Measurement error in research on financial literacy: How much error is there and how does it influence effect size estimates?

Financial literacy is often measured with only three to five questions, suggesting challenges with achieving respectable levels of internal consistency reliability. Based on our review, we found financial literacy tests composed of three and five test questions yielded mean reliability estimates of 0.40 ( k = 7; N = 167,075) and 0.54 ( k = 8; N = 57,937), respectively: values less than minimally acceptable for even exploratory research. Based on...