I love a good irony. Here’s my favorite:

Economists generally agree on two things when it comes to women and money:

1. Women are not generally as financially literate as their male counterparts
2. Women are better-suited to dealing with finances than men

We have to ask how much of these truths is learned, and cultural, and how much of it is innate and biological. I think it’s a mix of both nature and nurture, as behavioralists describe it.

The bad news is that girls in our society, and in Western society at large, don’t seem to take as much of an interest as boys do in developing their personal finances. Is it the Y chromosome? Perhaps.

This is bad news because, among other reasons, the high divorce-rate suggests that many, even most, women will be on their own at some point in their adult lives, even if it’s just between husbands. And especially if there are children in the picture, managing a household budget can be a pretty shocking wakeup call if you haven’t been paying attention.

But here’s the good news. Many economists study women in action when they are exposed to financial education. And women seem to respond to the opportunity to manage money more effectively than men.

Consider what financial scholar Dr. Annamaria Lusardi has to say on the subject. This Princeton-educated economist is currently a professor of Economics at Dartmouth College, is a former visiting scholar at Harvard Business School, and is the recipient of the Fidelity Pyramid Prize, which is dedicated to educating the public in financial well-being.

Lusardi comments: “One reason that women might be better financial decision-makers than men is that women know what they do not know. This demonstrated lack of overconfidence may prove helpful in financial decision-making and in avoiding financial mistakes, and this awareness may help women to take action…The fact that women make decisions with the well-being of others in mind, that they steer clear of excessive risk, and that they do not consider themselves ‘financial geniuses’ or ‘financial wizards’ are characteristics that have not been fully exploited.”

Okay, so women’s compassion and humility – “feminine” qualities so long scorned by men as signs of weakness—are actually strengths. Uh-huh. Lusardi concludes:

“Interestingly, women are often brought in when there is a financial crisis and confidence needs to be restored…Perhaps one of the ways to ensure the smooth functioning of financial institutions and contracts is to have more women in charge.”

I’m banking on women for the future—starting right now. How about you?
Source: http://annalusardi.blogspot.com

This entry was posted on Friday, September 3rd, 2010 at 12:54 pm and is filed under under my skin with jane wurwand, founder of dermalogica.