How is Consumer Financial Capability Measured?

Area of Science:

• Consumer Finance
• Behavioral Economics
• Socioeconomics

Background:

• The field of consumer financial capability lacks a standardized definition and measurement approach.
• Existing research exhibits significant diversity in conceptualizing and quantifying financial capability.
• There is a need to synthesize measurement practices to inform effective interventions and policies.

Purpose of the Study:

• To conduct a scoping review of quantitative peer-reviewed literature on financial capability measurement.
• To identify measurement domains, indicators, and operationalizations used in financial capability research.
• To provide recommendations for standardizing financial capability measurement.

Main Methods:

• Scoping review of quantitative studies published between 2015 and 2018.
• Inclusion criteria focused on studies measuring financial capability using quantitative data.
• Analysis of measurement constructs, indicators, and operationalizations.

Main Results:

• Thirty-four studies met the inclusion criteria.
• Financial capability was operationalized in 12 different ways, commonly combining financial knowledge and access.
• Few studies measured financial socialization or financial well-being; financial access measures were often limited to formal accounts.

Conclusions:

• Significant heterogeneity exists in the measurement of financial capability constructs.
• Standardization of measurement is recommended to advance evidence-based interventions and policies.
• Future research should incorporate broader measures including financial socialization and well-being.