Among couples, gender inequality in financial decision-making remains prevalent, with men traditionally having more control over household finances. This issue is further complicated as couples age. Old age is associated with cognitive difficulties, resulting in a reduced capacity to make financial decisions. Professor Anup Basu at Queensland University of Technology studies the intersection of age, financial decision-making and gender. In a recent study, Professor Basu and colleagues examined how older married individuals delegate financial decision-making tasks to their spouses. Read More
Sixty-four married couples aged 60 years or older participated in the study. In a “delegation experiment”, each spouse was given 10 common financial decision-making tasks, and had to choose the best response from four options for each task. For example, in the task of choosing a deposit account to invest 4,300 dollars, options included different accounts with varying interest rates and payment frequencies. All participants chose whether to attempt each task themselves or transfer it to their spouse.
The team’s results showed a stark difference in delegation based on gender. 92% of those who delegated tasks to their spouse were women. In fact, less than 5% of male participants delegated any task to their wives.
The next part of the study evaluated the participants’ financial competence. Both genders scored similarly on tests on average, meaning that financial competence was not the reason why women were more likely to delegate than men. However, lower financial competence made participants more inclined to delegate.
The researchers concluded that the most likely reason for the gender imbalance is men’s sense of identity and the perceived role of men as primary financial decision-makers within marriage. Financial tasks have been traditionally viewed by society as “men’s work”, and therefore delegating such responsibilities may cause men to feel a loss of identity or control.
These results raise concerns about women’s financial well-being in old age, since they often outlive their husbands and therefore disproportionately suffer the consequences of poor financial decisions. If financial decisions are not delegated in a timely manner, women can find themselves unprepared to take over such responsibilities when their partners die.
The experiment assigned participants to two groups. Participants in the first group were allowed to delegate to their spouse whichever tasks they wanted to. However, in the second group, once a participant chose to delegate a task, all subsequent tasks were automatically transferred to their spouse. The researchers found that in this second group, where delegation was irreversible, participants were far less likely to assign tasks to their spouse. They were also more likely to delay delegation compared to those who had the option to pick and choose tasks they wanted to delegate.
These findings have important implications for substituted decision-making mechanisms, such as Power of Attorney. A better understanding of provisions, such as the ability to revoke Power of Attorney, may encourage older people to put such arrangements in place sooner rather than later.
