledge about handling their finances to more women. High levels of

confidence and financial self-efficacy are crucial for improving women’s financial investment

and empowerment.

Overall, women feel investing is less exciting and more stressful compared to men (Hira

& Loibl, 2008). This is a crucial fact because although financial decision-making is generally

stressful, it is especially stressful for women. Women’s investment stress level is connected to

their lower financial literacy and confidence levels. Women’s inadequate financial knowledge

supporting the weight of their financial future is overwhelming, making investing stressful and

undoubtedly not exciting. The added feelings of anxiety and pressure that women experience and

men do not regarding investing further disadvantage their investment behavior and financial

well-being. The sharp differences between men’s and women’s investment behavior are focal

points for interventions to improve the financial investing process for women. It is vital to find

ways to build women’s confidence and knowledge in investing to help decrease their stress.
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Old Age, Retirement Savings, Financial Security, and Marriage

Significant gender differences in investment behavior occur in older people, and the

repercussions of earlier age gender differences are impactful as people near the ends of their

lives. Psychological characteristics shape the financial self-efficacy (FSE) of older pre-retirees,

and it’s important that they understand how to better control their financial situation as they

approach retirement years (Asebedo et al., 2019). Openness to experience was positively

associated with FSE, and a negative relationship exists between neuroticism and FSE (Asebedo

et al., 2019). Additionally, FSE has positive relationships with increased perceived mastery,

positive affect, task orientation, and reduced negative affect (Asebedo et al., 2019). Women’s

longer life expectancy is a major factor in the differences between male’s and female’s

investment behavior, especially as older pre-retirees begin to face the challenging consumption

versus saving dilemma that FSE influences (Asebedo et al., 2019). These findings suggest which

psychological traits will improve both genders’ FSE, and older pre-retirees need psychological

support to enhance their FSE and necessary financial behaviors for retirement preparedness

(Asebedo et al., 2019). It is valuable for older pre-retirees to establish meaningful and purposeful

retirement goals as a solution to support their FSE and help prepare them for retirement

(Asebedo et al., 2019).

Financial Security. Women have lower participation in retirement planning and are more

likely to live in poverty during retirement, which is significant when considering the financial

security of female-headed households (Ahmad & Sabri, 2015). Financial security is a dimension

of financial well-being and refers to the extent to which an individual feels they are in a stable

financial situation (Ahmad & Sabri, 2015). Financial literacy influences financial security, a
 21

determinant where gender differences already exist. A monthly fixed income positively relates to

female-headed households’ financial security, but a lack of insurance and total liabilities more

than their income reduces their financial security (Ahmad & Sabri, 2015). Overall, about half of

female-headed households have a moderate level of financial security (Ahmad & Sabri, 2015).

Women with lower financial security have lower life satisfaction, as their concerns about their

financial future impact life satisfaction (Ahmad & Sabri, 2015). Governmental support is a

pathway to improve female-headed households’ financial security, guiding focus toward helping

with their level of saving, the ability to meet emergencies, the adequacy of financial resources in

retirement, and the availability of income (Ahmad & Sabri, 2015).

Older-Aged Women. Older adults face many financial issues, and women with longer

life expectancies experience challenges more often. (Devaney, 2008). Older women are

economically vulnerable as they are disproportionately disadvantaged compared to men. If older

women are widowed or divorced, they are less likely to remarry than men, impacting their assets

and overall income due to the patriarchal society, which puts men in a dominant financial

position (Devaney, 2008). Additionally, women’s labor force participation is frequently shorter

than men’s and less continuous with childcare breaks, resulting in lower income and wealth for

women (Devaney, 2008). Older widowed women are underprepared to handle their finances;

95% of widows say they wish they had been more “interactive and inquisitive” with finances

while their spouse was alive (Devaney, 2008). There are long-term effects of gender differences

on investment behavior because the man of the household is often in charge of the finances and

investing. When the husband passes away first or the couple gets divorced, the widow is

significantly disadvantaged and left to uncover the family's financial position and path forward.
 22

Marriage. There is a multidirectional relationship between marriage and finance (Dew,

2008). When married, both men and women reduce the frequency and intensity of risky financial

behaviors because marriage encourages people to utilize and invest their money more

responsibly (Dew, 2008). Since married people consider the economic well-being of others and

themselves, they behave more responsibly, explaining why married individuals are economically

better off than single people (Dew, 2008). When examining financial decisions within a marriage

and how money is controlled, there are stark differences between the head being the man,

woman, or a balance between them both, as males and females view finances regarding assets,

income, and debt differently (Dew, 2008). Even though the world is becoming more progressive,

social norms have created the view that marriage depends on a male’s economic stability,

emphasizing their ability to make and manage money (Dew, 2008). Not surprisingly, equally

shared financial decision-making power and similar views on finances are negatively associated

with divorce (Dew, 2008). There are gender differences in investment behavior within the

context of marriage, and the gender imbalances within a marriage impact investing and finances

(Dew, 2008).

Households’ and individuals’ investment decisions for their retirement savings are driven

by gender and marital status (Sundén & Surette, 1998). Single men are likely to invest in the

riskier option of mostly stocks over single women and married men, and married women are

more likely than single women to choose mostly bonds (Sundén & Surette, 1998). In terms of

risk, individuals who choose mostly bonds are less likely to take financial risks (Sundén &

Surette, 1998). Furthermore, women are less likely than men to have a retirement plan, with

married women even less likely than single women, showing that they will accumulate less

individual wealth (Sundén & Surette, 1998). When women have a retirement plan, they invest in
 23

less risky vehicles than men, contributing to lower wealth growth (Sundén & Surette, 1998).

Marital status influences how males and females invest, and the investment style of one’s gender

can affect the investing style within a marriage, hurting their retirement planning (Sundén &

Surette, 1998).

Literature Review Summary. The current literature review establishes the significant

factors impacting men’s and women’s investment behavior, illustrating that the gender

differences in investment behavior often disadvantage women. An opportunity to address the

disparity between male and female investors to improve female investment decision-making and

outcomes exists. While improving women’s investing is the primary focus, psychological

androgyny can help better men’s investment decision-making. An androgynous person is high in

masculine and feminine traits, and I propose that males and females should target an

androgynous mindset when investing. In the next section, I apply psychological androgyny to

financial investing and refer to this new theoretical advancement in investment style as

androgynous investing.

Psychological Androgyny Proposal

Sandra Bem created the theory of psychological androgyny which countered the previous

assumption that all important aspects of gender existed along a single continuum called

masculinity–femininity (Dean & Tate, 2017). Instead, it supports the idea that individuals may be

both masculine and feminine. The Bem Sex Inventory (BSRI) justifies that the social concepts of

masculinity and femininity should be measured on separate scales, allowing a person to move

freely on both dimensions. There are four possible outcomes from the BSRI 1. feminine (e.g.,

high femininity/low masculinity), 2. masculine (e.g., low femininity/high masculinity), 3.

 24

androgynous (i.e., high femininity/high masculinity), and 4. undifferentiated (i.e., low

femininity/low masculinity) (Figure 1).

Figure 1. Bem (1974) Gender Roles (Vafaei et al., 2014)

The BSRI and psychological androgyny is a theoretical advancement that improves

psychological well-being, undercuts gender role polarization, and expands psychology’s focus

beyond gender roles by implication (Dean & Tate, 2017). Psychological androgyny relates to the

current exploration of gender differences in investment behavior as it takes the research out of

the binary perspective of gender and opens up the topic to other dimensions and new

conclusions.

Psychological androgyny is a new theoretical lens to view investing, and androgyny is

adaptive for financial investing. The literature shows how female tendencies have put them at a

disadvantage when making investment decisions, and these tendencies have developed due to

gender roles and stereotypes which perpetuate society. Although females have overall seen less

wealth growth than men because of their investment practices, males also have investment

tendencies that are not always beneficial. Androgynous investing merges the best aspect of
 25

masculine and feminine investment styles to help grow one’s wealth. The advantageous

masculine traits contributed are higher confidence, risk tolerance, financial literacy, and financial

self-efficacy. Valuable feminine traits included are more information searching and processing,

consultation with financial advisors, and financial planning. The combination of masculine and

feminine characteristics results in a more successful investor regardless of gender. Additionally,

androgynous investing shifts the investment conversation from male versus female to looking at

specific positively influencing investment traits. Furthermore, androgynous investing can shift

the gender questions in other behavioral areas as androgyny can be developed and applied to

those behaviors.

A key takeaway from androgynous investing is that we do not want investors to aim for a

male dominant investment style or target only masculine traits. While this might make investors

more money, money is not the most important thing, and there are drawbacks to male investment

tendencies such as overconfidence and overly risky choices. The healthiest potential wealth

growth comes from channeling both the masculine and feminine traits as they help to balance

one another. The masculine tendencies push people to take more risks and get further involved in

investing, and the female tendencies prevent people from making dangerous investment choices.

It is important to understand that the goal of proper financial investing is not to solely

focus on creating the largest amount of wealth but rather to create the greatest individual

happiness. While increasing wealth and having more money is a high priority, when investing,

there are also other goals to account for, including financial safety and satisfaction with life. A

carefully curated androgynous financial plan creates confidence and security, reducing one’s

stress levels as the investment style is not overly aggressive. In contrast, incorporating a

masculine driven investment plan leads to a stressful, aggressive portfolio that is dangerous as
 26

people can instantly take big hits when relying on volatile investments. Androgynous investing

reduces the chance of costly emotional decisions that appear during stressful times, and having a

sound investment plan is essential to making males and females feel more relaxed when the

market fluctuates.

Since establishing the desired androgynous investing traits, the following are calls to

action and potential ways to bring the concept to reality. Primarily, financial literacy growth is a

powerful way to help advance androgynous investing. The literature review expresses the

influence that age has on investing, so implementing financial literacy growth at a young age is

the most effective, especially for females. Increasing women’s financial literacy helps raise their

masculine tendencies because it will also increase their confidence, risk tolerance, and financial

self-efficacy. A possible intervention that promotes feminine tendencies for males is government

instituted tax incentives to work with a financial advisor. If males can receive a tax deductible for

consulting with a financial advisor, this will improve their financial planning and increase their

information search. With proper resources, men and women can increase their masculine and

feminine investment traits to achieve an androgynous investment style.

Conclusion. Psychological androgyny is a theoretical advancement, and applying it to

financial investment progresses the theory further. Androgynous investing helps males and

females invest their money effectively and safely to grow their wealth and remain in a state of

financial well-being throughout the entirety of their lives. A final aspect to highlight is while

masculine and feminine investment tendencies are typically innate to males and females, they

exist because of perpetuated societal gender beliefs. However, people can overcome gender roles

by implementing an androgynous investing strategy.

 27

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