October 17, 2022
By University of Alabama
Many existing survey instruments measuring financial knowledge include “don’t know” or “refuse to answer” options. Researchers at the University of Alabama hypothesized that the inclusion of these options could lead to erroneous results when selected in surveys, as respondents’ own tolerances for risk or levels of self-confidence can influence the likelihood of choosing these answers. This can lead to misleading results regarding the true levels of financial knowledge among those surveyed.
Researchers used a conceptual framework that describes the differences between being uninformed, partially informed, and misinformed. In the context of financial knowledge, they concluded that past research on this topic has not systematically accounted for these nuances and possibly categorized those who are misinformed or partially informed as being completely uninformed.
They then developed a set of research questions that explored the impact of including these options, both on a psychological level for respondents and the overall results of a survey. They fielded their survey to more than 3,500 participants, covering a wide range of income, education, and employment levels. Respondents received surveys that either included or did not include “don’t know” or “refuse to answer” options, and for those that did, some were discouraged from selecting them outright or were incentivized to not select them by receiving compensation for accurate answers.
The results of this study do indicate that financial knowledge may be underestimated when these options are present in surveys, but there is much more to explore. In September, NEFE hosted a webinar with the researchers to give them a platform to feature their in-progress research and explain their findings. This study and future research will shape best practices for evaluating financial knowledge, which can inform financial education and public policy.