By Hanna O’Connor

The relationship between money and women has been a complicated one. Often when telling the story of female advancement in society, we prefer a linear model of continual improvement. This is a rather distorted version of events, however. With money serving as one example, the trajectory of female liberty has followed the pattern of a pendulum, swinging between progress and retrogression. It is clear that history holds many examples of female action through finance. One of them, which is not commonly told, is where women have truly changed the course of history through investment. Historians of today believe that women from the upper classes financed the journeys conducted by Jesus of Nazareth. Although I expect that profit was probably not what they had wished for in return, it serves as a reminder that women handling money is not a recent phenomenon.

The idea of ‘Mr Breadwinner’ and ‘Mrs Consumer’, according to writer Mary Louise Roberts, stems from the nineteenth century, and was created in order to justify why women were ‘unfit’ for political participation. The discourse aimed at merging consumption and womanhood, creating yet another dichotomy between men and women which favoured the former. Roberts refers to Rousseau, who claimed that women from adolescence “love everything visual, mirrors, jewels, cloth”. Of course, society has since undergone transformation. This is acknowledged by an article in The New York Times from 2013, which proclaimed the rise of a new family breadwinner, since women accounted for 40 percent of the primary breadwinners in the US, a number which is steadily increasing. Yet, it is not unreasonable to suggest that the idea of women being excessive consumers is, in part, still alive.

An even greater issue than the prevailing female stereotype of ‘Mrs Consumer’ is, however, the fact that even when women earn roughly the same amount as men, they are still worse off when examining their longer-term financial security. Economists call this the ‘female financial paradox’. Although this gap is partly explained by lower earnings and smaller retirement benefits, studies also suggest that it is due to lower comfort levels with maths and lesser financial knowledge. This results in women preferring to save instead of investing, and even when they do invest, they tend to show more risk-averse behaviour. The same studies therefore express the need for more financial education directed towards women.

Whilst this might be one way of understanding and tackling the investment gap, one can rightfully criticize the paternalistic undertone. This is especially true when considering studies focusing on women who actually do invest. They instead paint an entirely different picture: women tend to outperform men. One such study was undertaken by University of California professor, Terry Odean, which stretched over a seven year period. It determined that single women outperformed men by 2.3 percent, and when operating within female investment groups, by 4.6 percent compared to their male counterparts. The reason for this is partly to be found in the aforementioned behaviour of women —  it seems that being “risk-averse” and trading less might actually be the better strategy. Odean’s study indicates that men trade about 45 percent more than women, which he finds to be a consequence of overconfidence amongst men.

The problem therefore seems to be that women, for different reasons, do not feel “at home” in the investment market. Sallie Krawcheck, who has been featured in The New York Times as ‘The woman who made it on Wall Street’, says in Here and Now that “[…] we as women tend to buy into some of the old myths —  it’s really one of the last places where we are more 1958 than 2016. They are: ‘guys are better at math.’ Not true. People do tend to think men are better investors. Again we talked about it, not true. That women need more financial education to invest. Well, everybody does, but men invest anyways”.

Perhaps we should reformulate the issue into one which is less about women’s supposed lack of financial expertise, and less about explaining how women (who throughout history have been handling money) should be taught to invest like men, and more about reshaping the male-dominated world of investment. This is what LouAnn Lofton has done in her book from 2012, Warren Buffett invests like a girl: And why you should, too, where she outlines strategies to achieve greater financial success, in what she calls a ‘feminine investing’ approach. Lofton refers to studies implying that more gender and age diversity leads to greater market stability, and this is where the potential in changing gender investment patterns really becomes evident. She suggests that with more women in “trading floors, boardrooms, and other male-heavy strongholds in the financial world”, we would perhaps have been able to greatly reduce the severe consequences of the financial crisis in 2008. Girls do not just “wanna have funds”, they need to have funds, not only for the wellbeing of themselves, but also for the wider economy.

By Hanna O’Connor

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