1. 1. FIRST RESULTS OF THE OECD/INFE INTERNATIONAL SURVEY OF ADULT FINANCIAL LITERACY COMPETENCIES Auckland, 12 October 2016 Flore-Anne Messy Head of DAF/FIN Division, OECD Executive Secretary INFE
2. 2. Outline
3. 3. THE OECD/INFE SURVEY INSTRUMENT
4. 4. Survey instrument to capture financial literacy a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well-being in a representative sample of adults, and available in a Toolkit Questionnaire (core) and optional questions Methodological notes; Interviewer briefings G20 Leaders welcomed and supported its use in 2013 It was updated in 2015 to include new areas OECD / INFE survey to measure financial literacy and financial inclusion
5. 5. Results comparable across countries and over time OECD/INFE financial literacy survey as well as on its relationship with Fin Behaviour 9Q Budgeting, paying bills on time, active saving, choosing products, retirement planning Fin knowledge 7Q Simple and compound interest, Inflation, time value of money, Risk and return, Risk diversification Fin attitudes 5Q Propensity to save vs spend, Time preference Financial inclusion Financial products awareness, use and recent choice Socio-demographics Age, Gender, Education, Work, Income New areas Wellbeing; Fraud; Self-assessment of financial knowledge
6. 6. THE 2015 INTERNATIONAL SURVEY RESULTS: SELECTED FINDINGS
7. 7. 30 countries and economies (including 17 OECD countries) took part. In total, 51,650 adults aged 18 to 79 were interviewed using the same core questions, in a total of 30 languages. Analysis looks at : Responses to different questions Minimum target scores achieved in financial knowledge, behaviour and attitudes In brief
8. 8. Albania Jordan Austria Korea Belarus Latvia Belgium Lithuania Brazil Malaysia British Virgin Islands Netherlands Canada New Zealand Croatia Norway Czech Republic Poland Estonia Portugal Finland Russian Federation France South Africa Georgia Thailand Hong Kong, China Turkey Hungary UK International coverage: 30 countries across Asia Pacific, Europe, Africa, North and South America
9. 9. On average, just 56% of adults across participating countries and economies achieved the minimum target score of at least 5 out of 7 (63% across OECD countries) Many adults are currently unable to reach the minimum target score on financial knowledge 56% 62% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% SouthAfrica Malaysia BritishVirginIslands Belarus Thailand Albania RussianFederation Croatia Jordan UnitedKingdom Brazil CzechRepublic Poland Georgia Average,allcountries Turkey France Hungary Belgium Lithuania Portugal Canada Average,OECDcountries NewZealand Netherlands Austria Latvia Norway Finland Estonia Korea HongKong(China)
10. 10. On average, only 58% could calculate a simple interest on savings (65% OECD) On average, only 42% of adults are aware of the additional benefits of interest compounding on savings (48% OECD) Only about two in three adults were aware that it is possible to reduce investment risk by buying a range of different stocks Adults particularly struggle with basic financial knowledge and concepts
11. 11. The distribution of knowledge varies 0% 10% 20% 30% 40% Korea Latvia Lithuania Malaysia Netherlands NewZealand Norway Poland 0 1 2 3 4 5 6 7
12. 12. And women struggle with financial knowledge more than men, on average, and in many countries (percentage of women and men achieving target minimum score) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% SouthAfrica BVI Jordan UnitedKingdom Brazil Canada Georgia Ave,allcountries Turkey Netherlands NewZealand Belgium Lithuania France Portugal Norway Ave,OECDcountries Austria Finland Korea HongKong(China) Female Male Only statistically significant differences shown
13. 13. Just one in two (51%) respondents across all participating countries and economies achieved the minimum target score of at least six out of nine on financial behavior (54% OECD) Only about half of adults reach the minimum target score on behaviour 51% 54% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Hungary Poland Georgia Brazil Turkey Estonia Croatia CzechRepublic Belarus RussianFederation Albania Netherlands Latvia Lithuania Average,allcountries Average,OECD UnitedKingdom Malaysia Korea Norway Jordan NewZealand Thailand HongKong(China) Portugal Canada Austria Belgium Finland BritishVirginIslands France
14. 14. The weakest areas of financial behaviour across these measures appear to be related to budgeting, planning ahead, choosing products and using independent advice There are several beneficial behaviours that are (perhaps surprisingly) uncommon On average, only 60% of adults reported having a household budget (57% OECD); and only about 50% set long-term goals and tried to achieve them (51% OECD) Among those who had chosen a financial product in the last two years, only 44% made an attempt to shop around on average (46% OECD), and only 19% used independent information (20% OECD)
15. 15. 60% 57% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Latvia Malaysia France Turkey Belarus Korea Thailand Portugal Albania Croatia Poland Lithuania Jordan Georgia Canada Finland HongKong(China) SouthAfrica Average,allcountries NewZealand Average,OECDcountries UnitedKingdom RussianFederation BritishVirginIslands Belgium Brazil Estonia CzechRepublic Netherlands Norway Austria Hungary In a number of countries, less than half of respondents have a household budget
16. 16. 1in 5 borrowed to make ends meet in the last 12 months, on average 0% 10% 20% 30% 40% 50% 60% 70% Belgium UnitedKingdom Norway HongKong(China) Hungary NewZealand Austria Korea France CzechRepublic Poland Netherlands Canada Finland Average,OECD Portugal Estonia Brazil Jordan Average,allcountries Croatia Malaysia Lithuania BritishVirginIslands RussianFederation Latvia SouthAfrica Albania Belarus Turkey Georgia Thailand Respondent reported that their income did not always cover their living costs Respondent borrowed to make ends meet (% of all respondents)
17. 17. When people choose a financial product they (very) rarely seek independent advice 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Netherlands Hungary HongKong(China) CzechRepublic Belarus Croatia UnitedKingdom Belgium Poland NewZealand Estonia Jordan Lithuania RussianFederation Latvia Average,allcountries Norway Average,OECDcountries Albania Turkey Brazil Georgia Malaysia Canada Austria Thailand Finland France Portugal BritishVirginIslands Korea 1 Some attempt to make informed decision or sought 2 Used independent information or advice
18. 18. Combining these findings, levels of financial literacy are low 13.2 out of 21, on average on the minimum target score 0.0 5.0 10.0 15.0 20.0 Poland(11.6) Belarus(11.7) Croatia(12.0) Brazil(12.1) RussianFederation(12.2) Malaysia(12.3) Georgia(12.4) Hungary(12.4) Turkey(12.5) CzechRepublic(12.6) Jordan(12.6) Albania(12.7) Thailand(12.8) BritishVirginIslands(13.0) UnitedKingdom(13.1) Average,allcountries(13.2) Latvia(13.3) Estonia(13.4) Netherlands(13.4) Lithuania(13.5) Average,OECDcountries(13.7) Portugal(14.0) Austria(14.2) Belgium(14.3) Korea(14.4) NewZealand(14.4) HongKong,China(14.4) Canada(14.6) Norway(14.6) Finland(14.8) France(14.9) Knowledge score Behaviour score Attitude score
19. 19. SELECTED POLICY LESSONS
20. 20. Importance of starting financial education early and ideally in schools improve financial knowledge overall establish sound habits (budget /long term planning) bridge the knowledge gender gaps Selected financial education policy lessons (1): Addressing overall low level of financial literacy
21. 21. Support financial resilience and improve active choices of products Tools to develop budget and face to face advice on prioritizing expenses and saving Support planning ahead and saving through a mixture of improved financial knowledge and tools (simulators) as well as nudges (reminders to save and default option) Improve access to information on products (comparison) and to advice especially in the case of complex investment choices (including for retirement) prospect of robo advice if properly regulated Selected policy lessons (2) : Address adults weakest behaviors
22. 22. Role of financial regulation : especially in the area of credit to support responsible use and protect consumers; but also to promote saving for the long-term (pension systems, taxation) The economic and financial context : The current low interest rate and inflation environment coupled with increased digitalization of finance may have an impact on consumers attitude and behaviors towards the short term and overreliance on credit. Selected policy lessons (3): The broader picture
23. 23. NEXT STEPS
24. 24. More detailed analysis of gender differences Analysis of the potential correlation between financial inclusion and financial literacy Analysis of other target groups, such as the self- employed, older adults, low-income groups Exploration of the concept of financial well-being Report on financial literacy across G20 countries Future analyses
25. 25. THANK YOU! www.oecd.org/finance/oecd-infe-survey-adult- financial-literacy-competencies.htm SecretariatINFE@oecd.org www.financial-education.org