Knowing the “don’t knows” to financial literacy questions in the u.S. national financial capability study

This study examines the propensity of responding “don’t know” (DK) to a set of financial literacy questions provided by the National Financial Capability Study (NFCS), a nationally representative U.S. data set. When given the opportunity to respond correctly, incorrectly, or DK, the inclusion of a DK response item uniquely encompasses facets of financial literacy, which are often overlooked. While researchers utilizing the NFCS have historically treated these responses as incorrect in financial literacy assessments or excluded/dropped DK responses in empirical analyses, this study’s findings suggest that the interpretation of DK responses may be better viewed as an amalgamation of survey participants’ uncertainty, response confidence, ambiguity regarding the question, or unwillingness to respond, rather than an outright lack of financial literacy. The empirical results suggest that females and those without financially independent children tend to respond DK more frequently to the financial literacy questions examined and that those who are older, married, highly educated, retired, have higher incomes, and current and former military personnel tend to select DK less frequently. Compared to Whites, Blacks are more likely and Asian/Pacific Islanders are less likely to answer DK.