That’s what she said: an empirical investigation on the gender gap in inflation expectations

Working paper

The gender gap in inflation expectations, i.e., women reporting systematically higher inflation expectations in consumer surveys, is a well-established phenomenon. The dis parity has been attributed to women’s greater involvement in grocery shopping and exposure to volatile food prices. I evaluate this hypothesis using a Bayesian learning framework, which suggests that signal volatility increases mean expectations only when ever the prior is flat. Such a flat prior could be caused by low financial literacy, which is more prevalent in women. Using data from the “Bundesbank Online Panel – House holds”, I find that grocery shopping increases expectations only for a low literacy sample and including a control for financial literacy closes the gender gap fully. This observation has significant macroeconomic implications, including potential gender-based disparities in retirement investment and monetary policy targeting.

Authors: Reiche, L

• Publication status: Published
• Publisher: University of Oxford
• Series: Department of Economics Discussion Paper Series
• Publication date: 2023-10-23
• Paper number: 1025
• Language: English
• Keywords: consumer inflation expectations; experience; financial literacy; gender