OECD EMPLOYER BRANDPlaybook

1

PISA 2012Students and MoneyFinancial literacy skills

9 July 2014Launch

2 PISA in brief

• Over half a million students…– representing 28 million 15-year-olds in 65 countries/economies

… took an internationally agreed 2-hour test…– Goes beyond testing whether students can

reproduce what they were taught…… to assess students’ capacity to extrapolate from what they know

and creatively apply their knowledge in novel situations– Mathematics, reading, science, problem solving (financial literacy)

… and responded to questions on…– their personal background, their schools

and their engagement with learning and school• Parents, principals and system leaders provided data on…

– school policies, practices, resources and institutional factors that help explain performance differences .

…“knowledge and understanding of financial concepts and risks, and the skills, motivation and confidence to apply such

knowledge and understanding in order to make effective decisions across a range of financial contexts … to enable

participation in economic life”.

29 000 of these students in 18 economies took the PISA test on financial literacy

3 Why is financial literacy relevant for 15-year-old students?

Big decisions at a young age: e.g. con-tinuing education vs

working

Shrinking welfare systems; increased

personal responsibil-ity

Shifting demograph-ics- increased

longevity

Changing labour-markets and re-

duced job security

Access to financial products at young

ages

Increasingly com-plex financial mar-

kets

Why is financial literacy relevant for 15-year-old students?

4

PolandSlovak Republic

IsraelItaly

CroatiaCzech Republic

LatviaUnited States

Shanghai-ChinaOECD average-13

SpainFlemish Community (Belgium)

FranceAustralia

EstoniaNew Zealand

Slovenia

0 10 20 30 40 50 60 70 80 90 100

Percentage of students with a bank account

% of students with a bank account

%

5

Shanghai-ChinaPolandIsraelLatvia

United StatesFlemish Community (Belgium)

CroatiaItaly

Slovak RepublicOECD average-10

FranceSlovenia

Russian FederationEstonia

Czech Republic

0 10 20 30 40 50 60 70 80 90 100

Percentage of students with a prepaid debit card

% with a prepaid debit card

%

8

PISA financial literacy assessment framework

ContentMoney and transactions

Planning and managing finances

Risk and reward

Financial landscape

ProcessesIdentifying financial in-

formation

Analyse information in a financial context

Evaluate financial is-sues

Apply financial know-ledge and understand-

ing

ContextsEducation and work

Home and family

Individual

Societal

8

12 Examples of what this might mean for 15 year olds

• …if they go to the cinema, will they still have enough money for the bus fare home? Or would it be better to buy pizza and in-vite friends home?

Balance their priority and plan what to

spend money on

• …a games console will need new games, a motorbike will need fuel and tyres and services and so on.

Remember that some of the purchases have

ongoing costs

• …Some emails that look like they came from their bank might not be legitimate, they should know what to do if they are not sure

Being alert to possible fraud

• …If their phone gets stolen, they should ask their parents if it is covered by their household insurance

Knowing what risk is and what insurance is

meant for

• …they should know that if they buy a computer on credit they will have to pay interest on the loan as well as paying the ad-vertised price for the computer

• …and they will realise that the less they repay of that loan each month, the more they will pay in interest

Make an informed de-cision about credit

12

13

Sara receives this invoice in the mail

Sample Question: INVOICE

This is an easy item – Level 1 on the financial literacy scale (below baseline)

Question 1: Why was this invoice sent to Sarah?A. Because Sarah needs to pay the money to Breezy Clothing.B. Because Breezy Clothing needs to pay the money to Sarah.C. Because Sarah has paid the money to Breezy Clothing.D. Because Breezy Clothing has paid the money to Sarah.

14

Sara receives this invoice in the mail

Sample Question: INVOICE

This is baseline item – Level 2 on the financial literacy scale

Question 2: How much has Breezy Clothing charged for delivering the clothes?Delivery charge in zeds:

…….............................……………………………………………...10 zeds

15

Sara receives this invoice in the mail

Sample Question: INVOICEThis is a hard item – Level 5 on the

financial literacy scale

Question 3:Sara notices that Breezy Clothing made a mistake in the invoice. Sara ordered and received two T-shirts, not three. The postage fee is a fixed charged. What will be the total of the new invoice?

131zeds

18

NEW OFFERMrs Jones has a loan of 8000 zeds with FirstZed Finance. The annual interest rate on the loan is 15%. Her repayments each month are 150 zeds. After one year Mrs Jones still owes 7400 zeds. Another finance company called Zedbest will give Mrs Jones a lona for 10 000 zeds with an annual interest rate of 13%. Her repayments each month would also be 150 zeds

NEW OFFER- Question 1. If she takes the Zedbest loan, Mrs Jones will immediately pay off her existing loan.What are two other financial benefits for Mrs Jones if she takes the Zedbest loan?1. …………………………………………………………………………………………………2. …………………………………………………………………………………………………

Sample Question: NEW OFFER

She will be paying lower interestsShe will have more money available

How well prepared are young people to make complex financial decisions?

1919

Strong performance in financial literacy

Low performance in financial literacy

Average performanceof 15-year-olds in

financial literacyFigure VI.2.2

20

375

385

395

405

415

425

435

445

455

465

475

485

495

505

515

525

535

545

555

565

575

585

595

605 Shanghai-China

Flemish Community (Belgium)

EstoniaAustraliaNew Zealand

Czech Republic PolandLativa

United StatesFrance Russian FederationSlovenia Spain CroatiaIsrael

Slovak Republic Italy

Colombia

Chart TitleMean score

15%

23%

30%

22%

10%

Series2

Distribution of performance

2%

5%

19%

32%

43%

Series2

Level 5

Level 4

Level 3

Level 2

Level 1 or below

Financial literacyPerformance

levels

Top performers

Baseline

Students can apply their understanding of a wide range of financial terms and con-cepts to contexts that may only become relevant to their lives in the long term.

They can analyse complex financial products and can take into account features of financial docu-

ments that are significant but unstated or not immediately evident, such as trans-action costs. They can work with a high level of accuracy and solve non-routine fi-nancial problems, and they can describe the potential outcomes of financial deci-

sions, showing an understanding of the wider financial landscape, such as income tax.

Students can apply their understanding of commonly used financial concepts, terms and

products to situations that are relevant to them. They begin to consider the conse-quences of financial decisions and they can make simple financial plans in familiar

contexts. They can make straightforward interpretations of a range of financial documents and can

apply a range of basic numerical operations, including calculating percentages. They can choose

the numerical operations needed to solve routine problems in relatively common financial

literacy contexts, such as budget calculations..

Students can identify common financial products and terms and interpret informa-tion

relating to basic financial concepts. They can recognise the difference between needs and

wants and can make simple decisions on everyday spending. They can recognise the

purpose of everyday financial documents such as an invoice and apply single and basic

numerical operations (addition, subtraction or multiplication) in financial contexts that they are likely to have experienced personally.

21

15%

23%

30%

22%

10%

Series2

Distribution of performance

2%

5%

19%

32%

43%

Series2

Level 5

Level 4

Level 3

Level 2

Level 1 or below

Financial literacyperformance

levels

Top performers

Baseline

23

18%

26%

27%

19%

9%

Series2

Distribution of performance

Level 5

Level 4

Level 3

Level 2

Level 1 or below

Financial literacyperformance

levels

Top performers

Baseline

24

2%

5%

19%

32%

43%

Series2

25

Shan

ghai

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na 4

1.2

Fl.Co

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.7

New

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15.

4

Aust

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11.

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.5

OECD

ave

rage

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7.9

Unite

d St

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7.3

Israe

l 6.

7

Fran

ce 7

.1

Pola

nd 6

.4

Slov

enia

5.2

Slov

ak R

epub

lic 4

.6

Latv

ia 3

.9

Russ

ian

Fede

ratio

n 2

.6

Spai

n 2

.5

Croa

tia 3

.1

Italy

1.8

Colo

mbi

a 0

.4

05

101520253035404550

Top performers… among boys… among girls

Top performers in financial literacy, by gender Tab V.4.6

9.7% of students are top performers in financial literacy(OECD average): they can solve problems such as sample task NEW OFFER– and possibly harder problems as well

Boys are more likely to be top performers than girls, particularly in New Zealand, Israel, Poland, France and the Flemish Community (Belgium)

Percentage of top performers

in financial literacy and at least

in one other domain

Sha

ngha

i-Chi

na

Est

onia

Flem

ish

Com

mun

ity (B

el...

Latv

ia

Pol

and

Cze

ch R

epub

lic

Aus

tralia

OE

CD

ave

rage

-13

New

Zea

land

Cro

atia

Spa

in

Rus

sian

Fed

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ion

Slo

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a

Uni

ted

Sta

tes

Fran

ce

Italy

Slo

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Rep

ublic

Isra

el

Col

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a

0

5

10

15

20

25

30

35

40

45

50

55

60

65 Low performers … among boys … among girls%

Percentage of low-performing studentsin financial literacy

Tab V.2.126

Across the OECD on average, 15% of students do not reach the baseline level of financial literacy – meaning that they can solve only simple tasks such as sample task INVOICE (if any)

Boys are more likely to be low performers than girls, particularly in France, Israel, Slovenia and the Slovak Republic

Skill gaps within countriesCo

lom

bia

Israe

l

Slov

ak R

epub

lic

Fran

ce

Italy

New

Zeal

and

Unite

d St

ates

Slov

enia

Russ

ian

Fede

ratio

n

Spai

n

OECD

ave

rage

-13

Croa

tia

Aust

ralia

Czec

h Re

publ

ic

Pola

nd

Latv

ia

Flem

ish C

omm

unity

(Bel

g...

Esto

nia

Shan

ghai

-Chi

na

190

290

390

490

590

69095%90%75%50%25%10%5%

Top

Bottom

Countries ranked by 10th percentile of financial literacy performance

28

How does financial literacy relate to mathematics and reading?

29

200 300 400 500 600 700 800200

300

400

500

600

700

800

Patterns of relative performance in financial literacy

Financial literacy performance relative to mathematics performance

Mathematics performance

Average relationship between financial

literacy and mathematics performance

Australia performs better-than-expected in financial literacy. The difference between observed and expected

performance is larger among strong performers in mathematics

The Czech Republic perform better-than-expected in financial literacy. The difference between

observed and expected performance is larger among low

achievers in mathematics France’s performance is lower-than-expected in financial literacy. The gap

between observed and expected performance is similar at all levels of

mathematics performance.

33

Italy’s performance is lower-than-expected in financial literacy. The

gap between observed and expected performance is wider

among high achievers in mathematics.

Students in Israel perform as expected in financial literacy at

all levels of mathematics performance

-30

-20

-10

0

10

20

30Fr

ance

Italy Slo

veni

a

Isra

el

Col

ombi

a

Sha

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na

Latv

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Uni

ted

Sta

tes

OE

CD

ave

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Cro

atia

Pol

and

Slo

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Rep

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Est

onia

Flem

ish

Com

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(Bel

gium

)

New

Zea

land

Rus

sian

Fed

erat

ion

Aus

tralia

Cze

ch R

epub

lic

%

Relative performance in financial literacy

Students' performance in financial literacy is

lower than their expected performance

Students' performance in financial is higher than their

expected performance

34

Taking performance in math-ematics and reading into ac-count

How are learning opportunities distributed?

4040

41

Est

onia

Italy

Rus

sian

Fed

erat

ion

Cro

atia

Aus

tralia

Fl.C

om. (

Bel

gium

)

Pol

and

Sha

ngha

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na

Col

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Latv

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Cze

ch R

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OE

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Spa

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Uni

ted

Sta

tes

Slo

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Rep

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land

0

2

4

6

8

10

12

14

16

18

20

Financial literacy Mathematics Reading

Per

cent

age

of v

aria

tion

in p

erfo

rman

ce

expl

aine

d by

soc

io-e

cono

mic

sta

tus

Relationship between socio-economic status and performance in financial literacy, mathematics and reading

Figure VI.3.6

What can be done to enhance financial literacy

Improving the quantity/quality of teaching of……conceptual foundations of math ?

…applied math ?…financial literacy as a cross-curricular domain ?

…financial literacy education as a separate subject ?…other types of education?

…or is it all about out-of-school experiences?

Slov

ak R

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Italy

Croa

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Israe

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Czec

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Spai

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ited

Stat

esAu

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Pola

ndFr

ance

OECD

ave

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Esto

nia

Fl.Co

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Belg

ium

)

Slov

enia

New

Zeal

and-25

-15

-5

5

15

25

35

45

55

65

75

Financial literacy by bank account holding (accounting for socio-demographic status)

Table VI.4.26

On average across OECD countries and economies, students who hold a bank account score 21 points higher than students with similar socio-economic status who do not.

43

Spain

Eston

iaIsr

ael

Slove

nia

Croatia Ita

lyFra

ncePo

land

Colombia

Shan

ghai-

China

OECD av

erage

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Russian

Fede

ration

United

State

s

New Ze

alandLat

via

Austr

alia

Fl.Com

. (Belg

ium)

Czech R

epub

lic

Slova

k Rep

ublic

0102030405060708090

100

Not available Available < 2 years Available ≥ 2 years

Student exposure to financial education 45

0 20 40 60 80 100

Not at all

1-4 hours a year

5-19 hours year

20-49 hours a year

50 or more hours a year

School curriculum

Financial literacy taught as a separate subject

PolandSpainEstoniaLatviaCroatiaSloveniaItalySlovak RepublicIsraelOECD average-13Shanghai-ChinaFranceCzech RepublicFlemish Community (Belgium)AustraliaRussian FederationColombiaNew ZealandUnited States

(100) (80) (60) (40) (20) 0

Financial education taught as a cross-curricular sub-ject

46

Exposure and financial literacyPe

rfor

man

ce in

fina

ncia

l lit

erac

y50

40 50 60 70 80 90 100375

425

475

525

575

625

526

379

513

541

501

520

500510

486

603

470

492

% of students in schools where the principal reports that financial literacy is available for at least 2 years

10 20 30 40 50 60 70 80 90-30

-20

-10

0

10

20

30

18

-5

2

19

59

-24

-5

-14

1

12

OECD average-132

14

0

2

-8

41

% of students in schools where the principal reports that financial lit-eracy is available for at least 2 years

Exposure and relative performance

Students' performance in financial is higher than their

expected performance

Students' performance in financial literacy is

lower than their expected performanceRe

lati

ve p

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fina

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akin

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to a

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51

Spai

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Shan

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Aust

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Slov

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)0102030405060708090

100

NO TEACHERS attended professional development in financial education UP TO 50% OF TEACHERS attended professional development in financial education50% OR MORE OF TEACHERS attended professional development in financial education

Teachers professional development55

Thank you !

Find out more about PISA at www.pisa.oecd.org• All national and international publications• The complete micro-level database

Email: Andreas.Schleicher@oecd.org