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PISA 2018 - Are Students Smart About Money?

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Over the past decades, both developed and developing countries have become concerned about the level of financial literacy amongst their citizens, and particularly amongst young people. This concern initially stemmed from worries about the potential impact of shrinking welfare systems and employment-related benefits, shifting demographics, and the increased sophistication and expansion of financial services. The indirect impact of the Covid-19 crisis on individuals’ income and savings (both current and future) and heightened uncertainty in the economic and financial landscape make financial literacy even more crucial for ensuring that citizens are financially resilient.Many 15-year-olds face financial decisions and are already consumers of financial services. They are likely to face growing complexity and risks in the financial marketplace as they move into adulthood. Since better knowledge and understanding of financial concepts and risks could help improve financial decision making amongst adults and young people, financial literacy is now globally recognised as an essential life skill.A growing number of countries provide financial education in school. To minimise curriculum overload, countries typically integrate financial literacy into other subjects and existing courses, rather than introducing an additional subject into an already crowded programme of study. Students may improve their financial skills by acquiring transversal competencies, such as problem solving and critical thinking, in other subjects; at the same time, financial problems can be used as a real-life context for teaching mathematics and other subjects.Thirteen OECD countries and economies and seven partner countries participated in the PISA 2018 assessment of financial literacy. Some 117 000 15-year-old students sat the test, representing around 13.5 million students.

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PISA 2018 - Are Students Smart About Money?

  1. 1. PISA 2018 Results Programme for International Student Assessment PISA VOLUME 4 Are Students Smart About Money? Andreas Schleicher
  2. 2. PISA 2018 Results Programme for International Student Assessment Q & A WEBINAR OECD Education and Skills Webinar Series Are Students Smart about Money? Any questions, please use the Q&A function at the bottom of the screen. The powerpoint and recording of this webinar will be available at: www.oecdedutoday.com/oecd-education- webinars/
  3. 3. Continued shrinking public and private benefit systems (pensions, health) Increased sophistication and expansion of financial services, which will be particularly relevant to young generations Financial decisions are a part of everyday life and can have lasting implications COVID-19 crisis implications: • more uncertain and precarious financial and employment situations that could last • increasing levels of fraud and scams • critical decisions to be made in the short term that will impact future financial wellbeing The financial landscape and the COVID-19 crisis context
  4. 4. • of students hold an account at a bank, building society, post office or credit union54% • of students reported that they had bought something on line (either alone or with a family member) during the previous 12 months73% • of students reported that they had made a payment using a mobile phone during the previous 12 month39% • of students reported always or sometimes comparing prices between a physical shop and an online shop.69% • of students agreed that they enjoy talking about money matters. 52% Key figures: Students are already experienced with (online) money matters
  5. 5. • of students performed below Level 2 proficiency. They cannot recognise the value of a simple budget. 15% • of students attained Level 5 proficiency, the highest level. They can analyse complex financial products and take into account features of financial documents that are not immediately obvious. 10% Performance stable between 2012 and 2018, but rebounded by 20 points from low in 2015 due to fewer low-performing students. Key figures : average performance is consistent with past exercises
  6. 6. Financial literacy is not perfectly correlated with per capita GDP…
  7. 7. ….or access to basic financial products
  8. 8. The 2018 PISA Financial Literacy Assessment
  9. 9. • 13 OECD countries/economies: Australia, Canadian provinces, Chile, Estonia, Finland, Italy, Latvia, Lithuania, Poland, Portugal, the Slovak Republic, Spain and the United States • 7 partner countries: Brazil, Bulgaria, Georgia, Indonesia, Peru, Russia and Serbia 20 participating countries/economies • representing 13.5 million 15-year-olds in the countries/economies concerned 117 000 students sat the test The PISA 2018 financial literacy assessment in a nutshell
  10. 10. to improve the financial well-being of individuals and society, and to enable participation in economic life the 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, Financial literacy is: How does PISA define financial literacy?
  11. 11. • A cognitive assessment measuring knowledge and understanding, and the application of this knowledge and understanding. • A questionnaire on students’ financial attitudes, behaviour, and experience How does PISA 2018 assess financial literacy? Content Processes Context Money and transactions Identifying financial information Education and work Planning and managing finances Analysing information in a financial context Home and family Risk and reward Evaluating financial issues Individual The financial landscape Applying financial knowledge and understanding Societal
  12. 12. Student performance
  13. 13. Financial literacy performance [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] [CELLRANGE] 380 400 420 440 460 480 500 520 540 560 Scorepoints Tab VI.2.1 Countries/economies with an asterisk* did not meet the PISA 2018 technical standards but were accepted as largely comparable Numbers next to the county/economy names indicate upper and lower rank Countries/economies statistically significantly above the OECD average Countries/economies NOT statistically significantly different from the OECD average Countries/economies statistically significantly different below the OECD average
  14. 14. 80 60 40 20 0 20 40 60 80 100 Estonia Canadianprovinces Poland Finland Latvia Portugal Lithuania Russia OECDaverage Spain Australia UnitedStates Italy SlovakRepublic Chile Serbia Bulgaria Brazil Peru Georgia Indonesia % Level 1 Below Level 1 Students at Level 5 can apply their understanding of a wide range of financial terms and concepts 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 documents that are significant but unstated or not immediately evident, such as transaction costs. They can work with a high level of accuracy and solve non-routine financial problems, and they can describe the potential outcomes of financial decisions, showing an understanding of the wider financial landscape, such as income tax. Important disparities of students’ financial literacy performance across and within countries Fig IV.2.1 Level 5 Level 4 Level 3 Level 2 Students at Level 1 can identify common financial products and terms and interpret information relating to basic financial concepts. They can recognise the difference between needs and wants and can make simple decisions on everyday spending. Students at Level 2 begin to apply their knowledge of common financial products and commonly used financial terms and concepts. They can recognise the value of a simple budget and can interpret prominent features of everyday financial documents. They can apply single basic numerical operations.
  15. 15. -20 -15 -10 -5 0 5 10 15 20 Estonia United States Slovak Republic Italy Poland Russia Spain OECD average - 2012 Latvia Australia Score-pointdifferences(PISA2018–PISA2012) A relatively stable performance with a couple of changes between PISA 2012 and 2018 Statistically significant differences between PISA 2012 and PISA 2018 are shown in a darker tone Fig IV.2.3 In Estonia, mean literacy performance improved by 18 score points since PISA 2012
  16. 16. Correlation between performance in … Mathematics Reading and performance in… 0,87 0,83 Financial literacy 0,81 Mathematics Performance in financial literacy is correlated with performance in mathematics and reading Fig IV.2.4 0.00 signifies no relationship and 1.00 signifies the strongest positive relationship! OECD average
  17. 17. -20 -15 -10 -5 0 5 10 15 20 Estonia65 Finland62 Brazil61 Lithuania57 Chile55 UnitedStates56 Canadianprovinces54 Australia54 OECDaverage52 Portugal51 Latvia51 Russia50 Georgia48 Peru47 Indonesia46 Poland47 SlovakRepublic42 Bulgaria42 Serbia36 Italy35 Difference between the actual financial literacy score and the score predicted by students' performance in mathematics and reading Relativeperformance(score-pointdifference) Students in Brazil, Estonia and Finland performed strongly on elements uniquely related to financial literacy Statistically significant differences are shown in a darker tone Fig IV.2.5 Students’ performance in financial literacy is higher than the performance of students with similar scores in mathematics and reading Students’ performance in financial literacy is lower than the performance of students with similar scores in mathematics and reading Percentage of students who perform above their expected score
  18. 18. Disparities in performance
  19. 19. 0 100 200 300 400 500 600 700 800 900 1000 Performance in financial literacy Boys Girls Boys over-represented at both ends of the performance distribution Fig IV.3.2 Increasedfrequency This figure is a histogram of performance using an interval size of five score points
  20. 20. 0 20 40 60 80 100 120 140 Indonesia Estonia Latvia Spain Canadianprovinces Italy Serbia Poland Russia OECDaverage Lithuania Georgia Finland Australia Chile Portugal Brazil UnitedStates SlovakRepublic Bulgaria Peru Difference in performance between advantaged and disadvantaged students Score-pointdifference(advantaged-disadvantaged) Advantaged students score roughly one proficiency level higher than disadvantaged students, on average across OECD countries All differences were statistically significant Tab IV.3.1 Students’ performance in financial literacy is higher than the performance of students with similar scores in mathematics and reading
  21. 21. -80 -70 -60 -50 -40 -30 -20 -10 0 10 20 Australia27 UnitedStates24 Canadianprovinces39 Russia6 Serbia9 Spain12 Italy10 OECDaverage11 Portugal7 Estonia10 Finland6 Score-pointdifferencebetweennon-immigrantand immigrantstudents Immigrant students performed 30 points below non-immigrant students, on average across OECD countries Fig IV.3.3Before accounting for socio-economic status After accounting for socio-economic status Statistically significant differences are marked in a darker tone Percentage of students with an immigrant background
  22. 22. Students’ experience with money matters
  23. 23. 0 10 20 30 40 50 60 70 80 90 100 Peru Serbia Brazil Brazil Spain Portugal Georgia Poland Chile Indonesia UnitedStates Lithuania Italy SlovakRepublic OECDaverage Russia Latvia Australia Canada Estonia Finland Payment card or debit card Account with a bank, building society, post office or credit union Percentageofstudentswhoreportedholding oneofthesefinancialproducts Roughly half of all students hold an account at a financial institution and/or a payment/debit card Fig IV.6.1Based on students’ self-reports
  24. 24. -30 -20 -10 0 10 20 30 40 50 Finland Canada Australia Portugal UnitedStates Latvia OECDaverage Chile Estonia Spain Lithuania Brazil Poland SlovakRepublic Italy Bulgaria Russia Georgia Serbia Indonesia Peru Score-pointdifference Score-point difference between students who hold a bank account and those who do not hold a bank account/those who do not know what a bank account is Financial literacy performance is positively associated with students holding a bank account (28 point ↑) Fig IV.6.2 Before accounting for gender, student socio-economic profile and immigrant background After accounting for gender, student socio-economic profile and immigrant background
  25. 25. 0 10 20 30 40 50 60 70 80 90 Peru Finland Portugal Poland Spain Serbia Brazil Chile OECDaverage Estonia Canada Italy SlovakRepublic UnitedStates Georgia Latvia Australia Bulgaria Lithuania Indonesia Russia Made a payment using a mobile phone Bought something on line (alone or with a family member) Percentageofstudentswhoreportedthattheyhadperformed thefollowingactivitiesovertheprevious12months Roughly 75% of students bought something on line 40% of students made a payment using a mobile phone Fig IV.6.3Based on students’ self-reports
  26. 26. -20 -10 0 10 20 30 40 50 Poland SlovakRepublic Lithuania Italy Latvia UnitedStates OECDaverage Estonia Canada Spain Finland Bulgaria Russia Brazil Chile Australia Serbia Portugal Indonesia Georgia Peru Score-pointdifference Score-point difference between students who bought something on line (alone or with a family member) and those who did not Financial literacy performance is positively associated with experience buying something on line (28 points ↑) Fig IV.6.4 Score-point differences that are statistically significant are marked in a darker tone Before accounting for gender, student socio-economic profile and immigrant background After accounting for gender, student socio-economic profile and immigrant background
  27. 27. Students’ confidence in handling money matters
  28. 28. 0 10 20 30 40 50 60 70 80 Paying with a debit card instead of using cash Keeping track of their balance Ensuring the safety of sensitive information when making an electronic payment or using online banking Transferring money Paying with a mobile device (e.g. mobile phone or tablet) instead of using cash % Percentage of students who reported that they are confident or very confident in performing each task Students are relatively confident handling basic digital financial transactions Fig IV.7.1 OECD average
  29. 29. 0 5 10 15 20 25 30 35 40 Keeping track of one's balance Paying with a debit card instead of using cash Ensuring the safety of sensitive information when making an electronic payment or using online banking Transferring money Paying with a mobile device (e.g. mobile phone or tablet) instead of using cash Score-pointdifference Score-point difference between students who reported feeling confident/very confident and those who reported feeling not very confident/not at all confident Financial literacy performance is positively associated with confidence in handling money matters digitally Fig IV.7.2 OECD average Before accounting for gender, student socio-economic profile and immigrant background After accounting for gender, student socio-economic profile and immigrant background Students who reported feeling (very) confident in using digital financial services perform better
  30. 30. 0 10 20 30 40 50 60 70 Keeping track of their account balance Planning their spending in consideration of their current financial situation Making a money transfer (e.g. paying a bill) Understanding bank statements Filling in forms at the bank Understanding a sales contract % Percentage of students who reported that they are confident or very confident in performing each task Students also feel confident handling some generic personal finance tasks Fig IV.7.3 OECD average
  31. 31. -5 0 5 10 15 20 25 30 35 40 45 Planning one's spending in consideration of one's current financial situation Keeping track of one's account balance Making a money transfer (e.g. paying a bill) Understanding bank statements Filling in forms at the bank Understanding a sales contract Score-pointdifference Score-point difference between students who reported feeling confident/very confident and those who reported feeling not very confident/not at all confident Financial literacy performance is equally positively associated with students’ confidence handling personal financial tasks Fig IV.7.4 Score-point differences that are statistically significant are marked in a darker tone OECD averageBefore accounting for gender, student socio-economic profile and immigrant background After accounting for gender, student socio-economic profile and immigrant background Students who reported feeling (very) confident in dealing with money matters perform better
  32. 32. Students’ financial behaviours
  33. 33. 0 10 20 30 40 50 60 70 80 90 100 Portugal Indonesia Chile Peru Italy Australia Finland Georgia OECDaverage Latvia Russia SlovakRepublic Brazil Lithuania Estonia Poland Bulgaria Canadianprovinces Spain UnitedStates Serbia Checked that they were given the right change when they bought something Checked how much money they have Percentageofstudentswho,intheprevious12 months,had… Almost 9 in 10 students checked how much money they have and that they are given right change Figs IV.8.1/2Based on students' reports
  34. 34. 0 10 20 30 40 50 60 70 80 Compare prices in different shops Compare prices between a shop and an online shop Wait until the product gets cheaper before buying it Buy the product without comparing prices % Percentage of students who reported that they sometimes or always use each spending strategy Most students compare prices in different shops including between physical and online shops Fig IV.8.3 OECD average
  35. 35. -40 -30 -20 -10 0 10 20 30 40 50 60 Compare prices in different shops Compare prices between a shop and an online shop Wait until the product gets cheaper before buying it Buy the product without comparing prices Score-pointdifference Score-point difference between students who reported that they sometimes or always use the strategy and those who reported otherwise Financial literacy performance is positively associated with comparing prices in different shops (48 points ↑, on average across OECD) Fig IV.8.4 OECD average Before accounting for gender, student socio-economic profile and immigrant background After accounting for gender, student socio-economic profile and immigrant background
  36. 36. Financial literacy at home and at school
  37. 37. 0 10 20 30 40 50 60 70 80 90 100 Parents, guardians or other adult relations Friends Television or radio The Internet Magazines Teachers % Percentage of students reporting receiving information from each source 94% of students obtain information about money matters from parents, on average across OECD countries/economies Fig IV.4.1 OECD average
  38. 38. -40 -30 -20 -10 0 10 20 30 40 Parents, guardians or other adult relations Friends Television or radio Internet Magazines Teachers Score-pointdifference Score-point difference between students who do and those who do not receive information from each source Financial literacy performance is positively associated with obtaining information from parents (38 points ↑, on average across OECD) Fig IV.4.2 OECD averageBefore accounting for gender, student socio-economic profile and immigrant background After accounting for gender, student socio-economic profile and immigrant background
  39. 39. 0 10 20 30 40 50 60 70 80 90 I can decide independently what to spend my money on I can spend small amounts of my money independently, but for larger amounts, I need to ask my parents or guardians for permission I need to ask my parents or guardians for permission before I spend any money on my own I am responsible for my own money matters (e.g. for preventing theft) % Percentage of students who agreed/strongly agreed with each statement A majority of students can decide independently what to spend money on and are responsible for own money matters Fig IV.4.4 OECD average
  40. 40. -50 -40 -30 -20 -10 0 10 20 30 40 I can decide independently what to spend my money on I can spend small amounts of my money independently, but for larger amounts, I need to ask my parents or guardians for permission I need to ask my parents or guardians for permission before I spend any money on my own I am responsible for my own money matters (e.g. for preventing theft) Score-pointdifference Score-point difference between students who do and those who do not receive information from each source Financial literacy performance is positively associated with being able to decide independently what to spend money on (30 points ↑, on average across OECD) Fig IV.4.5 OECD average Before accounting for gender, student socio-economic profile and immigrant background After accounting for gender, student socio-economic profile and immigrant background
  41. 41. Q & A WEBINAR OECD Education and Skills Webinar Series Any questions, please use the Q&A function at the bottom of the screen. The powerpoint and recording of this webinar will be available at: www.oecdedutoday.com/oecd-education- webinars/
  42. 42. What countries are already doing and might consider doing to improve financial literacy
  43. 43. • recognises the importance of financial education • involves the co-operation of different stakeholders • establishes a roadmap to achieve goals • provides guidance to individual programmes A nationally co-ordinated approach to financial education that consists of an adapted framework or programme that: • More than 70 countries are developing or implementing a national strategy As of 2020 Financial literacy initiatives in participating countries/economies: National strategies
  44. 44. Address the needs of low-performing students Tackle socio-economic inequalities early on Provide equal opportunities for learning to both boys and girls : target socio-economic and gender differences in experience, attitudes and behaviours in addition to performance differences Support both access to and education about safe and age-appropriate (digital) financial products Build on students’ positive experience with money Reinforce financial literacy at school and at home Selected policy recommendations
  45. 45. PISA : upcoming brochures to examine gender and digital finance Financial Literacy data : Launch of the OECD/INFE Global Survey on Adult Financial Literacy - 25 June 2020 Monitoring and evaluation of individual financial education programmes through technical assistance G20 : Upcoming Report on Digital Financial Inclusion of Youth Ongoing and relevant work
  46. 46. OECD/INFE at SecretariatINFE@oecd.org www.financial-education.org PISA at edu.pisa@oecd.org Data available at http://www.oecd.org/pisa/data Thank you for your attention ! Q A

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