Women and finance: The reasons behind a difficult relationship

The lower financial literacy levels among women compared to men were already highlighted in previous editions of the report and in many international studies. However, the Edufin Index 2024 offers a detailed analysis that explores the causes and effects of this phenomenon. To better understand the issue, researchers shifted their focus from the individual to the family unit, where financial decisions are usually made.

The research questions included:

• What are the dimensions of the gender gap in financial literacy?
• How do factors such as education, income, and the family environment influence this gap?
• What tools and strategies could help reduce these inequalities?

The study was conducted using a questionnaire designed by SDA Bocconi and administered by DOXA to approximately 3,500 individuals. Women scored lower than men in both sub-indicators of the Edufin Index. The gap is particularly significant, at 9 points, in the Awareness Index, which measures individuals' financial knowledge. In the Behavioral Index, which evaluates the ability to make informed, responsible financial decisions, women scored 56.5 compared to 58.5 for men. This suggests that women participate less actively in financial markets, particularly with regard to investments and advanced insurance instruments.

Women also tend to make financial decisions in their families less autonomously and more collaboratively than men. To understand why, researchers focused on the family as the true decision-making unit, analyzing data by marital status and, for couples, by whether the woman contributes more, less, or equally to the household income.

Among young, income-earning singles (representing about 10% of the sample population with equal gender distribution), the gap in decision-making autonomy between men and women is almost negligible. In couples, however, the divergence is significant and persists in favor of men, even when the woman earns more. Generally, working women in couples have higher Edufin levels, especially if they contribute significantly to the household income. On the other hand, women dependent on their partners score the lowest, with a rating of 47.

While women's participation in the workforce raises their financial literacy, it does not eliminate the gap with men. This persistent variance prompted a more thorough exploration of intra-family economic dynamics. Delving deeper, researchers examined the influence of men’s and women’s opinions on family financial decisions. Using a series of questions on significant financial choices, they constructed a 0-100 scale indicator measuring the weight of respondents’ opinions.

For singles, there were no differences. However, in couples, women’s opinions carried significantly less weight than men’s. The study revealed that decision-making weight increases with economic relevance, but so does the gender gap, expanding to 12 points among breadwinners. Why? Two hypotheses emerge from the literature:

• The first hypothesis is that those who, regardless of their economic relevance, effectively “hold the purse strings” by managing daily income and expenses would also have greater influence over long-term financial decisions. To determine who plays this role, a 0-100 scale indicator of economic power was developed, increasing with the level of control. The study reveals a direct relationship between economic relevance and economic power, but this still does not explain why the opinions of working women who contribute income continue to carry less weight than those of men. A telling example is the case of respondents with similar incomes who, with a score of 51, exhibit an equitable distribution of economic power with their partner but show that the decision-making weight skews toward men.

• The second hypothesis concerns the consequences of the division of household and childcare responsibilities. Here, a 0-100 scale indicator was constructed to measure contributions to domestic and childcare tasks. On this scale, zero indicates no contribution, 50 represents an equal division of responsibilities between partners, and scores above 50 indicate a higher burden. For all women, the indicator exceeds 50, signaling an unequal division of labor. These findings align with data from Ipsos for Save the Children, which in 2023 estimated that women dedicate over five hours daily to domestic tasks compared to less than two hours for men. This disparity is not linked to the share of family income; in fact, 60% of female breadwinners report taking full responsibility for household and childcare tasks, compared to just 10% of male breadwinners. Role stereotypes persist in Italian couples, with women expected to take on the duties of the household and caring for the family, while men are entrusted with major financial decisions. With limited time to address financial matters, women also lack opportunities to learn and engage with these topics.

A notable group includes the newly single (15% of the female population and 7% of the male population), encompassing divorced, separated, or widowed individuals. Here, decision-making weight is similar between genders, as women must make their own financial decisions. However, due to delays accumulated during their years as part of a couple, the gender gap in the Edufin Index is substantial (around four points), driven entirely by the Awareness component.

To identify ways to engage women with financial topics, the report explores the role of female financial advisors, who are seen as potential drivers of change. A significant portion of women and men believe female advisors better understand women’s needs, overcoming entrenched gender biases in the sector. Female advisors are perceived as more empathetic and capable of personalizing services, which increases women’s involvement in financial matters. Notably, 30% of women and 20% of men believe female advisors can positively influence women’s financial empowerment. These percentages rise among those who have interacted with female advisors, confirming the impact of direct experience on perceptions of professional effectiveness.

The SDA Bocconi faculty members involved in the creation of the EDUFIN INDEX 3° EDIZIONE Consapevolezza e comportamenti finanziari e assicurativi degli italiani (EDUFIN INDEX 3rd EDITION Financial and Insurance Literacy of Italians: Awareness and Behavior) report include Barbara Alemanni, Paola Castelli, Umberto Filotto, Gennaro De Novellis and Alessandro Recla.

Read other articles in the Edufin Index 2024 series:

Alemanni - Why Italians' financial literacy still falls short