N°23-09: A Leveraged Gender Gap: The Combined Effect of Longevity Risk (Mis)-Perception and Financial Risk-Taking

Financial risk and longevity risk are the main risks affecting pension income. This paper analyses gender differences related to how financial risk taking and survival expectations are correlated. We analyse data from the "Survey of Health, Ageing and Retirement in Europe" (SHARE) database and find a significant gender gap in self-assessed risk tolerance, consistently with previous literature. Moreover, we show that individuals with realistic survival expectations (i.e., survival expectations that are close to their actuarial counterparts) tend to take more financial risk. Because women show a significantly higher underestimation of their survival compared to men (-17% vs. -6% on average), the co-existence of no risk taking and longevity risk mis-perception is much stronger among women than men, what we call the leveraged gender gap, with important economic implications in relation to post-retirement income.