Abstract
Young adults increasingly require good financial literacy to make the most of the opportunities provided to them. Unfortunately, existing financial literacy measures that may assist with targeting interventions show low reliability, ceiling effects, and a high level of abstraction.
To address this, we designed and assessed the psychometric properties of a new measure specifically targeting young people, the Assessment of Economic and Financial Literacy (ASSET). We find it has better overall validity, reliability, and predictive power than existing measures.
Using ASSET, we find that mathematical ability, calculator use (an example of deliberative thinking), gender, and socioeconomic status are key predictors of financial literacy. We recommend this more robust tool for use in financial literacy research to assess implications for guiding major financial decisions among young people.