Clarification on Using Objective Financial Knowledge as a Single-Item Construct in PLS-SEM

[Ehsan Saeedi]

Dear Neeraj Sir and other group members,

I hope this email finds you well.

In one of my research papers, I have measured objective financial knowledge using five quiz questions related to numeracy, inflation, interest compounding, time value of money, and money illusion.

For each question, respondents received a score of 1 for a correct answer and 0 for an incorrect answer. I then created a composite score by summing the responses to all five questions (Q1 + Q2 + Q3 + Q4 + Q5), similar to an index.

Subsequently, I used this composite score as a single-item variable (Objective Financial Knowledge Score) in a PLS-SEM model alongside other constructs measured on a five-point Likert scale.

I would appreciate your guidance on the following:

1. Is this approach methodologically correct?
2. If it is correct, do I need to assess the validity and reliability of this single-item construct? If so, could you please advise me on the appropriate procedure?

Thank you for your time and assistance.

Kind regards,

Ehsan

[Neeraj Kaushik]

Both methods are correct

There's no validity / reliability of the single item construct

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[Ehsan Saeedi]

Thank you so much sir for the clarification. Appreciate it. 

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