The Personal Finance Index: Variations By Education
Personal finance knowledge is positively correlated with both general education and financial education in the P-Fin Index, a finding consistent with previous research. Figure 5 shows the percentage of index questions answered correctly across general education levels, and by the receipt/non-receipt of financial education. Figure 6 presents the distribution of correct answers across the same groups.
The share of P-Fin Index questions answered correctly is successively greater for higher levels of education. Those with a college degree are most likely to have a relatively high level of personal finance knowledge and understanding; those with less than a high school degree are most likely to have a relatively low level.
Individuals who have participated in a financial education class or program—provided in high school or college, in the workplace, or by a community organization—answered more questions correctly than those who have not received financial education. They are more likely to have a relatively high level of personal finance knowledge and less likely to have a relatively low level.
“Do not know” responses
Analysis of DNK responses is valuable, as previous research has demonstrated that a DNK response provides additional information. Figure 7 shows the percentage of DNK responses to the P-Fin Index questions across demographic groups, including general and financial education. This reveals patterns in personal finance knowledge analogous to those discussed above, specifically:
There is only a marginal difference between men and women in the percentage of questions answered DNK.
DNK responses are more common among young adults, i.e., those under age 45.
The frequency of DNK responses decreases as household income levels rise.
DNK responses are much more common among individuals who are not employed.
The frequency of DNK responses decreases as educational attainment increases.
DNK responses are more common among those who have not received financial education.