The Gender of Money

When it comes to finances, women and men are alike in one way: According to a recent survey of married couples, about one-third of respondents said they had lied to their spouse about money–hiding purchases, keeping secret accounts or lying about their earnings. Men and women were equally guilty of subterfuge.

When it comes to spending household money, however, it’s a different story. Here gender makes a significant difference.

In Bangladesh, Nobel Prize-winner Muhammad Yunus, creator of the micro-credit phenomenon, has found that women not only repay loans more often than men, but that when women control the money, their families were more likely to benefit from the income.

And a study in the Philippines reported that when women have control over a couple’s savings accounts, expenditures shift towards the purchase of family-targeted durable goods, such as washing machines or kitchen appliances.

In the traditional view of economists, all money is interchangeable, seamlessly fungible, and “free” from social or cultural influences. All that matters is how much money, not which money or whose money.

But money is far from impersonal. A growing body of research by sociologists and behavioral economists finds a dazzling array of cognitively, culturally and socially distinct ways in which people approach money. Some of the most intriguing differences are in the ways that women and men approach spending–and those studies are already influencing how some policy-makers and organizations around the world allocate their funds.

Last year, for instance, Haitian authorities distributed food vouchers only to women in the aftermath of the devastating earthquake. They said the food would be more likely to be divided equitably within the household this way than if men got the vouchers. And Oportunidades, Mexico’s innovative anti-poverty program, successfully targets its cash transfers to mothers, conditional on their children’s school attendance and health clinic visits by family members. Follow-up studies find that the money usually goes for food, children’s clothes and school supplies.

The pattern seems to transcend generations. A study by MIT economist Esther Duflo finds similar results comparing South African grandmothers’ and grandfathers’ usage of their old-age pension funds. And it’s not just a peculiar feature of developing economies. Sociologist Catherine Kenney reports that in low- to moderate-income two-parent U.S. households, children are less likely to experience food insecurity when their parents’ pooled income is controlled by their mother rather than their father.

So why is it that a mother’s money is more likely to be earmarked for her child’s well-being than the same amount of money in a man’s hands? Some might invoke genetic predispositions to caring, or a strategic advantage women get from investing in their children (anticipating, for instance, their child’s economic support in their old age). But neither of those explanations goes far enough.

Culture matters and so do social ties. Women are often held to higher standards of morality in spending. Despite jokes about women as spendthrifts, mothers (and grandmothers) are expected to consider their children’s needs as paramount. Selfless spending becomes a hallmark of moral virtue.

Kin, friends and other relations reinforce cultural expectations. In their study of a group of low-income single moms in the Philadelphia area, Kathryn Edin and Maria Kefalas observed a “norm of self-sacrifice” among the women they interviewed. Mothers, they report, “are harshly critical of other parents who buy…extras for themselves” rather than their children. Indeed, they found that a mother risked “social censure if she has nicer clothing than her children.”

Policy-makers are certainly paying attention to the gender of money. Microcredit organizations and conditional cash transfer experiments like Mexico’s Oportunidades regularly rely on women’s distinctive spending patterns, and programs targeting women have recently sprung up in Egypt and Pakistan. In a recent book, journalists Nicholas Kristof and Sheryl WuDunn offer their own rationale for supporting women-centered poverty policies in developing countries: “Some of the most wretched suffering,” they write, “is caused not just by low incomes, but also by unwise spending–by men.”

There is promise in gendered policies, but they don’t offer a full solution. Focusing only on private spending diverts attention away from crucial structural issues of inequality. A worrisome tradition persists in blaming poverty on the poor for allegedly misguided spending choices. Programs that focus on encouraging improved household spending practices therefore should operate along with broader policies providing income support for families and increased labor market opportunities, as well as wage parity for women. And rather than demonize spendthrift fathers, we should investigate when, how and why fathers’ budgeting becomes more similar to mothers’ budgeting. How do patterns change, for instance, in the case of full-time custodial dads?

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