Sexual orientation and financial well-being in the United States

We study the relationship between financial well-being and sexual orientation using the Survey of Household Economics and Decisionmaking (SHED) data for 2019–2022. We document that sexual minorities (people who are lesbian, gay, and bisexual, or LGB) have significantly more difficulty managing financially than similarly situated heterosexual individuals—and this pre-dated the COVID-19 pandemic. Differences are found across a broad array of current and future financial well-being outcomes, including retirement savings, rainy-day funds, credit card and schooling debts, and the use of alternative financial services such as payday loans. Differences in partnership, financial assistance from parents, financial knowledge, and risk preferences cannot explain these differences. Instead, we document that some social vulnerabilities, such as exposure to discriminatory behavior and violence, are differentially experienced by LGB people, which may play a role. Our results demonstrate that despite considerable improvements in attitudes and policies over time, sexual minorities in the United States experience significantly more financial insecurity than previously understood.