The Gender Gap on Wall Street: An Empirical Analysis of Confidence in Investment Decision Making

Abstract

We attempted to identify the personal characteristics that influence confidence in an investment decision in an experiment administered to 1,359 subjects nationwide. Multiple regression was used to control statistically for variation among subjects and to develop a model of investment decision confidence. The most striking finding was that women had significantly lower confidence in an investment task than men, after controlling for all other relevant variables and characteristics including the amount of the investment decision itself. Familiarity with and present attitude about investing in the stock market, college credit hours in accounting and finance, experience in evaluating common stocks, the current level of the stock market, and the investment decision itself (the amount to be invested) were also found to be significant. Age, value of personal portfolio, years of college, and years of business experience were not significant characteristics.