Evaluation of a Financial Literacy Test Using Classical Test Theory and Item Response Theory

The purpose of this study was to evaluate the quality (item difficulty and discriminability, construct validity, and reliability) of a financial literacy test that has been used to measure financial literacy in multiple countries. The test was analyzed based on Classical Test Theory and Item Response Theory, specifically the Rasch model, with the goal of identifying areas of improvement. The findings from the two measurement frameworks were quite comparable and identified similar measurement problems. Steps to improve the financial literacy measure were recommended.