OECD TOOLS TO MEASURE

FINANCIAL LITERACY AND

IDENTIFY CORE

COMPETENCIES

Adele Atkinson, PhD Policy Analyst Financial Education and Consumer Protection Unit High-level conference on global and European trends in financial education 22-23 May 2014 - Istanbul, Turkey

• Measuring Financial Literacy

– OECD/INFE measurement tool (use supported by G20 leaders in 2013)+ used in international measure in 2010; second one planned for 2015

– OECD PISA financial literacy assessment (future participation encouraged by G20 leaders 2013 and APEC leaders in 2012)

• Development of an international core-competency framework for youth (draft expected to be presented to G20 leaders in September 2014)

2

Outline

Behaviour 9 Q

Keeping track of money

Making ends meet

Choosing and using products

Short and long term planning

Knowledge 8 Q

Simple and compound

interest

Inflation- time value of money

Risk and return

Risk diversification

Attitudes 4 Q

Propensity to save vs

spend

Time preference (present vs

future)

Risk preference

(explanatory variable)

Financial inclusion

Awareness of products

Holding and using products

Savings habits

Socio-demographic information

Age

Gender

Education

Work

Income

3

Questionnaire content

Knowledge Maximum of 8

points

(High score 6+)

Behaviour Maximum of 9

points

(High score 6+)

Attitudes

Maximum of 5 points

High score is >3

2 combined measures

1) Overall score Maximum 22

2) Number of high scores

4

Analysis of financial literacy scores

5

% with high financial knowledge score

45% 46%

57% 61%

58%

69%

60%

51%

40% 41%

49%

33%

53% 57%

Alb

ania

Arm

enia

Cze

ch R

epu

blic

Esto

nia

Ger

man

y

Hu

nga

ry

Irel

and

Mal

aysi

a

No

rway

Per

u

Po

lan

d

Sou

th A

fric

a

Un

ited

Kin

gdo

m

BV

I

6

% with high financial behaviour score

39% 41%

48%

27%

67%

38%

57%

67%

59% 60%

43% 43%

51%

71%

Alb

ania

Arm

enia

Cze

ch R

epu

blic

Esto

nia

Ger

man

y

Hu

nga

ry

Ire

lan

d

Mal

aysi

a

No

rway

Pe

ru

Po

lan

d

Sou

th A

fric

a

Un

ite

dK

ingd

om

BV

I

7

% with positive attitudes

69%

11%

62%

46%

63%

69%

49% 53%

57%

71%

27%

54% 49%

67%

Alb

ania

Arm

enia

Cze

ch R

epu

blic

Esto

nia

Ger

man

y

Hu

nga

ry

Ire

lan

d

Mal

aysi

a

No

rway

Pe

ru

Po

lan

d

Sou

th A

fric

a

Un

ite

d K

ingd

om

BV

I

An international measure of financial literacy of youth

2012: Participation (voluntary) in 18 jurisdictions: Australia, Belgium (Flemish), China-Shanghai, Colombia, Croatia, Czech Republic, Estonia, France, Israel, Italy, Latvia, New Zealand, Poland, Slovak Republic, Slovenia, Spain, Russia, and USA

• Data on levels of financial literacy by

– country/economy

– maths/reading score

– socio-demographics

– experience with money

To be repeated in 2015

PISA cognitive assessment of

15-year-olds’ financial literacy

The PISA financial literacy assessment

framework: processes, content and context

Processes: mental strategies or cognitive approaches

Identify financial information

Analyse information in a financial context

Evaluate financial issues

Apply financial knowledge and understanding

Content: areas of knowledge and understanding

Money and transactions Planning and managing finances Risk and rewards Financial landscape

Contexts: applicable situations

Education and work Home and Family Individual Societal

Level 1

Level 2

Level 3

Level 4

Level 5

Described proficiency scale

Level 2 is the baseline: i.e. minimum level necessary for 15-year-old students to participate effectively and productively in society. Students who fail to reach this level will struggle to perform basic financial tasks in real life.

Level 5 students 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. (OECD 2014, forthcoming)

• Building on various resources:

– OECD/INFE work on financial education in schools

– PISA financial literacy assessment framework

– PISA analysis and described proficiency scale

– National learning and assessment frameworks

– Expert knowledge and feedback from INFE members

• Describing expected level of knowledge;

• awareness of key content; and

• behaviours and attitudes towards applying these in real life situations

An international core-competency

framework, describing expected outcomes

• The availability of tools to measure financial literacy among adults and youth makes it possible to:

– Described levels of financial literacy

– Compare across countries/groups/policies

– Identify changes over time

• Expert judgment and robust analysis can identify proportions with sufficient financial literacy

• In-depth study can provide a description of core competencies and the order in which they are developed

Conclusion

Questions? Comments?

Interested in participating in the 2015 adult financial literacy measure?

Please contact:

adele.atkinson@oecd.org

OECD/INFE financial education publications and

International Gateway

www.financial-education.org

Thank you