Cartagena, Colombia, 11 March 2010 Designing and Evaluating a National Strategy for Financial...
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![Page 1: Cartagena, Colombia, 11 March 2010 Designing and Evaluating a National Strategy for Financial Literacy Annamaria Lusardi Joel Z. and Susan Hyatt Professor.](https://reader036.fdocuments.us/reader036/viewer/2022062421/56649d6b5503460f94a4ac7a/html5/thumbnails/1.jpg)
Cartagena, Colombia, 11 March 2010
Designing and Evaluating a National Strategy for Financial Literacy
Annamaria LusardiJoel Z. and Susan Hyatt Professor of Economics
Director, Financial Literacy Center
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Relevance
• Increase in individual responsibilityDemographic changes: agingLabor market changes: more mobilityPension changes
• Financial markets more complexGlobalization of financial markets
• Cost and consequences of financial mistakes at the aggregate levelWelfare system will be affected
• Well informed citizens lead to more stable markets and better use of resources
Why a national strategy?
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Road map What is a national strategy? The institutional framework Identifying the issues Defining financial capability National survey Preliminary assessment Objectives: Long-term vs. short-term Designing interventions Targeted population sub-groups Evaluation Take-away
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What is a national strategy
- A vision for financially capable citizenry
- Aggregate stakeholders
- Identify the gaps
- Define a framework of action- Identify targets to be achieved in a specific time
frame
- Plan initiatives
- Evaluation of initiatives
Defining a national strategy
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Benefits of a national strategy
- Guidance and coordination- Public and private initiatives
- Avoid duplication of effort
- Share expertise
- Promote best practices
- Cost effectiveness
Benefits
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Institutional framework
Identify all stakeholders involved Identify a national agency/institution to
coordinate Useful to create a Financial Capability Steering
Committee sponsored by the coordinating agencies, involving all the stakeholders
(examples, UK and Ireland)
Some structure
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Identifying the issues
Some examples: Pensions or changes in pensions Low saving rates High default rates on loans Fraud and scams Others
What are the problems?
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Defining financial capability
Broad definition• What does it mean to be financially capable?
Knowledge versus behavior
Country-specific elements of the definition
Financial capability/competency
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Measurement: A national survey
- Picture of current levels of capability
- Identification of areas of intervention
- Identification of at-risk population categories
- Establishing a baseline for evaluation- Useful for both public and private sector
- Building a base for longitudinal evaluation: a new survey every 3-5 years
Benefits of a national survey
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Case study: U.S. National Financial Capability Study
1. Making ends meet
2. Planning ahead
3. Managing Financial Products
4. Financial Knowledge and Decision-Making
Four key components:
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Preliminary assessment
Existing initiatives Identify gaps in the provision of resources and
avoid duplication of initiatives Agencies and organizations already involved
with financial capability
Assessment of what exists
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Long term and short term objectives
Long-Term vs. Short-Term Objectives• Long-Term = Improvement of financial
literacy/capability for the entire population
• Short-Term = specific problems to solve. Focus on specific subgroups (those more at risk)
Objectives
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Designing intervention
Every objective (long term or short term) requires an intervention. For every intervention, these points should be considered:
- Target/beneficiary—who is it?- Current situation- Reasons for changes- Providers- Delivery methods- Budget- Design of evaluation- Pilot program- Evaluation
What to consider
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Intervention: Some examples
School: Learning money matters Young adult: Helping young adults make sense
of money Workplace: Make the most of your money Consumer communication Online tools New parents: Money box Money advice
UK experience
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Targeted population
Different population sub-groups have different needs and would benefit from targeted programs
Example: Maori people in New Zealand, Native Americans in the United States. But also the elderly and women may benefits from targeted programs
Different programs for different needs
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Evaluation
Must evaluate• Accountability
• Efficient allocation of resources
Standardized framework for evaluation• Use scientific methods
- Many biases
• Measurement of success- Indicators of knowledge/behavior
Disseminate results widely and share experience
The importance of evaluation
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Longitudinal evaluation
Can evaluate the national strategy itself Redo a national survey
• Re-adjust objectives
• Focus on areas in need
• Tailoring interventions
Allocate resources efficiently
over time
In the long run
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Some issues about evaluation
Have to design evaluation at the beginning of program not at the end
It needs resources and expertise Independence It is a requirement: we need to know what
works and what does not work
OECD can provide guidelines on evaluation
Evaluation is part of the program design
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Take-away
Need for direction Importance of coordination Many stakeholders Different targets Importance of evaluation at every stage Efficient use of resources Share experience across countries
Importance of a strategy and its evaluation
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The cost of ignorance
“An ignorant people is the blind instrument of its own destruction”
Simon Bolivar, 1819