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2. An overview of financial awareness and financial education measurement

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2 An overview of financial awareness and financialeducation measurementAleksandra Grzesiuk2.1 Review of research methods used in financial awarenesssurveys. International perspectiveDespite the importance of financial literacy, the academic literature has given limitedattention to how financial literacy is measured. The principal objective of this chapteris to determine whether the studies conducted internationally provide a measure-ment tool for measuring financial literacy and awareness. And if not a toolwhetherthey give at least some recommendations for researching the phenomenon in aninternational perspective. However, there are no commonly accepted standard con-structs providing the consistency needed in the comparative studies and/or meta-analysis in an international perspective.According to Pedhazur and Schmelkin (1991), the approach to construct valida-tion in terms of a logical analysis involves four main factors: 1. definition andconstruct, 2. item content, 3. method of measurement and 4. scoring procedure.The first and arguably most important aspect is defining the construct to allow foroperationalization that is complete and mutually exclusive from other constructs.The second element is determining the content of the instrument which ofteninvolves using items from each relevant domain as indicators of the given construct.Measurement procedures include structural concerns such as how the data werecollected (interview, rating scales); the number, wording, and order of items includedin the instrument; and the conditions of administration. Instrument scoring is animportant means of rating, communicating, and providing consistency in testing andinterpreting results obtained by means of an instrument.Huston (2010) in his broad literature review identified and examined seventy-oneindividual studies on financial literacy, of which the majority (52) was conducted onthe US sample. The analysed studies were published between 1996 and 2008. In hisanalyses Huston used the four criteria indicated by Pedhazur and Schmelkin (1991).As a result, distinct content areas used to varying degrees were identified:1. Money basics (including time value of money, purchasing power, personalfinancial accounting concepts)2. Intertemporal transfers of resources between time periods, including both bor-rowing (i.e. bringing future resources into the present through the use of creditcards, consumer loans, or mortgages)3. Investing (i.e. saving present resources for future use through the use of savingaccounts, stocks, bonds, or mutual funds)https://doi.org/10.1515/9783110636956-002
© 2019 Walter de Gruyter GmbH, Berlin/Munich/Boston

2 An overview of financial awareness and financialeducation measurementAleksandra Grzesiuk2.1 Review of research methods used in financial awarenesssurveys. International perspectiveDespite the importance of financial literacy, the academic literature has given limitedattention to how financial literacy is measured. The principal objective of this chapteris to determine whether the studies conducted internationally provide a measure-ment tool for measuring financial literacy and awareness. And if not a toolwhetherthey give at least some recommendations for researching the phenomenon in aninternational perspective. However, there are no commonly accepted standard con-structs providing the consistency needed in the comparative studies and/or meta-analysis in an international perspective.According to Pedhazur and Schmelkin (1991), the approach to construct valida-tion in terms of a logical analysis involves four main factors: 1. definition andconstruct, 2. item content, 3. method of measurement and 4. scoring procedure.The first and arguably most important aspect is defining the construct to allow foroperationalization that is complete and mutually exclusive from other constructs.The second element is determining the content of the instrument which ofteninvolves using items from each relevant domain as indicators of the given construct.Measurement procedures include structural concerns such as how the data werecollected (interview, rating scales); the number, wording, and order of items includedin the instrument; and the conditions of administration. Instrument scoring is animportant means of rating, communicating, and providing consistency in testing andinterpreting results obtained by means of an instrument.Huston (2010) in his broad literature review identified and examined seventy-oneindividual studies on financial literacy, of which the majority (52) was conducted onthe US sample. The analysed studies were published between 1996 and 2008. In hisanalyses Huston used the four criteria indicated by Pedhazur and Schmelkin (1991).As a result, distinct content areas used to varying degrees were identified:1. Money basics (including time value of money, purchasing power, personalfinancial accounting concepts)2. Intertemporal transfers of resources between time periods, including both bor-rowing (i.e. bringing future resources into the present through the use of creditcards, consumer loans, or mortgages)3. Investing (i.e. saving present resources for future use through the use of savingaccounts, stocks, bonds, or mutual funds)https://doi.org/10.1515/9783110636956-002
© 2019 Walter de Gruyter GmbH, Berlin/Munich/Boston
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