This study aims to examine the validity of financial knowledge measures through a racial lens. Financial literacy measures are conventionally constructed by summing respondent’s correct answers on a series of factual items and collapsing incorrect answers and “don’t know” (DK) response into a single absence-of-knowledge category. However, political knowledge literature suggests that DK response are not the same as incorrect response. Using data from the 2021 National Financial Capability Study, this study disentangles don't know responses and incorrect answers and explores how these two disparate responses affect the financial knowledge racial gap. In addition, due to historical discriminatory banking practices and policies such as redlining, compared to Whites, fewer racial minorities are homeowners and own investments. Compared to Whites, racial minorities have had less experience with financial products through which to learn important financial knowledge. This study examines the role of financial experiences in shaping financial knowledge across racial groups.

Accepted Poster Presentation