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Financial literacy is falling in Australia, except that it’s not

Author

Listed:
  • Botha, Ferdi
  • de New, John P.

Abstract

Using a nationally representative household panel for Australia, we observe an apparent significant deterioration in financial literacy between 2016 and 2020 and aim to identify its determinants. This surprising development is attributed to an exogenous change in interview mode from predominantly in-person to telephone, causally induced by the coronavirus pandemic. Measured financial literacy, though not latent true financial knowledge, declined as a result. Analyses of financial literacy or other cognitively demanding subjects must specifically take mode of interview into account, as mode changes can create spurious trends in cognitively demanding survey questions.

Suggested Citation

  • Botha, Ferdi & de New, John P., 2026. "Financial literacy is falling in Australia, except that it’s not," Economics Letters, Elsevier, vol. 259(C).
    • Handle: RePEc:eee:ecolet:v:259:y:2026:i:c:s0165176525006342
    DOI: 10.1016/j.econlet.2025.112797
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    References listed on IDEAS

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    1. Alison Preston & Robert E. Wright, 2023. "Gender, Financial Literacy and Pension Savings," The Economic Record, The Economic Society of Australia, vol. 99(324), pages 58-83, March.
    2. Marco Angrisani & Jeremy Burke & Annamaria Lusardi & Gary Mottola, 2020. "The Stability and Predictive Power of Financial Literacy: Evidence from Longitudinal Data," NBER Working Papers 28125, National Bureau of Economic Research, Inc.
    3. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
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    Keywords

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    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving

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