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Financial Literacy in the US: A Robustness Check of the Lusardi-Mitchell Questions

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  • Nicolini Gianni

    (Ph.D., Department of Management and Law; University of Rome Tor Vergata (Rome, Italy))

  • Henager Robin

    (Ph.D., School of Business; Whitworth University (Spokane, WA USA))

Abstract

This study tested the reliability of financial literacy measures used in previous studies based on a set of items referred to as the “Lusardi-Mitchell questions”. Using a sample of 514 American adults that completed a questionnaire with fifty financial literacy items, the authors compared (1) the results from a set of multivariate regression analyses that used the Lusardi-Mitchell questions to investigate the explanatory power of financial literacy on different financial behaviors, with (2) results that used alternative financial literacy measures that differ by the topic of the items or the number of the items. Doing so the paper investigate the chance that a scale based on a small number of items could not provide a precise measure of people financial literacy, due to a lack of information. Results suggest that the Lusardi-Mitchell questions provide a measure of financial literacy that is close to the results obtained using more sophisticated measures. In addition, the results supported the hypothesis that the financial literacy positively affects different financial behaviors.

Suggested Citation

  • Nicolini Gianni & Henager Robin, 2022. "Financial Literacy in the US: A Robustness Check of the Lusardi-Mitchell Questions," International Review of Financial Consumers, Sciendo, vol. 7(1), pages 19-32.
    • Handle: RePEc:vrs:irfinc:v:7:y:2022:i:1:p:19-32:n:1002
    DOI: 10.36544/irfc.2022.7-1.2
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