Template-type: ReDIF-Paper 1.0
Author-Name: Bertola, Giuseppe 
Author-Email:giuseppe.bertola@unito.it
Author-Name: Lo Prete, Anna
Author-Email: anna.loprete@unito.it
Author-Workplace-Name: University of Turin
Author-Workplace-Homepage: http://www.est.unito.it/
Title: Financial Literacy and Resilience when Survey Respondents Prefer Guessing to Admitting Ignorance.
Abstract: The respondent’s propensity to guess randomly even though it is possible to answer "I do
not know" is a plausible source of measurement error in assessments of financial literacy.
Using data from two consecutive waves of a survey on financial literacy and resilience of
Italian households during the Covid-19 pandemic we model and estimate the respondents’
propensity to guess rather than admit ignorance and find that it implies sizable
probabilities of misclassification for standard financial literacy indicators. Classifying as
financially literate only respondents who answer correctly in both waves of the survey
yields more significant and plausible estimated coefficients of financial literacy as an
explanatory variable for financial resilience: truly literate individuals have a lower
probability of having difficulty to make ends meet at the end of the month and of not
being able to face a mid-size emergency expense; individuals who guessed and were
lucky enough to appear literate show lower financial resilience.
Length: pages 30
Creation-Date: 2024-03
File-URL: https://www.est.unito.it/do/home.pl/Download?doc=/allegati/wp2024dip/wp_06_2024.pdf
File-Format: Application/PDF
Handle: RePEc:uto:dipeco:202406