Barking up the Wrong Gap

This weekend is a little different than the usual, as we are dog-sitting Paavo, the mini dachshund with the maxi personality. He is a good dog, but when he visits, he tends to wander at night and wake everyone up. Besides that though, he is pretty easy and a good option instead of having our own. My wife and daughter keep asking, but I am not ready to give in just yet. However, perhaps now would be a good time since I am not working so much and the dog could imprint with me instead, then it would be mine.

The irony.

I was reading today about another stupid social media grab for attention trend where women are laughing about how financially inept they are. Of course, women aren't ubiquitously inept, nor are all men competent, but is it something to brag and laugh about?

Paavo doesn't think so.

However, I imagine that the same women would also complain about the gender wage gap, which gets me thinking. The gap of course is not quote what it seems for the most part, because of the way they calculate it - it is much smaller than they advertise in most places. There are also some fields where the gap goes the other way. What I wonder though is, how much of an impact ineptitude has on the difference.

I suspect that like in many fields, differences between skills are going to affect salaries. However, many of these differences might not be tied directly to the work itself. For instance, the ability to negotiate, or the ability to walk away from an offer that doesn't meet desires. There is likely an average difference between the sexes in this regard, where perhaps women might not negotiate as hard on money, or be more willing to accept less if it means getting something. Having a Kobe earning 100k is better than not having a job because they wouldn't give 105k.

A 5% gap forms.

But, that also creates an anchor for future salary expectations too. So, a 10% pay rise for both moves one to 110K, the other to 104.5K, and another will move it to 121K and 114K - That gap keeps increasing based on the first anchor, but more importantly, what the difference is used for. For example in Australia, women tend to have more in bank savings than men. But, men have a lot more in investments. One is losing value against inflation, the other is gaining value.

More gap.

Which brings up another possible difference factor, because men tend to be more risk seeking than women. As a result, men might not live as long, because they die doing stupid things, but they are also more likely to invest in higher yield vehicles. But, when it comes to investing, me tend to peg themselves as people who are rational and are actually taking "calculated risks" - even if it is a fallacy. This means that they are going to do some level of due diligence, studying and comparing options, choosing what they think is best. There is a wide range of outcomes, but many build some level of financial literacy.

Which makes me wonder.

There must also be a wide range of financial outcomes if comparing women only, so what is the difference between those who are earning far more than those who are not? What are the skill differences? Are there interest differences also? For instance, I know women who are far, far more technical than myself and far more technical than the average man, but they are an outlier. I also know women who negotiate in business far better than the average man, and they are also earning far more than the average man in Finland at least. So, is wage gap a gender thing, or an interest thing?

Of course, there is a lot of legacy and systemic factors to consider, but in many places, that has been changing for many decades. But, I don't think that it is going to be possible to close it completely, because there are average differences between the two sex populations in what they are interested in, and how they behave.

My wife and have a collar on our mortgage.

While she now understands how it works at a high level, I can pretty much guarantee she doesn't know what it actually is and what factors are involved. She does not know the current interest rate or the reference rate or where it is derived. She doesn't know the maximum or minimum of the collar, and she has little care to learn, despite me trying. She just isn't interested. I know, and I check in often to see what has changed.

This is not uncommon, is it?

Our finances are only one part of our lives, but the way we approach them is how most of us approach everything that makes an impact on our lives - if we are interested, we will look into it. If not, we won't. But, not knowing much doesn't just mean we are still impacted, but that we are more likely to be more impacted negatively, because we will miss out on opportunity. We can say that we "don't have the time" to learn this or that, but if we were to take stock of the time we spend, we will likely find that we invest a lot into what returns very little, or that actually cost us, even if it makes us feel comfortable.

Like keeping savings in a bank.

Financial literacy is as important, if not more important than reading literacy itself. Our financial wellbeing directly or indirectly impacts on all parts of our lives, for all of our lives. And, the earlier we learn to read the economics of it, the earlier we start investing, and the more compounding benefits we will get.

One thing that we should all recognize though is, expecting the gender wage gap to be closed through changing the rules of the game to favour one over the other, is going to lead to more problems. And at an individual level, expecting this to happen in our lifetimes adequately and leaving our financial health up to policy makers and social constructs, is unlikely to help us much.