NBER Working Papers · 2026 · Tim Kaiser、Annamaria Lusardi、Olivia S. Mitchell、Luis Oberrauch
Abstract
This paper investigates why the widely-used Big Three financial literacy index provides a reliable measure of financial literacy. Using an Item Response Theory framework, we estimate item difficulty and discrimination parameters and conduct a meta analysis to assess the stability of these properties across datasets and countries. Results confirm the scale's validity and reliability, with item characteristics that remain stable across populations and settings. We find no evidence of measurement differences across demographic subgroups or countries. Compared to the longer Big Five scale, the Big Three index performs similarly in measuring financial literacy and predicting financial behaviors.