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Students’ financial literacy:
results from PISA 2015
Friday, 16 June 2017
Mexico city
The PISA financial literacy test
• In In In In 2015, a2015, a2015, a2015, around 48 000 students were assessed in financial round 48 000 students were assessed in financial round 48 000 students were assessed in financial round 48 000 students were assessed in financial literacy, representing about 12 million 15literacy, representing about 12 million 15literacy, representing about 12 million 15literacy, representing about 12 million 15----yearyearyearyear----olds in the olds in the olds in the olds in the schools of the 15 participating countries and economies schools of the 15 participating countries and economies schools of the 15 participating countries and economies schools of the 15 participating countries and economies
• Students in countries and economies that participated in the Students in countries and economies that participated in the Students in countries and economies that participated in the Students in countries and economies that participated in the financial literacy answeredfinancial literacy answeredfinancial literacy answeredfinancial 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
Peru
Brazil
Lithuania
Slovak Republic
Italy
Poland
Canada
Australia
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:
%
•Percentage of students in AustraliaAustraliaAustraliaAustralia at bachelor’s, master’s or doctoral levels who had a public who had a public who had a public who had a public student loan student loan student loan student loan in 2013/14
79%
•Percentage of bachelor’s-degree students in the United States United States United States United States who had a public student loan student loan student loan student loan in 2013/14
62%
•Average amount of debt Average amount of debt Average amount of debt Average amount of debt students graduate with in the NetherlandsNetherlandsNetherlandsNetherlands
USD 18 000
•Average amount of debt students graduate with in CanadaCanadaCanadaCanada
USD 12 000
In some countries, students nearing the end of compulsory education will soon
decide whether to take a student loan
Source: Education at a Glance 20160 10 20 30 40 50
Australia
United States
Netherlands
ParticipatingCanadianprovinces
%
Percentage of 15-year-old students
who perform at Level 4 and above
At Level 4, students […] can
make financial decisions
taking into account longer-
term consequences, such
as understanding the overall
cost implication of paying
back a loan over a longer
period […].
• On average across participating OECD countries and
economies, 84% discuss money matters with their
parents at least once a month
• Students who do so tend to perform better in
financial literacy
Students acquire financial skills from their parents…
But up to what their parents can transmit them
• But financial skills are strongly related to the
socio-economic background of their family
• Advantaged students score 89 points higher in
financial literacy than disadvantaged students
84%
89 score
points
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
Financial literacy
Consumer protection and
regulation
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 needs and gaps in financial literacy of needs and gaps in financial literacy of needs and gaps in financial literacy of studentsstudentsstudentsstudents across countries and within countries?
2. What are the main factors main factors main factors main factors explaining the wide inequalities wide inequalities wide inequalities wide inequalities within country?
3. Is financial literacy only about mathematics mathematics mathematics mathematics and and and and reading reading reading reading ?
4. What are students’ current experiences with money matters experiences with money matters experiences with money matters experiences with money matters ? Is it related to financial literacy?
5. How is financial literacy related to students’ financial financial financial financial behaviorsbehaviorsbehaviorsbehaviorsand 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
RussiaNetherlands
Australia
United StatesPolandItaly
Spain
LithuaniaSlovak Republic
Chile
Peru
Brazil
380
400
420
440
460
480
500
520
540
560
580Mean performance in financial literacy
Mean financial Mean financial Mean financial Mean financial
literacy literacy literacy literacy scorescorescorescoreFigure Figure Figure Figure IV.3.2IV.3.2IV.3.2IV.3.2
-30
-20
-10
0
10
20
30
Ru
ssia
Ita
ly
Un
ite
d S
tate
s
Be
lgiu
m (
Fle
mis
h)
OE
CD
av
era
ge
-7
Sp
ain
Slo
va
k R
ep
ub
lic
Au
stra
lia
Po
lan
d
Three-year
score-point
difference
Change between 2012 and 2015
Figure Figure Figure Figure IV.3.6IV.3.6IV.3.6IV.3.6
13 22 22 13
19 20 20 20 22 2225
32 3538
48
53
33 11 24 2217 15 6 8
10 12 64
6 3
13
80
60
40
20
0
20
40
60
80
100
B-S-J-G
(China)
Russia
Belgium (Flemish)
Canadian provinces
Netherlands
Australia
Italy
Poland
United States
OECD average-10
Spain
Lithuania
Slovak Republic
Chile
Peru
Brazil
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 Figure Figure Figure IV.4.1IV.4.1IV.4.1IV.4.1
Percentage of students at various percentiles on the financial literacy scale
200 300 400 500 600 700
B-S-J-G (China) 312
Canadian provinces 295
Netherlands 312
OECD average-10 285
Poland 262
Spain 265
Slovak Republic 311
Peru 276
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?
-30-25-20-15-10-5051015
Lithuania
Slovak Republic
Poland
Australia
Spain
Brazil
OECD average-10
Netherlands
Canadian provinces
Peru
Russia
Belgium (Flemish)
United States
Chile
B-S-J-G
(China)
Italy
Before accounting for performance in other subjects
After 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 Figure Figure Figure IV.4.4 IV.4.4 IV.4.4 IV.4.4
Score-point difference
Girls perform better Girls perform better Girls perform better Girls perform better
Boys perform better Boys perform better Boys 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
0
10
20
30
40
50
60
Peru
Brazil
Lithuania
Chile
Slovak Republic
Spain
Italy
Poland
Russia
United States
OECD average-10
Australia
Netherlands
Canadian provinces
Belgium (Flemish)
B-S-J-G (China)
Boys
Girls
… but in 9 countries and economies out of 15, more boys than girls
are low performers
Figure Figure Figure Figure IV.4.5IV.4.5IV.4.5IV.4.5
0
10
20
30
40
50
60
Boys
Girls
Students below
Students below
Students below
Students below
Level 2
Level 2
Level 2
Level 2
Students at
Students at
Students at
Students at
Level
Level
Level
Level 55 55
%
%
300
350
400
450
500
550
600
650
Peru 117
Brazil 78
Chile 103
Slovak Republic 80
Lithuania 71
Spain 79
United States 97
OECD average-10 89
Italy 60
Poland 73
Australia 107
Netherlands 104
Belgium (Flemish) 110
Russia 46
Canadian provinces
77
B-S-J-G
(China) 132
Score points
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
TableTableTableTable IV.4.11IV.4.11IV.4.11IV.4.11
Mean score, by quarters of the PISA index of economic, social and cultural status (ESCS)
440
450
460
470
480
490
500
510
Never or hardly ever Once or twice a month Once or twice a week Almost every day
Score points
Parents play a role in developing their children’s financial literacy not
only through the resources that they make available to them but also
through direct engagement
Figure IV.5.1Figure IV.5.1Figure IV.5.1Figure IV.5.1
Mean score, by students’ answers to the question:
“How often do you discuss money matters (e.g. talk about spending, saving, banking, investment) with your parents?”
Discussing money matters with parents at
least sometimes is associated with higher
financial literacy than never discussing the
subject, after accounting for students’ socio-
economic status
But discussing very
often may mean something else….
Is financial literacy only about
mathematics and reading?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Russia 45
Brazil 47
Slovak Republic 48
Italy 52
Canadian provinces 53
Lithuania 58
Spain 58
OECD average-10 62
Poland 62
Chile 62
Peru 68
B-S-J-G (China) 69
United States 70
Belgium (Flemish) 70
Netherlands 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.3.10aTable IV.3.10aTable IV.3.10aTable 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
-40
-30
-20
-10
0
10
20
30
40
Lithuania
Spain
Slovak Republic
Poland
Chile
Italy
OECD average-10
Netherlands
Brazil
Australia
United States
Peru
Canadian provinces
Russia
Belgium (Flemish)
B-S-J-G
(China)
Score-point difference
Students’ performance in
financial literacy is lowerlowerlowerlower
than the performance of
students with similar scores
in mathematics and reading
Students’ performance in
financial literacy is higherhigherhigherhigher
than the performance of
students with similar scores
in mathematics and reading
Figure Figure Figure Figure IV.3.12IV.3.12IV.3.12IV.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?
0
10
20
30
40
50
60
70
80
90
100
Netherlands
Australia
Canadian provinces
Belgium (Flemish)
OECD average-10
Italy
United States
Spain
B-S-J-G
(China)
Russia
Slovak Republic
Lithuania
Chile
Poland
%
Student has both a bank account and a prepaid debit card Student has a bank account but no prepaid debit card
Student 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 Figure Figure Figure IV.2.1IV.2.1IV.2.1IV.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 Figure Figure Figure IV.5.5IV.5.5IV.5.5IV.5.5
-20
0
20
40
60
80
100
Slovak Republic
Russia
Lithuania
Poland
B-S-J-G
(China)
Chile
United States
OECD average-10
Italy
Belgium (Flemish)
Australia
Spain
Canadian provinces
Netherlands
Score-point difference
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
0
10
20
30
40
50
60
70
80
90
100
Chile
Poland
Russia
Italy
Lithuania
Slovak Republic
B-S-J-G
(China)
Spain
United States
OECD average-10
Belgium (Flemish)
Canadian provinces
Australia
Netherlands
%
Students holding a bank account
Students holding a bank account who perform below proficiency Level 4
Often two out of three of the students who hold a bank account do not have the skills to manage such an account
TableTableTableTable IV.5.13bIV.5.13bIV.5.13bIV.5.13b
At Level 4, students can
apply their understanding of
complex financial concepts,
interpret and evaluate
financial documents such as
a bank statement, and make
financial decisions taking into
account longer-term
consequences, such as
understanding the overall
cost implication of paying
back a loan
Students who have a bank
account but do not reach
proficiency Level 4
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%
Slovak Republic
Belgium (Flemish)
Italy
Poland
Lithuania
OECD average-10
Canadian
provinces
Netherlands
Spain
Australia
B-S-J-G
(China)
United States
Russia
Chile
Not buy it
Save up to buy it
Try to borrow money from a friend
Try to borrow money from a familymember
Buy 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 Figure Figure Figure IV.6.1IV.6.1IV.6.1IV.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 familymember
Try to borrow moneyfrom a friend
Save up to buy it Not buy it
Odds ratio
Level 2 or 3 Level 4 or 5
Students' financial literacy is associated with
understanding the value of saving
Figure Figure Figure Figure IV.6.2IV.6.2IV.6.2IV.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
• 10 out of the 15 participating countries and economies
are implementing a national strategy for financial
education specifically addressing young people among
their target audiences:
… Australia, Brazil, Canada, Italy, the Netherlands, the
Russian Federation, Spain, Peru and the United States
.. And over 65 countries these days
National strategies for financial education
• Several countries started introducing some financial literacy elements in the school curriculum into existing subjects (Australia, Brazil, Flemish Community of Belgium, Lithuania, Peru, Slovak Republic, Spain – Canada and the United states, depending on province/state)
… but to what extent is the curriculum implemented?
• Some examples of evaluation of financial education programmes in school (Brazil, Italy, Russia, Spain, US)
…is it effective? evaluation needs to become systematic
Initiatives in school
• 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
• Continue to collect and share evidence on policy
effectiveness through the OECD/International
Network on Financial Education (INFE)
• PISA 2018 financial literacy: 21 countriesAustralia, Brazil, Bulgaria, Canada, Chile, Estonia, Finland, Georgia,
Indonesia, Italy, Latvia, Lithuania, Netherlands, Peru, Poland, Portugal,
Russian Federation, Serbia, Slovak Republic, Spain, United States
• Possibility of a further assessment in 2021
Next steps
www.oecd.org/finance/financial-education
and remember: Without Without Without Without data, you are just data, you are just data, you are just data, you are just
another person with an opinionanother person with an opinionanother person with an opinionanother person with an opinion
Thank you
Muchas Gracias
Find out more about our work at www.oecd.org/pisa
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