August 28, 2012
What’s Up With Women?
The share of women enrolled in college is increasing, and more women are breaking into the top tier of business, government and non-profits.
But at the same time that women are achieving more status than at in any time in history, we still know much less than men about money and finance. What’s up with that?
Financial literacy is important to women, because they live longer and need more retirement savings. Another reason this matters is that women are, according to a recent federal report, more financially vulnerable than men, particularly when they become divorced, widowed, or retired.
Anyone who is not savvy “will have a much tougher time preparing themselves for retirement,” Roger Ferguson, the president of the TIAA-CREF retirement system, said at the retirement research conference in Washington.
In a now-famous survey designed by Annamaria Lusardi, a professor at the George Washington University School of Business, and Olivia Mitchell at The Wharton School, only one in five American women who were asked three simple financial questions got them all right.
And the problem of financially illiterate women is universal. Lusardi recently fielded her survey on a global scale and found the same abysmal results. “Whether you look at the Netherlands or Sweden or Italy or the U.S. – these are very different countries – women know less than men,” she said.
She is, nevertheless, optimistic, because women are also more likely to admit what they do not know. Half of women in a separate U.S. study said they didn’t know the survey answers, while only one-third of men did. This admission can be viewed as “a good thing for women,” Lusardi said.
“Women do not feel over-confident about finance” and are “humble” about what they do not know, she said. The implication of this is that they may be more willing to learn.
This also seems to jibe with other research on women who work in state government in Wisconsin. The study found that women want information about retirement but don’t always know how to get it.
The question remains: why do women fare poorly on financial tests? Are money and finance a low priority, or is this just an extension of the schoolgirl’s math anxiety? Are such tests poor indicators? Does financial literacy conflict with our passion for shopping, or are we more invested in family than in investing our retirement savings?
Squared Away invites readers to share their insights into this issue in the section below!