Students’ financial literacy: results from PISA 2015

December 2017 Rio de Janeiro

The PISA financial literacy test • In 2015, around 48 000 students were assessed in financial

literacy, representing about 12 million 15-year-olds in the schools of the 15 participating countries and economies

• Students in countries and economies that participated in the financial literacy answered – a two-hour combination of tasks in science, reading and mathematics – A one-hour test in financial literacy (43 items) after the core assessment – Questions about their experience with money such as discussing money

matters with parents, basic financial products and sources of money (through a ‘money management questionnaire’)

… in addition to the standard questions about their personal background

Some 56% of 15-year-olds in participating OECD countries and economies have a bank account,

19% have a prepaid debit card

Young people are already financial consumers and will soon encounter complex financial decision

Some 64% earn money from some type of work activity

56% 64%

But fewer than one in three students have the skills to manage a bank account 31%

0 10 20 30 40 50 60 70 80 90

PeruMexico

BrazilChile

LithuaniaRussian Federation

Slovak RepublicChina

ItalyBelgiumPolandSpain

CanadaNetherlands

AustraliaUnited States

Made payments online using the Internet Made a transaction using a mobile phone

Many young people use digital financial products

Source: World Bank Global Findex, 2014

Percentage of young people age 15-24 who have:

%

Globalisation and digital technologies have made financial products and services more widely accessible but also more challenging

• More challenging financial choices – The spread of digital financial services opens up new opportunities for

financially excluded people to access the formal financial system… – but also exposes consumers to new security threats and risks of fraud that

are compounded when low financial literacy is combined with poor digital skills and low cyber security awareness

• More financial risks – Increased life expectancy, less welfare protection, more “individualized”

pensions, and more uncertain economic and job prospects due to digitalization, technological change, globalization

• Growing inequality

Financial education is a complement to financial consumer protection, inclusion and regulation

• More challenging financial choices – The spread of digital financial services opens up new opportunities for

financially excluded people to access the formal financial system… – but also exposes consumers to new security threats and risks of fraud that

are compounded when low financial literacy is combined with poor digital skills and low cyber security awareness

• More financial risks – Increased life expectancy, less welfare protection, more “individualised”

pensions, and more uncertain economic and job prospects due to digitalisation, technological change, globalisation

• Growing inequality

Financial literacy

Consumer protection and

regulation

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 improve the financial well-being of individuals and society, and to enable participation in economic life

Financial literacy in PISA

What does financial literacy mean for the lives of 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 invite friends home?

Balance their priority and plan what to spend money on

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

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, on top of the advertised price for the compute

Make an informed decision about credit

PISA framework for financial literacy

Content

Money and transactions

Planning and managing finances

Risk and reward

Financial landscape

Processes Identifying financial

information

Analyse information in a financial context

Evaluate financial issues

Apply financial knowledge and understanding

Contexts

Education and work

Home and family

Individual

Societal

What the results tell us?

1. What are the current needs and gaps in financial literacy of students across countries and within countries?

2. What are the main factors explaining the wide inequalities within country?

3. Is financial literacy only about mathematics and reading ? 4. What are students’ current experiences with money matters ?

Is it related to financial literacy? 5. How is financial literacy related to students’ financial behaviors

and future expectations?

→ Goal : Evidence to support effective policy action

5 research questions and a policy goal

Students’ performance in financial literacy

What are the needs and gaps across and within countries?

B-S-J-G (China)

Belgium (Flemish) Canadian provinces

Russia Netherlands Australia

United States Poland Italy

Spain

Lithuania Slovak Republic

Chile

Peru

Brazil

380

400

420

440

460

480

500

520

540

560

580Mean performance in financial literacy

Mean financial literacy score Figure IV.3.2

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OEC

D av

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Spai

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Three-year score-point difference

Change between 2012 and 2015

Figure IV.3.6

13 22 22 13 19 20 20 20 22 22

25 32 35 38

48 53

33 11 24 22 17 15 6 8

10 12 6 4 6 3

1 3

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Students’ financial literacy by proficiency levels

%

BANK ERROR - Evaluate a potential financial fraud and respond appropriately to a financial scam e-mail message – Level 5

INVOICE Question 2 - Identify a delivery cost that is explicitly stated on an invoice – Level 2

INVOICE Question 1 – Recognise the purpose of an invoice - Below Level 2

PAY SLIP - Read a pay slip and recognise that the employer will only pay net salary into the employee’s bank – Level 4

INVOICE Question 3 (partial credit) - Interpret various elements on the same invoice to correct a mistake in the billing – Level 3

Variation within each country is wider than the variation between countries at the mean

Figure IV.4.1

Percentage of students at various percentiles on the financial literacy scale

200 300 400 500 600 700

B-S-J-G (China) 312Belgium (Flemish) 291

Canadian provinces 295Russia 232

Netherlands 312Australia 309

OECD average-10 285United States 280

Poland 262Italy 249

Spain 265Lithuania 266

Slovak Republic 311Chile 274Peru 276

Brazil 302

25th - 10th percentile 50th - 25th percentile 75th - 50th percentile 90th - 75th percentile

Score-point difference between

90th and 10th

Varying opportunities to improve students’ financial literacy

What are the main factors (gender, socio-economic and immigrant background) explaining the wide inequalities within country?

-30-25-20-15-10

-505

1015

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Italy

Before accounting for performance in other subjectsAfter accounting for performance in mathematics and reading

In most countries/economies there are no differences in financial literacy between boys and girls at the mean…

Figure IV.4.4 S

core

-poi

nt d

iffer

ence

Girls perform better

Boys perform better

Gender differences in financial literacy may be related different opportunities for learning, different contexts in which men and women grow up and live, and to a possible variation of these factors across generations.

Difference between boys and girls

0102030405060

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(Chi

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Boys

Girls

… but in 9 countries and economies out of 15, more boys than girls are low performers

Figure IV.4.5

0102030405060

Boys

Girls

Stud

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bel

ow

Leve

l 2

Stud

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at

Leve

l 5

%

%

300

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500

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Per

u

117

Bra

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78

Chi

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103

Slo

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Rep

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8

0

Lith

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a

71

Spa

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79

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Sta

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97

OEC

D a

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89

Italy

6

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Pol

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73

Aus

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1

07

Net

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4

Bel

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(Fle

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110

Rus

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46

Can

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77

B-S

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(Chi

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132

Sco

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oint

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Top quarter of ESCS

Third quarter of ESCS

Second quarter of ESCS

Bottom quarter of ESCS

Difference between

students in the top quarter and students in the bottom quarter

of this index

Socio-economically advantaged students score 89 points higher than disadvantaged students, on average across OECD, equivalent to more than one PISA proficiency level

Table IV.4.11

Mean score, by quarters of the PISA index of economic, social and cultural status (ESCS)

Is financial literacy only about mathematics and reading?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Russia 45Brazil 47

Slovak Republic 48Italy 52

Canadian provinces 53Lithuania 58

Spain 58OECD average-10 62

Poland 62Chile 62Peru 68

B-S-J-G (China) 69United States 70

Belgium (Flemish) 70Netherlands 71

Australia 71

Variation uniquely associated with mathematics performanceVariation uniquely associated with reading performanceVariation associated with more than one domainVariation uniquely captured by the financial literacy assessment

Total explained variation

Student performance in financial literacy is correlated with performance in mathematics and reading, but around 38% of the score reflects factors that are uniquely captured by the financial literacy assessment

Table IV.3.10a

Financial literacy skills may go beyond or fall short of the ability to use the knowledge that students acquired in compulsory education

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Students’ performance in financial literacy is lower than the performance of

students with similar scores in mathematics and reading

Students’ performance in financial literacy is higher than the performance of

students with similar scores in mathematics and reading

Figure IV.3.12

Difference between the actual financial literacy score and the score predicted by students’ performance in mathematics and reading

Highest performing countries/economies

Learning by doing

What are students’ current experiences with money matters ?

Are these related to financial literacy?

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Student has both a bank account and a prepaid debit card Student has a bank account but no prepaid debit cardStudent has a prepaid debit card but no bank account Student earns money from a work activity

Many students hold basic financial products or earn money from work

Figure IV.2.1

On average, students who hold a bank account perform better in financial literacy than students of similar socio-economic status who do not have a bank account

Figure IV.5.5

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After accounting for socio-economic status Before accounting for socio-economic status

Difference between students who have a bank account and students who do not

Financial literacy and financial decisions

How is financial literacy related to students’ financial behaviors?

0%10%20%30%40%50%60%70%80%90%

100%

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Not buy it

Save up to buy it

Try to borrow money from a friend

Try to borrow money from a familymemberBuy it with money that really shouldbe used for something else

Most students would save if they want to buy something for which they do not have enough money

Figure IV.6.1

Percentage of students who gave the following replies to the question: “Likelihood of students' response to the question “If you don’t have enough money to buy something you really want

(e.g. an item of clothing, sports equipment) what are you most likely to do?”

1.00

1.50

2.00

2.50

3.00

3.50

Try to borrow moneyfrom a family

member

Try to borrow moneyfrom a friend

Save up to buy it Not buy it

Odd

s ra

tio

Level 2 or 3 Level 4 or 5

Students' financial literacy is associated with understanding the value of saving

Figure IV.6.2

High performing students are more than twice as likely as low-performing students in financial literacy to choose the statement "Save up to buy it" rather than "Buy it with money that really should be used for something else“, after accounting for performance in mathematics and reading and other characteristics.

What do the results mean for policy?

Financial literacy

skills for all

students

Address the needs of low-performing students

Tackle socio-economic

inequalities early on

Provide equal opportunities for learning to boys

and girls

Help students make the most of

available learning opportunities at

school

Target parents at the same time as

young people

Provide young people with safe opportunities to

learn by experience outside of school

Evaluate the impact of

initiatives in and outside of

school

A multifaceted policy agenda

• Videos, competitions, interactive tools, events (money weeks, savings day), museums, serious games

…complementary to school initiatives …can reach out-of-school young people

… participation of non-profits and private sector to be monitored …again their impact needs to be evaluated more regularly

Out of school initiatives

www.oecd.org/finance/financial-education Flore-Anne.Messy@oecd.org SecretariatINFE@oecd.org

and remember: Without data, you are just

another person with an opinion

Thank you Muchas Gracias

Obrigado Find out more about our work at www.oecd.org/pisa

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