Using item response theory in the assessment of the financial well-being scale: an application in Brazil and India

Abstract

PurposeThis study aims to evaluate Netemeyer and colleagues' much cited financial well-being scale in Brazil and India and compare responses from different demographics. It also compares the results using two analysis techniques, item response theory (IRT) and confirmatory factor analysis (CFA).Design/methodology/approachA total of 994 survey responses from Brazil and 1,081 from India were collected. IRT and CFA models were used to analyse the data.FindingsThe results demonstrate the two-dimensional structure of the financial well-being scale and show that different items are differentially useful in measuring the construct across different groups. These findings may support the scale's future refinement and use in applied studies that will target specific groups (e.g. males, females, younger respondents and older respondents).Research limitations/implicationsThis study serves as an example to others who can explore the advantages of IRT over classical test theory methods to assess the psychometric properties of scales aimed at measuring latent constructs of interest in the field of marketing.Practical implicationsThe correct diagnosis of financial well-being is important to guide interventions by governments and non-governmental entities, as well as by financial institutions interested in better understanding individuals.Originality/valueThe authors show how the identification of the characteristics of scale items provided by the IRT technique allows for a better understanding of its properties and how it can be improved.