A new (and better) way to measure individual financial capability

Submitted by Natasha Pei on November 10, 2016 - 12:53pm

Authors: Dr. Jennifer Robson (Political Management) and James Splinter (Economics)

Publisher: Carleton University - This report has been prepared in fulfillment of a research contract with Vancity Credit Union, 2015

Financial literacy has been associated with a wide range of economic and social outcomes. But what is financial literacy and how should it be measured? As Sandra Huston points out, there is no consensus on what should be measured and many existing tests do not meet certain professional standards for instrument design and implementation.

This study aims to validate the results of a 2012 pilot study that developed a short instrument to measure financial capability, using national survey results as reference point. More importantly, this study also develops a numerical scoring system to provide respondents with a transparent and easy to interpret method for differentiating low, moderate and high levels of personal financial literacy.

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