Researchers have long recognized a gender divide in money matters. When it comes to high-risk investments, for example, women are known to be more cautious than men.

Regarding debt, however, it has remained unclear how gender plays a role. In a new study, published in The Journal of Consumer Affairs, researchers found that men are more willing to acquire debt in order to purchase luxury items, while women tend to see debt as a safeguard to make ends meet.

“We found that gender absolutely influences attitudes about debt,” said Dr. Mary Eschelbach Hansen, a study author and American University economics professor.

“When women observe others facing financial troubles or unemployment, or when women themselves have these experiences, they come to view debt as a tool to help smooth consumption. And, in general, they are less tempted than men to use debt to buy luxuries.”

Using consumer survey data from 2004-2013, the research team looked at whether women and men had differing tolerances for debt and whether economic events — both recent and in the past — had an impact on their feelings about taking on debt. The study specifically focused on men and women who had never been married.

Hansen conducted the study with colleagues Drs. Erin E. George, assistant professor of economics at Hood College, and Julie Lyn Routzahn, associate professor of economics and business administration at McDaniel College.

The researchers looked at the responses of both genders regarding their attitudes toward borrowing money for luxury purchases and toward covering living expenses when income is cut.

They also took into account whether the participants had recently been unemployed or had difficulty making debt payments. The researchers used changes between the annual surveys to measure how living through the Great Recession affected women and men.

The Great Recession, a period of global economic decline which began in 2007, is the only recession since 1973 in which women experienced substantial job loss. Declining tax revenues led to harsh measures that disproportionately affected women working in the public sector and those who received public benefits.

The subprime mortgage crisis was also more hard on women, as women were more likely to be targeted by lenders to receive subprime loans.

“As women observed the negative effects of the mortgage crisis and the Great Recession on other women, it reinforced their beliefs to use credit to bridge gaps in income,” said George.

“But perhaps more importantly, the experience of the Great Recession made women more cautious about taking on debt for non-essentials. This attitude of caution is a central reason why their financial position improved relative to the position of men.”

For example, the researchers note that in the 2010 survey, the monthly debt burden of never-married men was higher than the burden carried by the typical never-married woman.

The findings are good news for women, say the researchers, because if women mainly use debt to smooth consumption, they can protect their well-being. If personal difficulties make women less willing to borrow for luxuries, then they will probably experience improvement in their financial stability. They will also have greater potential to acquire assets, thus reducing financial insecurity in old age.

Since the findings concern women who have never married, improved financial stability increases the bargaining power of women entering marriage, thus reducing domestic abuse and divorce, and improving outcomes for children.

The findings also suggest that education about debt management should be spread across adulthood and that gender-specific education may be more effective than a gender-neutral curriculum.

“Lifetime financial education is important,” said Routzahn. “People’s attitudes change over time as things happen to them and in the wider world. Women, in particular, tend to have lower wages and assets. Focusing on financial education for women at critical junctures in their lives, when they may benefit from such education, should be considered.”

“Critical junctures could include, for example, when women are applying for unemployment insurance. That would be a good juncture because we know women are strongly affected by those experiences.”

Source: American University

How Men and Women View Financial Debt