Gender Differences in Optimism and Asset Allocation

We investigate two alternative explanations why men may hold more stocks than women. Apart from a gender difference in risk aversion, gender differences in either optimism or in perceived risk of financial markets might cause men to hold more risky assets. Our results show that men tend to be significantly more optimistic than women regarding a broad range of issues, including the economy and the stock market. After taking differences in optimism into account systematic gender differences in asset allocations disappear. Our evidence also suggests that women indeed perceive stock market risk to be significantly higher than men offering a second alternative explanation why women invest less in stocks