Gender effects on investment choices

Many economic interactions involve some form of risk. Thus, it is not surprising that substantial body of research in social science has tried to understand how decision makers incorporate risk in their choices. Expected utility, the dominant theory of decision under risk, makes some testable empirical predictions. However, under expected utility the actual level of risk-taking behavior by the agent is left as a free parameter, allowing for individual differences.

It has been observed that over the last decade the Income of the third world countries such as India, China and Indonesia has grown at a high pace. As the wealth of the people increases they will have confidence in the markets and start investing in financial products. This research paper deals with the investment decisions of all individuals across different income groups, age, gender etc. and tries to identify the effect of demographic factors on the decision making investors

The study aims to find out if the demographic and gender factors of an individual namely his age, income, gender, savings, source of income and investment experience have any effect on the patterns of investment and hence affect his risk taking ability. Advanced quantitative techniques have been used to investigate the data and judgment has been given on the basis of statistical output.

The results would help the managers in the Wealth Management process in advising their clients better regarding investments that are most suitable according to their demographics and personality type. The study provides evidence that the investment choice depends on and is affected by the demographic and gender variables.

The world as we know is under constant change and evolution. Perhaps the greatest influence on this change has been demography; the changing dynamics of world populations and their resultant impacts our environment and our society in general. The world’s population has risen from two billion in 1930 to the current levels of almost seven billion and based on a new report published by the UN Population Division world populations is believe to reach 14 billion by 2100. The proportion of seniors is growing more rapidly than younger populations on all continents due to a combination of longer life expectancies and declining fertility rates. The consequence of this will be the increase of the median age of world populations from its current level of 28 years to over 38 years in 2050. This will be more pronounced in more developed countries seeing a median age of almost 46 years in 2050. By 2050, approximately two billion people will be aged 60 or over. This effect would surely be felt on the investment culture in Mauritius. But firstly before analyzing how demographic and gender change has influenced the world of investment it is important to understand the concept of investment and many more factors related to it.

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