Financial Literacy

Lusardi, A. (2008). Financial Literacy: An essential tool for informed consumer choice? Unpublished Working Paper. Dartmouth College.

The Financial Literacy sub-scales (self-assessed, basic, and advanced):Lusardi (2008) Financial Literacy.doc

	Table of Contents
	Description
	History of Use
	References

Description:

Purpose		The Financial Literacy Tests were designed to assess understanding of the basic and advanced concepts in finance necessary to make saving decisions.
Questions		Various groups of items (in groups of 3-8) using a mixed multiple-choice and free-response format
Sub-scales		3 groups of items: Basic Financial Literacy: understanding of interest rates, inflation, and risk diversification (3 items) Numeracy: understanding of numbers and basic arithmetic (3 items) Advanced Financial Literacy: understanding of bonds, stocks, mutual funds, and asset pricing (8 items)
Domain		Consumer Finance
Psychometrics
Sample items		If 5 people all have the winning number in the lottery and the prize is 2 million dollars, how much will each of them get? (Numeracy) Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? (Basic Financial Literacy) More than $102 Exactly $102 Less than $102 Do not know Refuse to answer If the interest rate rises, what will typically happen to bond prices? (Advanced Financial Literacy) They will rise They will fall They will stay the same There is no relationship between bond prices and the interest rate Do not know Refuse to answer

References:

Scale:

Lusardi, A. (2008). Financial Literacy: An essential tool for informed consumer choice? Unpublished Working Paper. Dartmouth College.

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