Women appear to have a lower risk appetite in our sample. Exceptions are France and Spain, where women exhibit a higher predisposition to take on risks (FRA: 30%; ESP: 27%) as compared to men (FRA: 26%; ESP: 20%). German women were the most cautious of our sample; only 8% of them were willing to accept higher levels of risk, as opposed to 15% of German men. Risk appetite between men and women were similar in Austria (women: 10%; men: 12%) and in Italy (w: 13%; m: 16%). In Switzerland, the levels of risk appetite were more divergent (w: 14%; m: 26%) as well as in the US (w: 21%; m: 33%).
Does the level of risk literacy influence investment decisions? The relationship is not straightforward, although our survey results indicate that risk literacy could play a role in asset preference. A higher amount of the people in our survey that are not risk literate would prefer to hold cash (30%), as compared to the risk literate (22%). On the other hand, 36% of the risk-literate sample preferred securities (bond, equities or mutual funds), while only 26% of the non-risk-literate would consider it an appropriate investment. The non-existence of differences regarding cryptocurrencies and insurance products, however, makes clear that risk literacy alone cannot explain investment choices; personal preference and risk appetite play a big role here.
Cash is the most preferred investment instrument for women, while insurance is highly unpopular overall. In an experiment, we asked our subjects what instrument they would prefer to invest and hold for a year. Echoing their lower risk appetite, we found that cash is the most preferred instrument for women in almost all countries (average of 32%), with the exceptions of Austria (cash: 24% vs securities: 29%) and the US (cash: 23% vs securities: 36%) where they prefer securities. Vice versa, in most countries, men choose securities as their financial instrument of choice (average of 33%) – with the only exception of France where they prefer cash to securities (cash: 29% vs securities:23%). France is also the only country in our sample where both sexes prefer insurance over cryptocurrencies by a wide margin (insurance: 18% vs cryptocurrencies: 6%). While in Italy (and Austria) at least women see more value in insurance than in cryptocurrencies, in all the other countries, insurance is highly unpopular as a financial instrument (average of 10%; against cryptocurrencies average of 11%): a decade of zero or even negative interest rates has seemingly tarnished the perception of insurance as a valuable savings product.
Impact of the Covid-19 crisis and asset choice: Even among respondents negatively affected by the crisis and those who reported receiving social protection payments, securities are the most popular investment vehicle (28% and 35%, respectively). Cash is king only among those that had more income (34%) and of those who consumed more of their income (28%).
What does this mean for policymakers? Our results – a seemingly positive impact of risk literacy on investment choices on the one hand, and an only diluted impact of risk preferences and circumstances on the other hand – make a strong argument for improving risk literacy. After all, higher levels of risk literacy could help to make investments that better match the personal situation of the investor. The good news: risk literacy is a cheap policy that can be achieved by educating the population in statistical thinking.