The Interaction Effect of Age and Gender on Financial Capability: A Cross-National Analysis

Background and Purpose: The recent economic recession affected lower-income household’s financial well-being across the world. The purpose of this study is to examine the covariate effects of socio-demographic variables on the latent variables of financial capability, purchasing behavior, and economic strain among low income households in a mid-sized city in the U.S. and Nairobi, Kenya. The study was undergirded by the following question: What is the effect of sociodemographic variables on the constructs of financial capability, purchasing behavior, and economic strain among low income households in the U.S. and Kenya?

Methods: The samples were conveniently drawn from heads of households living in public housing in a mid-sized city in southeastern United States and Nairobi, Kenya between 2009 and 2010. Public housing in Nairobi consists of housing units built in the 1960s by the then colonial government to offer affordable living for lower class city workers. They are characterized by very low rents, which make them comparable to public housing in the U.S.

A total of N=383 (U.S., n = 194; Kenya, n = 189) individuals participated in the self-administered surveys. The range of participant age was from 16 to 82 years (M = 36.20, SD = 14.57) and the sample was 54.7% female (n = 209) and 43.7% male (n = 167). Also, 75.7% (n = 290) of the sample was not married while 20.4% (n = 78) reported being married. The highest level of education among the majority of participants in the sample was a high school diploma (n = 148; 38.6%). Majority of participants reported an annual income of $5,000 or less (n = 223; 58.4%).

A two-group confirmatory factor analysis was used to test measurement and structural invariance of the latent constructs between groups. with Mplus 7.0. The covariates used in the study included: age, level of education, marital status, and gender

Results: The latent means of the constructs were invariant across groups, Δχ2 (3) = 6.75, p >.05. The only significant predictive effects were financial capability regressed on the age by gender interaction term (β = .032, p < .001) in the U.S. group. Specifically, the results indicated that in the U.S. group, the effect of gender on financial capability was only significant at relatively low and high observed values of age. Specifically, at approximately 44 years of age (the mean age) there is no effect of gender on financial capability. When age is approximately 59 years (+ 1 SD), males have a higher mean on the latent variable financial capability than their female counterparts.

Conclusions and Implications: The age by gender interaction was significantly related to financial capability in the U.S. group. Social work researchers and practitioners are currently engaged in efforts to encourage financial education and capability issues in the profession’s pedagogy as well as practice. the study contributes to these efforts by demonstrating how this construct varies by sociodemographic factors among U.S. poorer households. While further research is needed, practice with poorer families on financial issues should take cognizance of socio-demographic factors.