What Explains the Gender Gap in Financial Literacy? The Role of Household Decision Making

Using newly collected data from the RAND American Life Panel, we examine potential explanations for the gender gap in financial literacy, including the role of marriage and who within a couple makes the financial decisions. Blinder–Oaxaca decomposition reveals the majority of the gender gap in financial literacy is not explained by differences in the characteristics of men and women—but rather differences in coefficients, or how literacy is produced. We find that financial decision making of couples is not centralized in one spouse although it is sensitive to the relative education level of spouses.