Aging and strategic learning: the impact of spousal incentives on financial literacy

Joanne Hsu

No 2011-53, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: American women tend to be less financially literate than men, which is consistent with a household division of labor in which men manage finances. However, women also tend to outlive their husbands, so they will eventually need to take over this task. Using a new survey of older couples, I find that women acquire financial literacy as they approach widowhood. At an estimated increase of 0.04 standard deviations per year approaching widowhood, 80 percent of women in the sample would catch up with their husbands prior to the expected onset of widowhood. These findings reflect actual increases by women and are not merely an artifact of cognitive decline among older men. The results are consistent with a model in which the household division of labor breaks down when a spouse dies: women have incentives both to delay acquiring financial knowledge and also to begin learning before widowhood. This paper represents the first empirical examination of the financial literacy of both members of couples and provides a life-cycle interpretation of the gender gap in financial literacy.

Keywords: Financial literacy - United States; older people; Finance, Personal (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-age, nep-dem and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Aging and Strategic Learning: The Impact of Spousal Incentives on Financial Literacy (2016)
Working Paper: Aging and Strategic Learning: The Impact of Spousal Incentives on Financial Literacy (2011)
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