Gender differences in recollections of economic socialization, financial self‐efficacy, and financial literacy

• Published date: 01 January 2023
• Author: Elise Frølich Furrebøe,Ellen Katrine Nyhus,Andrew Musau
• Date: 01 January 2023
• DOI: http://doi.org/10.1111/joca.12490

RESEARCH ARTICLE

Gender differences in recollections of economic

socialization, financial self-efficacy,

and financial literacy

Elise Frølich Furrebøe

1

| Ellen Katrine Nyhus

1

|

Andrew Musau

2

1

School of Business and Law, University

of Agder, Kristiansand, Norway

2

Faculty of Business Administration and

Social Sciences, Molde University

College, Molde, Norway

Correspondence

Elise Frølich Furrebøe, School of

Business and Law, University of Agder,

Postboks 422, 4604 Kristiansand, Norway.

Email: elise.f.furreboe@uia.no

Abstract

The OECD/INFE international surveys of adult financial

literacy (OECD/INFE 2016, 2020) show gender differ-

ences in financial literacy in developed countries in

Europe. In this study, we examine whether these differ-

ences can be explained by gender differences in parental

economic socialization using the Dutch 2018 DHS

household survey. We investigate whether respondents'

recollection of economic socialization when young pre-

dict their adult economic behavior and self-assessed

financial knowledge. The results from ordinal logit and

logistic regressions and for nonlinear equations decom-

positions reveal gender differences in the recollection of

economic socialization and in how socialization prac-

tices are related to economic behavior and self-assessed

financial knowledge. Men have to a greater degree than

women been socialized in terms of having paid work

outside the home, while women more often than men

report that their parents controlled their spending.

Moreover, we find gender differences in how men and

women benefitted from thesame socialization practices.

KEYWORDS

economic socialization, financial literacy, financial self-

efficacy, gender differences

Received: 2 December 2020 Revised: 20 August 2022 Accepted: 1 September 2022

DOI: 10.1111/joca.12490

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distrib ution and

reproduction in any medium, provided the original work is properly cited.

© 2022 The Authors. Journal of Consumer Affairs published by Wiley Periodicals LLC on behalf of American Council on Consumer

Interests.

J Consum Aff. 2023;57:69–91. wileyonlinelibrary.com/journal/joca 69

1|INTRODUCTION

The purpose of this study is to investigate whether the relatively large gender differences in

financial literacy observed in developed countries can be partly explained by gender differences

in economic socialization. More specifically, we investigate whether there are gender differ-

ences in parental economic socialization and whether different aspects of economic socializa-

tion may have different effects on men's and women's financial literacy and financial behavior.

The OECD/INFE international surveys of adult financial literacy (OECD/INFE, 2016;

OECD/INFE, 2020) as well as many other international studies (Klapper et al., 2015; Robson &

Peetz, 2020) report large gender gaps in financial literacy across ages and geographic areas, with

women consistently demonstrating a greater degree of financial illiteracy (Bucher-Koenen

et al., 2017; Japelli, 2010; Lusardi & Mitchell, 2014; Nyhus & Refvik, 2016). Relatively large gen-

der differences in financial literacy are even found in countries such as the Netherlands and

Norway (OECD/INFE, 2016), which are both relatively gender equal in terms of access to edu-

cation and to the labor market. These countries have high national scores on financial literacy

(OECD/INFE, 2016; OECD/INFE, 2020), but such scores are mainly caused by high literacy

among men. For example, the OECD/INFE, 2016 survey showed that 84% of men and 56%

of women in Norway achieved the minimum target score on financial knowledge

(OECD/INFE, 2016). The corresponding numbers for the Netherlands were 76% men and 51%

women (OECD/INFE, 2016). Furthermore, research shows gender differences among adoles-

cents (Lusardi & Mitchell, 2014), highlighting the fact that the gender gap persists despite shifts

in society from traditional gender roles to more gender equality and that the differences are pre-

sent at an early age. We therefore investigate whether the observed gender gaps among adults

are shaped in childhood and may be explained, in part, by differences in parental economic

socialization.

1.1 |Dimensions of financial literacy

The construct financial literacy is defined and operationalized in different ways. One definition

states that financial literacy refers to peoples' ability to process economic information and make

informed decisions about financial planning, wealth accumulation, pensions, and debt

(Lusardi & Mitchell, 2014). As pointed out in the OECD (2020) report, financial literacy implies

that a person needs confidence and the ability to use their financial knowledge, in addition to

financial knowledge itself. Thus, financial literacy can be conceptualized as containing two

human capital dimensions: (1) knowledge acquired through education and/or experience and

(2) the ability and confidence to apply such knowledge (Huston, 2010).

It follows that measuring financial literacy becomes challenging since the two-dimensional

definition requires a distinction between actual and perceived financial knowledge. While

actual (or objective) knowledge (human capital dimension 1) may be measured by numeracy or

problem-solving tasks such as the ability to “compute the cost of a good that sells at half price”

(Japelli, 2010), the degree of confidence and ability to apply knowledge (human capital dimen-

sion 2) may be measured by a self-efficacy scale based on one or several statements/questions

about confidence in one's own abilities. An example of a single item financial self-efficacy mea-

sure is “How confident do you feel about your ability to manage your own finances?”(Serido

et al., 2013). Perceived financial knowledge, also called subjective knowledge (Shim

et al., 2010), is typically measured through such self-assessments of one's own financial

70 FURREBØE ET AL.