Are You Financially Literate or Not? Experimental Evidence on Discrepancies between Two Metrics

This note reports on an online, within-subjects experiment with a convenience sample of 206 respondents. The experiment consisted in having the same set of respondents taking not one but two of the financial literacy tests that are popular in the literature, namely the Big Three and the Standard & Poor’s. Disturbingly, we find that 37 per cent of the respondents are considered literate by one test but illiterate by the other. One explanation is that the difficulty level of questions that are relatively similar across the two approaches would nevertheless appear to differ. Another explanation involves the minimum number of correct answers needed for someone to be classified as financially literate. We show that, at least for our sample, a solution might consist in removing these thresholds. The differences in raw scores between the two tests proved to be not statistically significant.