pisa students’ financial literacy - results from pisa 2015

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Students’ financial literacy: results from PISA 2015 Andreas SCHLEICHER

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Page 1: PISA   Students’ Financial Literacy - Results from PISA 2015

Students’ financial literacy:

results from PISA 2015

Andreas SCHLEICHER

Page 2: PISA   Students’ Financial Literacy - Results from PISA 2015

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

Page 3: PISA   Students’ Financial Literacy - Results from PISA 2015
Page 4: PISA   Students’ Financial Literacy - Results from PISA 2015

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, like student loans

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%

Page 5: PISA   Students’ Financial Literacy - Results from PISA 2015

0 10 20 30 40 50 60 70 80 90

Peru

Brazil

Chile

Lithuania

Russian Federation

Slovak Republic

China

Italy

Belgium

Poland

Spain

Canada

Netherlands

Australia

United 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:

%

Page 6: PISA   Students’ Financial Literacy - Results from PISA 2015

• 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

Page 7: PISA   Students’ Financial Literacy - Results from PISA 2015

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

Page 8: PISA   Students’ Financial Literacy - Results from PISA 2015

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

Page 9: PISA   Students’ Financial Literacy - Results from PISA 2015

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

Page 10: PISA   Students’ Financial Literacy - Results from PISA 2015

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

Page 11: PISA   Students’ Financial Literacy - Results from PISA 2015

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

Page 12: PISA   Students’ Financial Literacy - Results from PISA 2015

0

10

20

30

40

50

60

70

80

90

100

Ita

ly

Spain

Un

ite

d S

tate

s

Ca

nad

ian

pro

vin

ce

s

Ch

ile

Austr

alia

OE

CD

avera

ge-1

0

Slo

vak R

epub

lic

Ru

ssia

Lithu

ania

Pola

nd

B-S

-J-G

(C

hin

a)

Ne

therl

and

s

Belg

ium

(F

lem

ish

)

%

Working outside school hours (e.g. a holiday job, part-time work)

Working in a family business

Occasional informal jobs (e.g. baby-sitting or gardening)

Any work activity (working outside school hours and/or working in a family business and/or occasional informal jobs)

Some 64% of students earn money

from some formal or informal work activity

Table IV.5.15

Percentage of students who receive money from:

Page 13: PISA   Students’ Financial Literacy - Results from PISA 2015

0

10

20

30

40

50

60

70

80

90

100

Ch

ile

Pola

nd

Ru

ssia

Ita

ly

Lithu

ania

Slo

vak R

epub

lic

B-S

-J-G

(C

hin

a)

Spain

Un

ite

d S

tate

s

OE

CD

avera

ge-1

0

Belg

ium

(F

lem

ish

)

Ca

nad

ian

pro

vin

ce

s

Austr

alia

Ne

therl

and

s

%

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

Table IV.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

Page 14: PISA   Students’ Financial Literacy - Results from PISA 2015

Students using basic financial products or earning from work

0

10

20

30

40

50

60

70

80

90

100

Net

her

lan

ds

Au

stra

lia

Can

adia

np

rovi

nce

s

Bel

giu

m(F

lem

ish

)

OEC

Dav

erag

e-1

0

Ital

y

Un

ited

Stat

es

Spai

n

B-S

-J-G

(Ch

ina)

Ru

ssia

Slo

vak

Rep

ub

lic

Lith

uan

ia

Ch

ile

Po

lan

d

%

Student has a prepaid debit card but no bank account Student has a bank account but no prepaid debit card

Student has both a bank account and a prepaid debit card Student earns money from a work activity

Page 15: PISA   Students’ Financial Literacy - Results from PISA 2015

• Percentage of students in Australia at bachelor’s, master’s or doctoral levels who had a public student loan in 2013/14

79%

• Percentage of bachelor’s-degree students in the United States who had a public student loan in 2013/14

62%

• Average amount of debt students graduate with in the Netherlands

USD 18 000

• Average amount of debt students graduate with in Canada

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 20 40 60 80 100

Australia

United States

Netherlands

ParticipatingCanadianprovinces

%

Percentage of 15-year-old students

who perform at Level 4 and above

Page 16: PISA   Students’ Financial Literacy - Results from PISA 2015

Countries vary in how well they prepare students for the financial world

…and in how quickly they improve outcomes

Page 17: PISA   Students’ Financial Literacy - Results from PISA 2015

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

literachy scoreFigure IV.3.2

-30

-20

-10

0

10

20

30

Ru

ssia

Ital

y

Un

ite

d S

tate

s

Be

lgiu

m (

Fle

mis

h)

OEC

D a

vera

ge-7

Spai

n

Slo

vak

Rep

ub

lic

Au

stra

lia

Po

lan

d

Three-year score-point difference

Change between 2012 and 2015

Page 18: PISA   Students’ Financial Literacy - Results from PISA 2015

-30

-25

-20

-15

-10

-5

0

5

10

15

Lithu

ania

Slo

vak R

epub

lic

Pola

nd

Austr

alia

Spain

Bra

zil

OE

CD

avera

ge-1

0

Ne

therl

and

s

Ca

nad

ian

pro

vin

ce

s

Peru

Ru

ssia

Belg

ium

(F

lem

ish

)

Un

ite

d S

tate

s

Ch

ile

B-S

-J-G

(C

hin

a)

Ita

ly

Before accounting for performance in other subjects

After accounting for performance in mathematics and reading

Few gender differences in mean scores…Figure IV.4.4

Sco

re-p

oin

t d

iffe

ren

ce

Girls perform better

Boys perform better Gender differences in

financial literacy may be

related to 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

Page 19: PISA   Students’ Financial Literacy - Results from PISA 2015

0

10

20

30

40

50

60

Pe

ru

Bra

zil

Lith

uan

ia

Chile

Slo

va

k R

ep

ub

lic

Sp

ain

Italy

Po

lan

d

Russia

Unite

d S

tate

s

OE

CD

avera

ge

-10

Au

str

alia

Neth

erl

an

ds

Ca

nad

ian

pro

vin

ces

Be

lgiu

m (

Fle

mis

h)

B-S

-J-G

(C

hin

a)

Boys

Girls

…but more boys than girls are low performersFigure IV.4.5

0

10

20

30

40

50

60

Boys

Girls

Stu

den

ts b

elo

w

Lev

el 2

Stu

den

ts a

t

Lev

el 5

%

%

Page 20: PISA   Students’ Financial Literacy - Results from PISA 2015

Relationships matter

Parents have a significant role, but not all parents can play this role

Page 21: PISA   Students’ Financial Literacy - Results from PISA 2015

420

440

460

480

500

520

Students who discussmoney matters more

often with friends thanwith parents

Students who discussmoney matters equallyoften with parents and

friends

Students who discussmoney matters more

often with parents thanwith friends

Score

poin

tsRelationships matter: Financial literacy, family and friends (after accounting for social background)

Figure IV.5.2

Page 22: PISA   Students’ Financial Literacy - Results from PISA 2015

1.0

1.5

2.0

2.5

3.0

3.5

Slo

vak R

epub

lic

Ru

ssia

Ita

ly

Pola

nd

Bra

zil

Lithu

ania

Spain

Ca

nad

ian

pro

vin

ce

s

OE

CD

avera

ge-1

0

Ch

ile

Un

ite

d S

tate

s

Peru

Ne

therl

and

s

Austr

alia

Belg

ium

(F

lem

ish

)

Od

ds r

atio

s

Increased likelihood of socio-economically disadvantaged students to be low performers in financial literacy

Even after looking at students with similar math and reading

performance, disadvantaged students are about twice as likely as

advantaged students to be low performers

Table IV.4.25a

Page 23: PISA   Students’ Financial Literacy - Results from PISA 2015

300

350

400

450

500

550

600

650

Peru

117

Bra

zil

7

8

Ch

ile

103

Slo

vak R

epub

lic

80

Lithu

ania

71

Spain

79

Un

ite

d S

tate

s

97

OE

CD

avera

ge-1

0

89

Ita

ly

60

Pola

nd

73

Austr

alia

10

7

Ne

therl

and

s

10

4

Belg

ium

(F

lem

ish

) 1

10

Ru

ssia

4

6

Ca

nad

ian

pro

vin

ce

s

77

B-S

-J-G

(C

hin

a)

1

32

Sco

re p

oin

ts

Wealthiest quarter (ESCS)

Third quarter

Second quarter

Poorest quarter

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 the 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)

Page 24: PISA   Students’ Financial Literacy - Results from PISA 2015

Financial literacy skills is more than reading and math

-40

-30

-20

-10

0

10

20

30

40

Lithu

ania

Spain

Slo

vak R

epub

lic

Pola

nd

Ch

ile

Ita

ly

OE

CD

avera

ge-1

0

Ne

therl

and

s

Bra

zil

Austr

alia

Un

ite

d S

tate

s

Peru

Ca

nad

ian

pro

vin

ce

s

Ru

ssia

Belg

ium

(F

lem

ish

)

B-S

-J-G

(C

hin

a)

Sco

re-p

oin

t d

iffe

ren

ce

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

Page 25: PISA   Students’ Financial Literacy - Results from PISA 2015

Learning by doing

Students develop financial and economic understanding, skills and habits not only through talking to parents and observing their

behaviour, but also via personal experiences and learning by doing

Page 26: PISA   Students’ Financial Literacy - Results from PISA 2015

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

-20

0

20

40

60

80

100

Slo

vak R

epub

lic

Ru

ssia

Lithu

ania

Pola

nd

B-S

-J-G

(C

hin

a)

Ch

ile

Un

ite

d S

tate

s

OE

CD

avera

ge-1

0

Ita

ly

Belg

ium

(F

lem

ish

)

Austr

alia

Spain

Ca

nad

ian

pro

vin

ce

s

Ne

therl

and

s

Sco

re-p

oin

t d

iffe

ren

ce

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

Page 27: PISA   Students’ Financial Literacy - Results from PISA 2015

Students who receive pocket money for doing chores at home, those who earn

money from part-time jobs or in a family business score lower in financial literacy

Students who receive gifts of money score higher in financial literacy.

Gifts may be related to higher financial literacy if they provide an occasion for students to think about their saving and spending

decisions, but also if high-performing students receive money as a reward for school performance

Sources of money and financial literacy

Page 28: PISA   Students’ Financial Literacy - Results from PISA 2015

• Boys are more likely than girls to be involved in regular work activities, and to receive money in exchange for work, while girls in some countries and economies are more likely than boys to receive money in the form of allowances or gifts

• Socio-economically advantaged students are more likely to receive money from occasional informal jobs, such as babysitting or gardening, and from gifts than disadvantaged students. Disadvantaged students are more likely to earn money by working outside of school hours than advantaged students

Other findings

Page 29: PISA   Students’ Financial Literacy - Results from PISA 2015

Financial literacy and forward-looking thinking

On average across countries, high-performing students are more than three times as likely as students without baseline financial skills to say they would save rather than buy the item anyway

Hypothetical spending behavior is not associated with gender and only weakly with social background

Page 30: PISA   Students’ Financial Literacy - Results from PISA 2015

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

Odds r

atio

Level 2 or 3 Level 4 or 5

Students' financial literacy is associated with understanding

the value of saving (after accounting for math and reading and social background)

Figure IV.6.2

High performing students are

more than three times 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.

Page 31: PISA   Students’ Financial Literacy - Results from PISA 2015

Financial literacy and student motivation

0

5

10

15

20

25

30

35

40

45

50

I want to be able toselect from among the

best opportunitiesavailable when I

graduate

I want top grades inmost or all of my courses

I see myself as anambitious person

I want to be one of thebest students in my class

I want to be the best,whatever I do

Score-point differenceBefore accounting for performance in other domains

After accounting for performance in mathematics and reading

Page 32: PISA   Students’ Financial Literacy - Results from PISA 2015

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

Page 33: PISA   Students’ Financial Literacy - Results from PISA 2015

• Over 50 countries have or are developing a financial

education strategy that…

– recognizes the importance of financial education – including

possibly through legislation – and defines its meaning and scope

– involves the co-operation of different stakeholders as well as the

identification of a coordinating body

– establishes a roadmap to achieve specific and predetermined

objectives within a set period of time

– provides guidance for individual programmes in order to efficiently

and appropriately contribute to the national strategy

National strategies for financial education

Page 34: PISA   Students’ Financial Literacy - Results from PISA 2015

• Several countries started introducing financial literacy

elements in the school curriculum into existing subjects,

built teacher capabilities and developed instructional

materials

• Some examples for evaluating financial education in

school (Brazil, Italy, Spain, US)

Initiatives in school

Page 35: PISA   Students’ Financial Literacy - Results from PISA 2015

• 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 can bring

resources, but also up-to-date experience on financial issues

…needs to be integrated in national strategies

Out of school initiatives

Page 36: PISA   Students’ Financial Literacy - Results from PISA 2015

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

– All publications

– The complete micro-level database

Email: [email protected]

Twitter: SchleicherOECD

Wechat: AndreasSchleicher

Thank you