Why Can’t a Woman Invest More Like a Man?



Gender Differences in Investment Behaviour

Abstract
This research examines the life cycle of equity participation by gender, unlike previous studies
that consider both genders together. Women’s equity participation is found to have a distinct
life cycle pattern. In addition, the factors significant for women’s equity participation are found
to vary notably from men at certain ages. In their twenties, women’s equity participation
parallel, at a lower level, that of men. Women’s equity participation declines between the ages
of 30 and 45, and the presence of children is a significant factor associated with the lack of
participation. After age 45, women’s participation increases rapidly until retirement age, and the
factors significant for this participation are similar to men’s. These finding improves the
understanding of the gender investment gap in equities, and why it fluctuates with age. The
presence of children appears to increase risk aversion in women, but not in men. As the
children mature, women’s risk tolerance increases, as reflected in their increased equity
participation.

Sheila Ohlund

Sheila.Ohlund@gmail.com
June 2017
 Contents



Life Cycle Portfolio Choices and Gender Effects of Habit Formation

Introduction ……………………………………………………………………..…… 3

Literature Review………………….………….…………………….……….……….. 4

- Equity Participation Life Cycle………………………………………..…. 4

- Gender Effects in Investment Choice………………………………..…. 5

Data………………………………..………….…………………………….………… 6

Methodology and Results…………………….…………………………….…….…. 9

Discussion……………..……………………….…………………………….….……14

Appendix: Definition of Variables…..………………………………………….……15

References…………………………………………………………………………………16

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 Gender Effects on Life Cycle Portfolio Choices 


Introduction


Despite the superior returns generated by equity investments, remarkably few households invest in equity
assets (Guiso et al, 2002). Women have especially low levels of equity participation, which has been
attributed to their limited financial literacy and risk tolerance (Bajtelmit and Bernasek, 1996 and Lusardi and
Mitchell, 2011). The financial industry has incorporated this perspective into their investment
recommendations for women. However, survey data has found that of all the industries affecting their daily
life, women are most dissatisfied with the financial services industry, both in their products and services
(Boston Consulting Group, 2009). Misconceptions regarding the dynamics of women’s investment
preferences are likely to be contributing to this dissatisfaction. This study analyses investment behaviour by
gender and finds significant gender differences in both the patterns of life cycle investments as well as the
factors significant to equity participation at different ages. The insights from this research provide an
improved basis for developing gender and risk appropriate life cycle investment strategies.



This study examines the life cycle patterns of equity investment participation by gender, and finds significant
divergence both in the pattern of participation as well as the factors significant at different life cycle stages
Women have a different pattern of equity participation over their investment life cycle. For both genders, the
underlying factors vary with age, but the variability is especially pronounced for women. The presence of
children has a negative effect on equity participation between the ages of 30 and 45.

Gender has been identified as an important factor depressing equity participation, though research studies
have different in the extent of gender differences in equity participation. (Dwyer, 2002 and Arano et al., 2010)
In general, women have been found to have participate less in risky asset investments, and an extensive
research literature has found women to have lower financial literacy and more limited risk tolerance.
(Lusardi and Mitchell, 2011)

This research utilises the European Central Bank’s Household Finance and Consumption Survey (HFCS) of
2013. The survey provides comparable demographic and financial data from more than 62,000 households
in 15 euro area countries. Equity participation of the entire population of households is found to be
consistent with previous research, with an arch shaped life cycle pattern. Participation starts at low levels,
rises to a peak between the ages of 55 and 64, and finally declines after retirement age (Bertaut, 1996;
Guiso et al. 2002, 2003).

This analysis segments the household population by the gender of the household reference person and finds
life cycle participation in risky investment assets varies significantly by age. Men’s participation rates has the
standard arch shaped trajectory, rising quickly in the early work years, then stabilising after age forty until
finally declining after retirement age. Women’s participation rates have a more complex pattern. In the early
work years, women’s participation rates parallel men’s, but decrease sharply after the age of thirty. After the
mid-forties, women’s participation rates increase rapidly as retirement age is approached, then decline after
retirement age.

Previous research of all households has found that households investing in risky assets are characterised by
relatively high wealth levels, educational attainment and risk tolerance. This research finds that the
underlying factors vary with age for both genders. The variability is especially pronounced for women.The
decline in women’s equity participation in their thirties is associated with family factors, especially the
presence of children in the household.

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Women have been found to have participate less in risky asset investments, and an extensive research
literature has found women to have lower financial literacy and more limited risk tolerance. (Lusardi and
Mitchell, 2011) Gender has been identified as an important factor depressing equity participation, though
research evidence has been varied, with limited gender effects noted in some studies. (Dwyer, 2002 and
Arano et al., 2010) This research provides insight into the differences found in research on women’s
participation levels, by highlighting the changes in women’s participation levels throughout their life cycle.

Literature Review

This study draws from two research areas, life cycle patterns of portfolio choice and gender effects on
participation in risky assets.

Equity Participation Life Cycle

Initial work on the optimal portfolio choices over an individual’s life cycle by Samuelson (1969) determined
that individuals should participate in risk assets at all ages and at a constant level. Several restrictive
assumptions were required, including independent and identical distribution of returns, frictionless markets
that allowed for cost free portfolio rebalancing, and the absence of labour income.

Labour income was incorporated in work by Merton (1971), who determined optimal portfolio shares were
consistent with those found by Samuelson, under assumptions of constant risk preferences, i.i.d. investment
returns, and complete markets, which allow future labour income flows to be capitalisable and insured.
Assuming future labour income flows are certain, they constitute a large endowment of a risk free asset, that
offsets investments in risky assets. The model prescribed a constant value of risky assets to be held over an
individual’s life time regardless of wealth levels or consumption preferences.

Human capital are associated with background risks, which are risks that can not be diversified or avoided,
as distinct from the effects of choices that arise from risk preferences. Background risks have the potential
for a significant impact on portfolio choice. Background risks can result from a variety of sources, including
volatility in labour income (Polkovnichenko, 1998 and Heaton and Lucas, 2000), or fluctuations in real estate
values or entrepreneurial income (Flavin and Yamashita, 2002 and Cocco, 2004). Labour income constitutes
a major source for wealth accumulation for most of the population. The significance of labour income vary
over the life cycle. Expected future flows from labour income are large when young but decrease as
retirement age is approached.

Uninsurable labour income risk was found to have a limited effect on portfolio choice by Heaton and Lucas
(1997). However, Viceira (2001) found an increase labour income risk made the labour income asset less
like a risk free asset and more like a risky asset, causing a decreased willingness to assume investment
portfolio risk. Gomes et al (2005) also found a limited effect of labour market risk on portfolio choice,
although incorporation of a small probability (0.5%) of a disastrous labour income shock resulted in a 40
percent drop in the holding of risky assets of young investors.

Habit formation preferences have also been found to effect portfolio choices within the context of labour
market risk. Habit formation describes the effect of past consumption levels have on current consumption
preferences. Heaton and Lucas (1997) found that a high level of habit formation at lower wealth levels lead
to greater risk aversion. In order to sustain past consumption levels, precautionary savings are preferred
and limited investment risk is accepted. Polkovnichenko (2007) combines the labour uncertainties modelled
by Gomes et al (2005) with the effect of habit formation preferences. His model predicts that young
households will hold less risky assets, as their accumulated wealth levels are insufficient to cushion their
consumption levels.
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Gender Effects in Investment Choice

An extensive literature of the effect of gender on investment behaviour has found women exhibit greater risk
aversion. Factors such as wealth, education and financial literacy have been found to have important effects
on the gender gap. Research has been conducted on two types of data. The first source is survey data
collected on a representative sample of individuals households, such as the US Federal Reserve Board’s
Survey of Consumer Finances (SCF). This data includes the comprehensive portfolio of assets of
households. The second source of data is based on investment and retirement plans. This data identifies the
specific individual making the investments, though these investments may be offset by other investments of
other household members.

Early studies of the SCF found significant gender influences in investment risk taking. An examination of
pension allocation behaviour of SCF 1989 respondents with defined contribution plans found that women
allocate a smaller portion of wealth to their pensions (27%) relative to men (35%). Single women allocated
less than married women, while single men allocated more than married men. Wealth and number of
children were found to be significant factors affecting investment choices. (Bajtelsmit et al, 1999) Gender
was found to significantly affect investment allocation choices based on SCF 1992 and 1995 survey data on
defined contribution retirement plans. Marital status, risk preferences and the financial assets outside the
defined contribution plan were important, but did not reverse the gender effects. (Sundén and Surette, 1998)

Gender was not found to have a significant effect on the probability of owning equities in a study focused on
determining why so few households invest in risky assets using the SCF of 1983. (Haliassos and Bertaut,
1995) Married couples and female headed households were found to have a higher probability of owning
risky financial assets compared to unmarried men, if factors such as income and stated risk preference are
controlled. (Bertaut and Starr-McCluer, 2002) Gender effects were found to vary by country based on
national household survey data from 2004 and 2005 from Austria, Italy, Netherlands and Spain. Risk
preferences did not have a gender impact, with the exception of Italy, the country with the greatest gender
inequality. (Barasinska, and Schäfer, 2013) A study of Canadian Survey of Financial Security of 1999 and
2005 focusing on distinguishing age and cohort effects, found that previously married women born between
1955 and 1966 have a significantly higher predicted portfolio risk relative to other men and women in the
cohort. (Rybczynski, 2015)

Several studies of employee contributions to pension plans found greater risk aversion in women’s
investment allocations. One study was based on a large pension plan that offered several investment
options, including employer stock, diversified equities, a government bond portfolio, a social choice fund, and
a guaranteed interest fund. Men were more likely to opt for the employer stock, while women were
significantly more likely to choose the guaranteed interest fund (Bajtelsmit and VanDerhei, 1997). A survey
of faculty employed at five Colorado universities found women to be more conservative investors, with less
invested in stocks than men. Women’s risk aversion was confirmed when considering the cases where
spouses/partners were willing to take at least average risk (Bernasek and Shwiff, 2001). Women were found
to be more risk averse than men in a study of four large not-for-profit Australian retirement savings funds
from 1995 to 2004. Excessive risk aversion was evident for young women, which moderated as women
approached retirement age. (Speelman et al, 2006)

Gender related risk differentials have been found using other data sources. A survey of of randomly selected
mutual fund investors carried out by the US Office of the Comptroller of the Currency and the Securities
Exchange Commission in 1995, revealed that women’s largest, last and riskiest mutual fund holdings
exhibited less risk than men. However, controlling for investment knowledge significantly diminished the
impact of gender on investment risk taking. (Dwyer, 2002)

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More recent studies of retirement plans found no indication of gender effects on risk preferences in asset
allocations. No significant differences were found in the allocation to equites between men and women
faculty at Kansas Regents University in 2003, given controls for demographic, income and wealth levels.
(Arano et al, 2010) Women’s asset allocation to risky assets was found to depend on wage levels based on
1996 data for 401(k) plans. Women with wages between $25,000 and $50,000 were found to have a greater
probability to invest in risky assets than men. However, women earning more than $75,000 had a smaller
probability of investing in risky assets than men. (VanDerhei and Olsen, 2000)

Contrary to the literature indicating women to be more conservative investors, women were found to be more
likely to invest more aggressively in a study of Australian managed fund investors from 1974 to 2005. Riskier
‘growth’ funds had about 55% female investor days compared to just 45% of male investor days. Younger
men (aged less than 30) were found to be more risk loving. Surprisingly, among middle aged (aged between
30 and 50) and older (aged over 50) investors, women were found to be more risk seeking. (Brown et al,
2006)

Data

The Eurosystem Household Finance and Consumption Survey (HFCS, 2013) provides harmonised
household-level financial data of 15 countries in the euro area. The survey sample and statistical weights
are designed to be representative of the individual country as well as at the aggregate euro level. The survey
is designed to adequately represent the full spectrum of household wealth by oversampling the wealthiest
households, which tend to be more difficult to contact and less likely to respond. The HFCS provides
multiply imputed values for missing values. The survey sample includes 62,521 households from Austria,
Belgium, Cyprus, Germany, Spain, Finland, France, Greece, Italy, Luxembourg Malta, Netherlands, Portugal,
Slovenia, and Slovakia. The household interviews were conducted in 2010/2011, except in France
(2009/2010), Spain (2008/2009), and Greece (2009).

A household reference person (RP) is selected based on the internationally accepted Canberra criteria,
including home ownership, spousal or parental status, the highest income earner and/or the eldest individual.
The demographics used in the analysis, such as gender and age, refer to the reference person. Table 1
indicates the number of total households as well as households whose responsible person are men and
women. Panel A summarises the data by country, and Panel B summarises the data by age group.

The focus of this analysis is the household’s ownership of publicly traded shares. Publicly traded shares
include shares with prices quoted on a recognised stock exchange or other secondary market. Mutual funds
and other equity, such as limited partnerships are excluded. The output variable, or participation rates, are
grouped into age and gender cohorts. The factor analysis is based on ten year cohorts between the ages of
20 and 79. The households with RPs less than 20 and over 85 are excluded, due to the limited number of
observations and variables.

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Table 1 Panel A: Number of Observations by Country and Gender
Country Total 
 Men RP 
 Women RP 

Households Households Households
Austria AT 2'380 1'062 1'318
Belgium BE 2'327 1'303 1'024
Cyprus CY 1'237 785 452
Germany DE 3'565 1'969 1'596

Spain ES 6'197 3'433 2'764

Finland FI 10'989 5'457 5'532
France FR 15'006 8'508 6'485
Greece GR 2'971 1'212 1'759
Italy IT 7'951 4'335 3'616

Luxembourg LU 950 585 365

Malta MT 843 450 393
Netherlands NL 1'301 879 390
Portugal PT 4'404 2'996 1'408
Slovenia SI 343 136 207
Slovakia SK 2'057 914 1'143

Euro area EA 62'521 34'024 28'452

Source: HFCS, 2013

Table 1 Panel B: Number of Observations by Age Group and Gender

Age Group Total 
 Men RP 
 Women RP 

Households Households Households
less than 20 726 349 377
20 to 29 4'468 2'132 2'336
30 to 39 8'043 4'097 3'946
40 to 49 11'781 6'301 5'480
50 to 59 12'257 7'034 5'223

60 to 69 11'710 7'048 4'662

70 t0 79 8'450 4'684 3'766
80 and greater 5'041 2'379 2'662
Source: HFCS, 2013

The factors included in the analysis are those identified to be significant in equity participation rates in
previous research. Table 2 summaries the factors, the number of observations for each gender, and the
extent to which the factor values vary by gender. The key factors are age, wealth, highest educational
attainment, and risk preference. Other factors included, such as marital status, children, labour status and
the expectation of an inheritance, have also been identified in precious research as significant in determining
equity participation.

Sheila Ohlund, 20 June 2017 Gender Differences in Investment Behaviour 7 of 25

 Outcome variable

HH owns publicly trades shares
 33'966 28'384 19.9% 13.1% 17.37***

(Response indicates proportion yes)

Control Variables

Age (ages 85 and above = 85) 33'572 28'059 52 52.7 0.76

Net Wealth per household 34'024 28'452 266'444 191'770 -7.49***

Net Wealth per capita (16+ ) 32'755 26'916 131'096 105'760 -5.12***

Marital Status Single 6'356 6'082 22% 22% -0.24

Marital Status Married 23'532 12'586 63% 40% -60.25***

Marital Status Union 323 312 1% 1% 0.17

Marital Status Widowed 1'509 5'726 6% 22% 49.87***

Marital Status Divorced 2'295 3'734 8% 14% 9.75***

34'015 28'440

Children (number in household) 34'024 28'452 0.38 0.41 2.31*

RP Education 1 Primary 6'758 6'402 17% 21% 6.04***

RP Education 2 Lower Secondary 5'451 4'795 15% 17% 2.50*

RP Education 3 Upper Secondary 12'494 10'268 42% 40% -1.81

RP Education 5 Tertiary 9'227 6'903 25% 21% -5.73***

33'930 28'368

Labor Status 1 Working 18'113 12'442 57.5% 44.8% -16.24*”*

Labor Status 2 Work Leave 44 218 0.2% 1.6% 7.33***

Labor Status 3 Unemployed 1'834 1'646 5.7% 5.7% 0.07

Labor Status 4 Student 711 750 0.0% 0.0% 1.03

Labor Status 5 Retired 12'302 8'660 32.0% 29.9% -2.53*

Labor Status 6 Disabled 590 470 1.8% 1.6% -0.78

Labor Status 7 Military Service 43 2 0.0% 0.0% -3.21***

Labor Status 8 Domestic Tasks 92 3'959 0.2% 13.3% 35.38***

Labor Status 9 Other 279 283 0.9% 1.0% 1.30

34'008 28'438

Investment attitude: substantial risk 315 122 0.9% 0.5% -3.01**

Investment attitude: above avg risk 1'530 905 7.5% 4.5% -5.84 ***

Investment attitude: average risk 5'427 3'471 30.1% 22.9% -8.00***

Investment attitude: no risk 12'548 11'714 61.5% 72.0% 10.02***

19'820 16'212

Inheritance Expected
 11'865 9'675 15.3% 11.5% -4.61***

(Response indicates proportion yes)

Significance of correlation coefficient: * p<0.05, ** p<0.01, *** p<0.001

Source: HFCS, 2013

Sheila Ohlund, 20 June 2017 Gender Differences in Investment Behaviour 8 of 25

 Marital status relates to the individual’s legal status, single (never married), married, widowed and divorced,
rather than actual co-habitation arrangements. Consensual union is a legal based registered partnership
existing in some countries.

Labour status reflects the individual’s own perception of their current main activity. The category other refers
to those not working for pay, which includes individuals who are not in the labour force, including those with
sufficient wealth who do not wish to work.

Net wealth is defined to be total household assets, excluding pension wealth, less total outstanding
household liabilities. Wealth is determined on a household level. However, the household structure varies
significantly over the countries surveyed. In some countries, multiple generations tend to live in the same
household, while in other countries households are more likely to be composed of nuclear family and single
individuals (Fessler et al, 2014). In order to calibrate for these differences in household structure, wealth is
calculated on per capita basis of adult household members, individuals over the age of 16. As wealth
increases exponentially, the log of wealth is required for use in the regression equations.

Inheritance expectations are included, as expected future inheritance is not part of current wealth, but is
expected to affect future wealth levels.

Methodology and Results

The participation of all households over their life cycle is consistent with the results of previous research. For
all households, participation forms an arch shaped pattern, starting from low levels for young households,
rising to a peak around retirement age, and declining thereafter. The pattern of men’s participation is similar,
though exceeding the levels for all households.

Women’s participation rates have a more complex pattern. During their twenties, women’s participation
parallel’s men, but declines sharply from the early thirties to the early forties. During the late forties, and
continuing until retirement age, the participation rate rises rapidly. After retirement, the participation rate
declines in tandem with men’s. The decline in participation rates when women are in their thirties is
anomalous in that it varies from the men’s pattern, and also deviates from the rising trends during women’s
twenties, late forties and fifties. (Graph 1)

Graph 1: Participation in Equity Investments by Gender and Age

16.0%

12.0%
Equity Participation %

8.0%

4.0%

All Households Men RP Women RP

0.0%
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-60 60 - 64 65 -69 70 -74 75 -79 80-85

Sheila Ohlund, 20 June 2017 Gender Differences in Investment Behaviour 9 of 25

The factors significant for participation are analysed for three groups, all households, households with men
as responsible persons and households with women as responsible persons. Equity participation is the
dependent variable. The independent variables are those factors found to be significant in previous
research. The following regression equations are used:

For all households of all ages:


Equity_Participation = 𝜶 + 𝛃1Gender + 𝛃2Age + 𝛃3Wealth + 𝛃4Marital Status + 𝛃5Education + 


𝛃6Labour Status + 𝛃7Investment Attitude + 𝛃8Inheritance Expected + ɛ

For men and women RP households of all ages, the gender factor is removed:

Equity_Participation = 𝜶 + 𝛃2Age + 𝛃3Wealth + 𝛃4Marital Status + 𝛃5Education + 


𝛃6Labour Status + 𝛃7Investment Attitude + 𝛃8Inheritance Expected + ɛ

For all households within each age cohort, the age factor is removed:

Equity_Participation = 𝜶 + 𝛃1Gender + 𝛃3Wealth + 𝛃4Marital Status + 𝛃5Education + 


𝛃6Labour Status + 𝛃7Investment Attitude + 𝛃8Inheritance Expected + ɛ

For men and women RP households within each age cohort, the age factor is removed:

Equity_Participation = 𝜶 + 𝛃3Wealth + 𝛃4Marital Status + 𝛃5Education + 


𝛃6Labour Status + 𝛃7Investment Attitude + 𝛃8Inheritance Expected + ɛ

The results of the regression analysis are indicated in Table 3. Panel A shows the results using all
households, Panel B shows the results using only households with men as RP and Panel C shows the
results using only households with women as RP.

All ages

The factors significant for all households and all ages are consistent with previous research. Age, gender,
wealth, educational attainment and risk preferences are all significant. The factors for men at all ages are
similar, though with the exception of age. Like men, women RP households do not have age as a significant
factor, but children and a student status, are associated with lower equity participation.

Ages 20 -29

For all households, gender and education are no longer significant factors, but marital status also appears as
a significant factor for equity participation. Men have the same factors, with martial status included in the
significant factors. Women have only one significant factor, a marital status of married.

Ages 30 -39

For all households, gender becomes a significant factor, along with wealth, educational attainment and risk
preferences. For men, a marital status of married and divorced, associated with lower equity participation,
are new significant factors. Women’s significant factors include wealth as a positive factor, but children
appears as a factor associated with lower equity participation.

Ages 40 -49

All households have little change, except the addition of student labour status as a positive factor for equity
participation. For men, marital status is no longer a significant factor. leaving wealth, educational attainment
and risk preference remain as significant factors. For women, the previous negative factor of children is also
absent. Wealth remains and risk preference appears as a significant factor for the first time.


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Table 3 Panel A: Equity Participation Regression by Age: ALL Households

All Households
Age Group all ages 20-29 30-39 40-49 50-59 60-69 70-79

Age -0.001 ***

-4.17
Gender: Women 0.033 *** -0.008 0.051 ** 0.048 * 0.027 * 0.008 0.038
5.20 -0.27 2.59 2.79 2.22 0.33 1.81
Wealth a -0.024 *** -0.019 * -0.020 *** -0.027 *** -0.016 *** -0.039 -0.028 ***
-9.03 -2.65 -4.48 -5.13 -3.95 -6.60 -5.63
Single -0.000 -0.075 * 0.046 0.041 -0.050 0.075 -0.160
-0.02 -2.27 0.78 0.71 -1.19 0.45 -1.14
Married 0.008 -0.043 0.070 0.048 -0.128 ** 0.094 -0.088
0.50 -1.65 1.10 1.02 -2.75 0.67 -0.79
Widowed 0.032 -0.166 * -0.027 0.126 -0.084 0.152 -0.088
1.66 -2.20 -0.48 1.47 -1.26 1.02 -0.78
Divorced 0.015 -0.072 0.130 0.045 -0.113 * 0.096 -0.096
0.77 -1.48 1.94 0.93 -2.14 0.65 -0.90
Children 0.005 -0.005 0.018 -0.005 0.013 0.023 -0.089
1.12 -0.41 1.61 -0.44 0.53 0.78 -1.54
Educ: Lower Secondary -0.014 0.001 0.002 -0.027 0.005 0.020 0.011
-2.09 0.05 0.14 -0.76 0.52 0.96 1.09
Educ: Upper Secondary -0.027 *** -0.017 -0.002 0.008 -0.057 *** -0.005 -0.015
-4.30 -1.20 -0.10 0.57 -6.68 -0.35 -1.37
Educ: Tertiary_ -0.083 *** 0.030 -0.095 * -0.054 * -0.116 *** -0.019 -0.104 ***
-5.81 0.87 -2.45 -2.47 -9.01 -0.63 -3.38
Labour Status: Working 0.007 -0.033 -0.018 0.165 -0.149 * 0.031 -0.134
0.19 -0.99 -0.30 1.44 -2.41 1.55 -0.89
Labour Status: Unemployed 0.013 -0.021 0.000 0.171 -0.108 * -0.035
0.43 -0.78 0.01 1.55 -2.04 -0.65
Labour Status: Student 0.056 0.027 0.082 -0.441 * 0.133 * -0.042
1.45 0.81 1.19 -2.22 2.15 -0.96
Labour Status: Retired 0.034 0.056 -0.306 0.189 -0.128 * 0.015 0.035 *
0.84 1.31 -0.84 1.84 -1.96 0.58 2.09
Labour Status: Disabled 0.031 0.010 0.048 0.172 -0.109 * -0.003 -0.108
0.78 0.29 0.80 1.29 -2.12 -0.03 -1.08
Labour Status: Domestic -0.022 -0.011 -0.026 0.142 -0.255 *** 0.028 -0.009
-0.76 -0.59 -0.42 1.15 -4.16 1.07 -0.28
Labour Status: Other 0.049 0.179 * -0.271 * 0.276 * -0.101 0.045 0.022
1.38 2.55 -2.13 2.30 -1.74 0.57 0.21
Invest. Attitude:Substantial Risk -0.143 *** -0.044 -0.071 -0.206 -0.225 -0.171 -0.223
-3.60 -0.61 -1.59 -1.76 -1.55 -1.41 -1.11
Invest. Attitude:Above Avg Risk -0.178 *** -0.220 ** -0.010 -0.245 ** -0.224 * -0.329 *** -0.051
-4.59 -2.95 -0.18 -2.85 -3.29 -3.60 -1.07
Invest. Attitude:Average Risk -0.142 *** -0.050 -0.128 ** -0.105 *** -0.179 *** -0.228 *** -0.142 *
-7.93 -1.84 -3.01 -4.94 -9.48 -7.74 -5.94
Inheritance Expected 0.004 -0.011 0.016 -0.002 0.011 -0.009 0.015
0.25 -0.32 0.80 -0.060 0.33 *** -0.15 0.39
Constant 2.260 *** 2.24 *** 2.09 *** 2.01 *** 2.411 2.261 *** 2.303 ***
72.250 20.59 31.13 19.25 19.960 13.14 17.46

N 19'250.000 1'545 2'861 1'801 3'845 1'320 2'568

a Wealth is logged and per capita based on the members o the household over the age of 16, in thousands.

t statistics in parentheses Significance of correlation coefficient: * p<0.05, ** p<0.01, *** p<0.001

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Table 3 Panel B: Equity Participation Regression by Age: Men RP Households

Men RP
Age Group all ages 20-29 30-39 40-49 50-59 60-69 70-79

Age -0.001
-1.93
Wealth a -0.030 *** -0.024 *** -0.026 * -0.031 ** -0.015 * -0.045 *** -0.036 ***
-9.80 -3.20 -2.54 -3.22 -2.08 -8.04 -4.94
Single 0.006 -0.098 * 0.033 0.049 0.022 -0.048 -0.256
0.15 -2.25 1.36 0.59 0.49 -0.40 -1.63
Married 0.008 -0.034 ** 0.034 * 0.072 -0.100 *** -0.061 -0.050
0.23 -0.66 2.88 0.78 -3.53 -0.58 -0.32
Widowed 0.026 0.336 -0.068 0.021 -0.067
0.63 1.52 -0.55 0.15 -0.41
Divorced 0.026 0.037 0.213 *** 0.068 -0.109 0.023 -0.124
0.67 0.42 3.88 0.90 -1.54 0.18 -0.90
Children -0.006 0.006 0.012 -0.018 0.013 0.047 -0.227
-0.70 0.33 0.54 -1.03 0.35 0.95 -1.86
Educ: Lower Secondary -0.017 0.039 0.018 -0.068 0.014 0.021 0.006
-1.26 1.17 1.28 -1.14 0.86 0.87 0.34
Educ: Upper Secondary -0.018 -0.005 0.008 0.009 -0.034 -0.009 -0.011
-1.45 -0.24 1.24 0.33 -1.75 -0.84 -0.60
Educ: Tertiary_ -0.101 *** 0.044 -0.110 *** -0.096 ** -0.101 *** -0.070 *** -0.101 **
-8.13 0.96 -13.70 -2.77 -4.87 -4.24 -2.70
Labour Status: Working 0.041 -0.076 0.298 -0.042 -0.190 ** -0.016 -0.111
0.23 -1.19 1.23 -1.11 -2.88 -0.15 -0.64
Labour Status: Unemployed 0.045 -0.072 0.295 -0.028 -0.140 * -0.116
0.25 -1.14 1.03 -0.51 -2.32 -1.05
Labour Status: Student 0.052 -0.023 0.369 -0.732 *** 0.157 0.022
0.28 -0.33 1.12 -5.31 1.41 0.23
Labour Status: Retired 0.068 -0.031 0.338 0.046 -0.126 -0.058 0.047
0.38 -0.43 1.50 0.72 -1.89 -0.65 1.60
Labour Status: Disabled 0.082 -0.028 0.387 -0.025 -0.151 * -0.032
0.47 -0.52 1.79 -0.32 -2.53 -0.35
Labour Status:Military 0.200 0.002
1.03 0.03
Labour Status: Domestic 0.047 0.260 -0.198 -0.133 0.053
0.26 0.88 -0.93 -1.92 0.45
Labour Status: Other 0.062 0.194 ** -0.142 *** 0.070 -0.103 0.013 -0.126
0.38 3.27 -4.69 0.66 -1.12 0.08 -0.86
Invest. Attitude:Substantial Risk -0.176 ** -0.064 -0.146 *** -0.333 * -0.190 -0.159 -0.428
-3.19 -0.76 -6.50 -2.34 -1.17 -0.94 -1.60
Invest. Attitude:Above Avg Risk -0.200 *** -0.278 *** -0.036 -0.267 * -0.235 * -0.411 *** -0.075
-4.30 -3.59 -1.29 -2.54 -2.17 -4.40 -1.03
Invest. Attitude:Average Risk -0.168 *** -0.036 -0.180 *** -0.119 *** -0.212 *** -0.250 *** -0.200 ***
-6.83 -0.90 -18.19 -4.67 -5.29 -5.89 -4.52
Inheritance Expected 0.006 -0.040 0.017 -0.011 0.040 -0.003 0.055
0.25 -0.60 1.93 -0.34 1.04 -0.05 1.15
Constant 2.312 *** 2.341 *** 1.878 *** 2.270 *** 2.392 *** 2.553 *** 2.370 ***
12.170 19.53 5.15 16.60 19.110 22.770 14.93

N 10'748 713 1'504 2'120 2'218 2'144 1'525

a Wealth is logged and per capita based on the members o the household over the age of 16, in thousands.

t statistics in parentheses Significance of correlation coefficient: * p<0.05, ** p<0.01, *** p<0.001

Sheila Ohlund, 20 June 2017 Gender Differences in Investment Behaviour 12 of 25

Table3 Panel C: Equity Participation Regression by Age: Women RP Households

Women RP
Age Group all ages 20-29 30-39 40-49 50-59 60-69 70-79

Age -0.001
-1.32
Wealth a -0.019 *** -0.014 -0.017 ** -0.026 *** -0.017 *** -0.029 ** -0.015 *
-6.40 -1.61 -2.67 -5.78 -3.60 -3.08 -3.50
Single -0.006 -0.053 0.043 0.014 -0.120 0.221 -0.025
-0.240 -1.16 0.62 0.21 -1.17 1.69 -1.33
Married 0.014 -0.067 ** 0.106 0.011 -0.124 0.309 * -0.075
0.56 -2.84 1.47 0.16 -1.13 2.33 -3.76
Widowed 0.040 -0.032 0.040 -0.086 0.329 * -0.032
1.40 -0.40 0.68 -0.67 2.49 -1.73
Divorced 0.017 -0.073 0.109 0.008 -0.094 0.246 -0.018
0.83 -1.40 1.47 0.13 -0.81 1.87 -0.82
Children 0.016 ** -0.013 0.024 ** 0.009 0.018 -0.009 -0.012 *
2.96 0.58 2.81 0.94 1.37 -1.52 -0.82
Educ: Lower Secondary -0.004 -0.031 -0.008 0.029 -0.009 0.033 -0.018
-0.250 -0.73 -0.32 0.84 -0.51 0.95 -1.09
Educ: Upper Secondary -0.029 * -0.030 0.002 0.018 -0.088 *** -0.018 -0.046
-2.47 -0.83 0.06 0.58 -4.32 -0.35 -4.10
Educ: Tertiary_ -0.043 * 0.013 -0.050 0.011 -0.124 *** 0.071 -0.099
-2.19 0.28 -0.79 0.28 -4.21 1.36 -3.35
Labour Status: Working 0.001 -0.076 -0.036 0.211 0.001 -0.001 -0.025
0.03 -1.78 -1.28 1.45 0.01 -0.03 -0.31
Labour Status: Unemployed -0.001 -0.042 -0.013 0.193 0.020 -0.049
-0.03 -1.24 -0.36 1.29 0.210 -0.68
Labour Status: Student 0.089 *** 0.001 0.085 0.234 -0.050
4.28 0.06 0.74 1.55 -1.42
Labour Status: Retired 0.026 -0.317 0.182 -0.023 0.032 0.059
0.59 -0.74 1.33 -0.20 0.70 1.05
Labour Status: Disabled 0.005 -0.062 0.054 0.200 0.043 -0.077
0.12 -0.97 0.78 1.13 0.35 -0.80
Labour Status: Domestic -0.031 -0.007 -0.043 0.183 -0.116 0.017 0.054
-0.92 -0.19 -0.78 1.20 -1.15 0.79 1.00
Labour Status: Other 0.061 0.293 0.048
1.39 1.80 0.55
Invest. Attitude:Substantial Risk -0.085 0.021 0.068 -0.045 -0.367 -0.182 0.022 *
-1.06 0.78 1.00 -0.31 -1.24 -1.22 1.13
Invest. Attitude:Above Avg Risk -0.122 * -0.062 -0.050 -0.162 -0.206 * -0.029 -0.028
-2.27 -1.38 -0.35 -1.29 -2.12 -0.77 -0.97
Invest. Attitude:Average Risk -0.110 *** -0.066 -0.067 -0.091 ** -0.136 *** -0.202 * -0.044
-7.82 -1.17 -1.35 -2.90 -4.22 -6.37 -2.64
Inheritance Expected 0.003 0.028 0.028 0.015 -0.033 -0.040
0.35 0.73 1.10 0.48 -1.36 -0.72
Constant 2.200 *** 2.233 *** 2.059 *** 1.987 *** 2.326 *** 1.954 *** 2.140 ***
52.90 19.64 20.41 14.95 14.54 10.670 44.50

N 8'499 832 1'357 1'801 1'624 1'320 2'240

a Wealth is logged and per capita based on the members o the household over the age of 16, in thousands.

t statistics in parentheses Significance of correlation coefficient: * p<0.05, ** p<0.01, *** p<0.001

Ages 50 -59

All households have a notable increase of labour status significant factors, all of which have a positive effect
on participation, with the exception of labour status student. Men also have the inclusion of working status

Sheila Ohlund, 20 June 2017 Gender Differences in Investment Behaviour 13 of 25

as significant factors. In contrast, for women, labour status is not significant, but educational attainment
factors first become significant.

Ages 60 -69

All households have a sharp decrease in significant factors, only risk preferences remain as significant
factors. Men also have a reduction in significant factors, with wealth and educational attainment of tertiary
education remaining with risk preferences as significant factors. For women, education attainment is
eliminated, and wealth and risk preference become associated with equity participation while marital status
has a negative correlation.

Ages 70 -79

All households have wealth, education and risk preference associated with greater participation while a
retired labor status is associated negatively with equity participation.. Men are similar with only wealth,
educational attainment and risk preference supporting participation. For women, wealth and children, are
positively associated with equity participation.

Discussion

The life-cycle of equity participation rates observed for all households combines two distinct gender patterns.
Women have a particularly volatile pattern and underlying factors. Especially notable is the decline in
women’s participation rates in their thirties. At this age, the presence of children appears as a negative
factor for equity participation. Although there is no decline in men’s participation at this age, a married or
divorced marital status of men constitute two significant factors negatively associated of equity participation.
For both genders, family factors during the thirties are associated negatively with equity participation.

This finding is consistent with the research of Polkovnichenko (2007) on habit formation and portfolio choice
in the context of uninsurable labour income risk. Children require significant costs, which constitutes a type
of habit formation, as households have a strong preference to maintain the spending levels associated with
family obligations. Households are relatively young when they have children, when the accumulated assets
are low and the expected future labour income flows high, but subject to background risk. Households with
children would also have a relatively high expense to accumulated wealth ratio, which Polkovnichenk found
to be the circumstances when younger households have conservative investment behaviour.

This research provides insight into the differences found in research on women’s participation levels, by
highlighting the changes in women’s participation levels throughout their life cycle. Women have a more
volatile equity participation rate over their life cycle. One significant factor for women of all ages is a student
status, which constitutes a significant negative factor for equity participation. Studies based on surveys of
student populations would be affected by this factor. Women’s equity participation varies during their life
cycle, but rises toward retirement age, which is consistent with studies of this age group. (Arano et al., 2010,
and Brown et al., 2006)

An improved understanding of the factors affecting equity life cycle participation has important implications
for the finance industry investment recommendations. All households with relatively high costs required by
family considerations should benefit from an improved understanding of the limits on their participation in
risky investments. As these family obligation pressures are reduced through time, greater participation in
risk assets can be incorporated in their investment portfolios.


Sheila Ohlund, 20 June 2017 Gender Differences in Investment Behaviour 14 of 25

Appendix: Definition of Variables

The HFCS survey questions and detailed answers for the variables used are as follows:

Equity Participation:

Do you/does anyone in your household own stock shares in any publicly traded companies? 

1 - Yes 2 - No

Age:

Age of the person at the time of the interview.

Education:

What is the highest level of education (you/he/she) (has/have) completed? 

1 – Primary or below (No formal education or below ISCED 1 + ISCED 1: Primary education) 

2 – Lower secondary (ISCED 2: Lower secondary or second stage of basic education)

3 – Upper secondary (ISCED 3: Upper secondary + ISCED 4: Post-secondary)

5 – Tertiary (ISCED 5: First stage tertiary + ISCED 6: Second stage tertiary)

Labour Status:

What is (your/X’s) current employment status. Which categories best describe (your/his/her) situation? 

1 - Doing regular work for pay / self-employed/working in family business

2 - On sick/maternity/other leave (except holidays), planning to return to work 

3 - Unemployed

4 - Student/pupil/unpaid intern

5 - Retiree or early retiree

6 - Permanently disabled

7 - Compulsory military service or equivalent social service

8 - Fulfilling domestic tasks

9 - Other not working for pay

Investment Attitude:

Which of the following statements comes closest to describing the amount of financial risk that you (and your
husband/wife/partner) are willing to take when you save or make investments?

1- Take substantial financial risks expecting to earn substantial returns

2 - Take above average financial risks expecting to earn above average returns 

3 - Take average financial risks expecting to earn average returns

4 - Not willing to take any financial risk

Net Wealth:

Total household assets excluding public and occupational pension wealth minus total outstanding
household’s liabilities.



Inheritance expectations:

included separately, as expected future inheritance is not part of current wealth, but is expected to affect
future wealth levels.

Number of Household Members 16+:


Number of persons for which age is greater than or equal to 16. 


Sheila Ohlund, 20 June 2017 Gender Differences in Investment Behaviour 15 of 25

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