Why We Don’t Know What We Don’t Know - And Why One Size Won’t Fit All

Runner-up in the Academic Category of this year’s Money Awareness and Inclusion Awards, Elizabeth Ooi asks an important question: why do so many respondents answer “I don’t know” in financial literacy tests?

It can be tempting to think the reason people don’t know the answer to a question is because, well, they simply don’t know. But it can be much more complicated than this. They may not know because the haven’t been taught, or because they’ve never even seen this kind of question before, but there are lots of other reasons.

We also have to consider the reasons the answer is even there. Is “don’t know” offered as a possible answer to avoid “guessed” answers (which would mean plenty of people who don’t know the answer would be forced to pick one), or to make the test feel more accessible (ie, encouraging the honest answer of don’t know, if that is indeed the case).

Because finance is, for so many people in the world, outside of their formal education, then they might feel uncertain answering definitively. They may not feel confident about the answer, and the more they lack confidence, the more they may answer “I don’t know”.

This has been provided as an answer in the past for the difference between male and female financial literacy: that men rarely answer “I don’t know” to a question whereas women click that button far more often.

Elizabeth Ooi, however, conducted a study to see if there were other cultural reasons behind this answer, particularly if there is a difference between collectivist and individualistic cultures – and yes there is.

Publishing the output in the Pacific Basin Finance Journal, under the title “Culture and confidence in financial knowledge testing” (you can read more here), it showed respondents of both genders from collectivist cultures being 9% more likely to answer one question “I don’t know” than ones from individualistic cultures.

While so many of the important concepts behind financial literacy can seem simple to those of us who already understand them, this study gets to the heart of why we can’t just “teach” them to people, as there are many layers of differences, of experience, of culture, of tradition, that make it harder for some people to grasp these ideas than others.

Or require them to be presented in a different way, one that understands their culture and what is important to them.

We will need many different approaches to overcome different types of uncertainty, or to build confidence in people from different cultures. We will need multiple different role models, and we will need to ensure people feel that knowledge about money is being made accessible to them.

Only then will we see more people answering financial literacy surveys correctly – and confidently!

To learn more about Elizabeth Ooi, as well as all the other winners at MAIA 2023, visit: https://www.maiawards.org/winners-2023