Financial Homo Ignorans: Development and validation of a scale to measure individual differences in financial information ignorance

Abstract

Information ignorance refers to the act of deliberately avoiding, neglecting, or distorting information to uphold a positive self-image and protect our identity-based beliefs. We apply this framework to household finance and develop a concise 12-item questionnaire measuring individuals’ receptiveness to financial information, or the lack thereof – the Financial Homo Ignorans (FHI) Scale. We conduct two studies with samples from the general population in Sweden (total N=2508) and show that the FHI scale has high reliability and distinct from other commonly used individual-difference measures in behavioral finance. We show that individual heterogeneity as assessed by the FHI scale explains a substantial variation in financial behaviors and financial well-being, also when controlling for demographics and financial literacy. These results unequivocally demonstrate the utility of the FHI scale as a valuable instrument for researchers and practitioners in comprehending and addressing the challenges posed by the omnipresence of financial information in today's world.