To what extent does financial education influence gender equality?

Researcher Matthew Bird of Universidad del Pacífico, Peru, coordinated a cross-disciplinary team of experts from different institutions, such as Fundación Capital, to conduct a research project on finance and gender equality entitled: 'Financial Education, Couple's Communication, and Gender Norms: Explaining the Mixed Effects of Women's Empowerment on Intra-household Bargaining ' (“Educación financier, comunicación de pareja y normas de género: Explicando los efectos mixtos del empoderamiento de las mujeres en la negociación dentro del hogar“). The goal is to gauge how much do shifts in women’s economic and psychological power affect their empowerment and cause (or not) their sentimental relationships to improve.

Two approaches, several conclusions

This study addresses a complex issue, in which two theories converge to explain how money-related issues and the power balance affect their sentimental relationships. “On one hand, according to the theory of resources economic scarcity increases the likelihood of conflict, as couples negotiate how to distribute limited assets. On the other hand, reaction theories hold that relative change in the control of resources, regardless of the overall level thereof, threatens the role and identity of men, driving them to reaffirm control or extract resources through violence”, explains the study.

To verify the validity of these theories, researchers conducted a research study in Colombia (confirm) using two versions of LISTA, a financial education application designed for 'tablets'. One of the versions provided financial education content with specific messages for women on topics such as savings or family budgeting, while the other, offered family financial education messages, but without any gender-specific content. The two versions were distributed among 20 women and 10 of their male partners, all of them in families in vulnerable situations  The data on which the research is based were collected through a survey on financial habits and final interviews with the participants, as well as telemetry data gathered by the application, which allowed establishing behavioral profiles within couples and drawing up the conclusions.

Economic, psychological and social resources

Female empowerment can be defined through three variables: resources, intervention and achievements. Resources include access to material, human and social goods; intervention, to the ability to female empowerment, to results that translate into higher living standards. These three variables, which translate into economic, psychological and social resources, are the ones that affect intra-household conditions and a woman's relationship with her partner.

Participants who disagreed more with traditional gender roles and aspired to take on a more important role in the family economy, were more willing to follow the application’s tips and apply them in daily life. Women who accepted the traditional role assigned to them, in households where men had a dominant role, were attracted mainly by messages related to saving or achieving financial goals. This trend, in a certain way, can also be considered, according to the study, as "an alternative pathway towards empowerment."

When financial education leads to less scarcity and detrimental financial habits and an increase in food security and savings, it causes financial stress to decline within couples and their relationship to improve. If the acquired knowledge improves the availability of cash to meet daily needs - not to spend on impulsive unnecessary purchases – then it translates into a greater well-being. Therefore, financial literacy should be a weapon of empowerment for women, who are able to take on a more active role in intra-household bargaining. However, if the spouse begins to feel threatened by this shift in roles, problems at home will likely arise.

Equality and financial education

Financial education allows women to manage household expenses and make important monetary-related decisions. Nevertheless, the way in which financial literacy messages are received largely depends on variables such as communication and roles within the couple. The more balanced and healthy a household’s collaboration patterns are, the better the couple’s communication will be, and this results in higher financial skills. So, in other words, paraphrasing one of the participants, “When we buy something, we both decide".

Despite the minuscule population sample on which the paper is based, the work paves the way for exploring new ways of leveraging financial education to transform less equal households towards a model based on women’s economic and psychological empowerment.

Matthew Bird and his team will hold a conference to discuss the key findings of their study on February 18 at Universidad del Pacífico (Avda. Sánchez Cerro 2098. Pabellón J, Aula Magna 504, Lima) from 9 to 13h. A series of experts will join the speakers to debate and share their insights, based on the conclusions of this study.

To attend this event, please register here.