Measuring consumers’ financial well-being: Uncovering the causes and consequences of careless and insufficient effort in self-report responses

This study investigates the prevalence and causes of careless and insufficient effort responding (C/IER) in a self-report instrument assessing financial well-being. Using an explanatory mixture item response modeling approach, we analyze data from 6,394 respondents who responded to the Consumer Financial Protection Bureau’s financial well-being and financial skills scales. We identify different patterns of C/IER and examine factors that contribute to its occurrence in the two scales. The results indicate that 14% of the responses were impacted by C/IER, with question characteristics (e.g., negatively worded or frequency-based questions) and respondent demographics (e.g., age, gender, and education level) exhibiting significant relationships with attentiveness. Respondents with higher financial knowledge were more attentive, while younger individuals and those experiencing financial shocks were more prone to careless responding. These findings underscore the importance of carefully designing self-report instruments to minimize response biases and ensure data quality. By addressing different question designs and respondent-level characteristics, future instruments can yield more reliable and valid insights into individuals’ financial well-being.