Seven Ways to Knit Your Portfolio: Is Investor Communication Neutral?

The concept of “familiarity” has been used in financial economics to explain apparent paradoxes in people's behavior, such as the home bias in portfolio choices. In this study, we investigate whether (lack of) familiarity with the language of investor communication may contribute to an explanation of the well-documented gender gap in financial decision-making (i.e. women participate less in the stock market than men and, if they do, they take less risk than men). Using an interdisciplinary framework that combines insights from Behavioral Economics, Finance, Social Psychology and Linguistics, we analyze the metaphors used in websites that target beginning retail investors in three different languages; Dutch, Italian and English UK. We find that in all three languages the metaphors used come from the same conceptual domains; namely, war, health, physical activity, game, farming and the five senses. As these domains refer to worlds that are predominantly and (stereo)typically masculine, we conclude that the language of investor communication may give rise to feelings of familiarity and belonging among men, while creating feelings of distance and non-belonging among women. In other words, just as emotional responses influence risk assessment and return expectations, the language used in financial communication may contribute to explaining the gender gap in stock market participation, risk taking and portfolio choice.