Financial Literacy Data
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The Big Three
We provide insights into financial literacy trends using responses to the Big Three questions from the FINRA Foundation's 2021 National Financial Capability Study (NFCS).
Do you want to learn more about the fundamental financial education concepts covered by the Big Three? Check out the stories that explain these concepts – compound interest, inflation, and risk diversification. They are not only fun to read, but they will also help you understand the importance and implications of these concepts in your own financial decision-making!
We used these stories in a financial education intervention. Our research shows that the stories indeed improve financial knowledge. Results also suggest that, to make better decisions in complex financial situations, an understanding of all three concepts together is important (so, don’t skip a story!), and refreshing your knowledge by revisiting your stories is crucial (set a reminder!).
What Is the NFCS
The National Financial Capability Study (NFCS) is a large-scale, multi-year project that measures Americans’ financial capability. The FINRA Investor Education Foundation commissioned this national study in consultation with the U.S. Department of the Treasury and other federal agencies. The NFCS was first conducted in 2009 and then repeated every three years. It aims to benchmark key indicators of financial capability and evaluate how these indicators vary with underlying demographic, behavioral, attitudinal, and financial literacy characteristics. In each wave, the study deepened the exploration of topics that are highly relevant today.
The NFCS provides information on Americans’ financial capability, drawing from a sample of over 25,000 respondents. The large sample size allows researchers not only to study financial capability among the entire population but also to slice the data in different ways, providing detailed studies on population subgroups.
Professor and IFDM Faculty Director Annamaria Lusardi has been academic advisor to the FINRA Investor Education Foundation since the first wave of the study, assisting with the design of the survey instruments and co-authoring the reports.