A comparative analysis of the OECD/INFE financial knowledge assessment using the Rasch model

Abstract

Based on Item Response Theory, and more specifically the Rasch model, the financial knowledge domain included in the OECD/INFE adult financial literacy assessment conducted in 2015 was evaluated. This was done in order to determine whether the measurement instrument, in its existing design, could be classified as an International Large-scale assessment (ILSA), suitable for within countries and for comparison across countries. The development cycle of the OECD/INFE assessment was briefly presented to portray the conditions necessary to ensure that successful measurement would lead to action. Based on the first phase of the analysis, the suitability of the data for the Rasch model was established and the applicability of the instrument to country-specific analysis was confirmed. However, the differential item function (DIF) exploration determined that the assumption that item difficulties are homogeneous across the various countries does not hold, therefore confirming the utility of this study. The results highlighted the greater risk associated with the traditional ranking of results rather than with sophisticated analyses, as traditional approaches could result in misdiagnosis of problem areas on instruments which might not be comparable across countries. Based on the results, it does not seem that the OECD/INFE adult financial knowledge assessment adhere to the requirements of being classified an ILSA.