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This study reports empirical results based on an original survey of household finances in which, unlike other surveys, the participants were specifically asked about their degree of involvement in financial decision-making for the household. Women's involvement in household finances is found to be significantly positively related to their share of total household income. Since the most commonly-used datasets for household financial research do not identify the household decision-maker, previous research on gender differences in financial decision-making has been limited. This research suggests that female share of total household income could be a viable proxy for female decision-makers in married couples.
Keywords: Decision-making, Gender, Risk aversion, Risk tolerance
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Introduction
The process by which joint financial decisions are made within married and cohabitating couple households is an issue that has plagued researchers who conduct empirical studies of gender and household savings and investment decisions. The significance of gender variables in household financial research is called into question if the women in the sample are not making decisions independently of their spouse or partner. Although this problem has long been recognized by researchers, few have presented reasonable empirical solutions. The most common solution to this problem (e.g., Jianakoplos & Bernasek, 1998; Bajtelsmit & Bernasek, 2001) has been to limit the sample to singles or to compare single women to other groups such as married couples and single men.
Although consideration of the financial decisions of singles skirts the problem of who makes the decisions in a household, it is still difficult to generalize from their behavior to the population at large since single women and men are not necessarily representative of the majority of women and men. Thus, accurate identification of the decision-maker for each household is essential for empirical work in this area. Anecdotally, men have traditionally been more likely than women to make household savings and investment decisions, but there is evidence to suggest that women's involvement in household financial decision-making has been increasing. The purpose of this paper is to empirically estimate a model of household financial decision-making to determine the factors that increase women's involvement in the process. The results of the estimation shed light on the financial decision-making process in households and suggest some guidelines that researchers...