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Financial Homo Ignorans: Development and validation of a scale to measure individual differences in financial information ignorance

Author

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  • Barrafrem, Kinga
  • Västfjäll, Daniel
  • Tinghög, Gustav

Abstract

Information ignorance refers to the act of deliberately avoiding, neglecting, or distorting information to uphold a positive self-image and protect our identity-based beliefs. We apply this framework to household finance and develop a concise 12-item questionnaire measuring individuals’ receptiveness to financial information, or the lack thereof – the Financial Homo Ignorans (FHI) Scale. We conduct two studies with samples from the general population in Sweden (total N=2508) and show that the FHI scale has high reliability and distinct from other commonly used individual-difference measures in behavioral finance. We show that individual heterogeneity as assessed by the FHI scale explains a substantial variation in financial behaviors and financial well-being, also when controlling for demographics and financial literacy. These results unequivocally demonstrate the utility of the FHI scale as a valuable instrument for researchers and practitioners in comprehending and addressing the challenges posed by the omnipresence of financial information in today's world.

Suggested Citation

  • Barrafrem, Kinga & Västfjäll, Daniel & Tinghög, Gustav, 2024. "Financial Homo Ignorans: Development and validation of a scale to measure individual differences in financial information ignorance," Journal of Behavioral and Experimental Finance, Elsevier, vol. 42(C).
    • Handle: RePEc:eee:beexfi:v:42:y:2024:i:c:s2214635024000510
    DOI: 10.1016/j.jbef.2024.100936
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    Keywords

    Ignorance; Information processing; Financial behavior; Financial well-being;
    All these keywords.

    JEL classification:

    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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