Abstract
Purpose: This study examined subjective numeracy and its relationship with accounting judgements on probability issues. Design/methodology/approach: A subjective numeracy scale (SNS) questionnaire was distributed to 231 accounting students to measure self-evaluated numeracy. Modified Bayesian reasoning tasks were applied in an accounting-related probability estimation, manipulating presentation formats. Findings: The study revealed a positive relationship between self-evaluated numeracy and performance in accounting probability estimation. The findings suggest that switching the format of probability expressions from percentages to frequencies can improve the performance of participants with low self-evaluated numeracy. Research limitations/implications: Adding objective numeracy measurements could enhance results. Future numeracy research could add objective numeracy items and assess whether this influences participants' self-perceived numeracy. Based on this sample population of accounting students, the findings may not apply to large populations of accounting-information users. Practical implications: Investors' ability to exercise sound judgement depends on the accuracy of their probability estimations. Manipulating the format of probability expressions can improve probability estimation performance in investors with low self-evaluated numeracy. Originality/value: This study identified a significant performance gap among participants in performing accounting probability estimations: those with high self-evaluated numeracy performed better than those with low self-evaluated numeracy. The authors also explored a method other than additional training to improve participants' performance on probability estimation tasks and discovered that frequency formats enhanced the performance of participants with low self-evaluated numeracy.
Original language | English |
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Pages (from-to) | 60-80 |
Number of pages | 21 |
Journal | Journal of Applied Accounting Research |
Volume | 25 |
Issue number | 1 |
DOIs | |
Publication status | Published - 18 Jan 2024 |
Externally published | Yes |
Keywords
- Accounting information users
- Accounting probability estimation
- Bayesian reasoning
- Numeracy
- Objective numeracy
- Subjective numeracy
ASJC Scopus subject areas
- Accounting
- Economics, Econometrics and Finance (miscellaneous)
- Information Systems and Management