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Revalidating Fernandes et al.’s 2014 financial literacy scale in response to ongoing legislative and behavioral changes

Author

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  • Weiss-Cohen, Leonardo
  • Newall, Philip Warren Stirling

    (University of Warwick)

  • Ranyard, Rob
  • Ayton, Peter
  • Clacher, Iain

Abstract

Measures of financial literacy are widely used in research and underpin a wide range of policy interventions. The authors of “Financial literacy, financial education, and downstream financial behaviors" created a valid and reliable financial literacy questionnaire which has been widely used and frequently cited. However, we find that due to recent changes to legislation, the answer to one of their questions is now incorrect. This undermines the validity of the measure and will lead to incorrect usage if the questionnaire is not revalidated. We recommend that future researchers exclude this question. Item Response Theory analyses across five different datasets covering multiple time points and N=4959 participants were conducted to confirm that the scale remains reliable and measures the same construct without this item. The excluded question is also specific to the US, and its removal increases the international scope of the measure. We discuss the remaining limitations of this questionnaire.

Suggested Citation

  • Weiss-Cohen, Leonardo & Newall, Philip Warren Stirling & Ranyard, Rob & Ayton, Peter & Clacher, Iain, 2023. "Revalidating Fernandes et al.’s 2014 financial literacy scale in response to ongoing legislative and behavioral changes," OSF Preprints 493x7, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:493x7
    DOI: 10.31219/osf.io/493x7
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