OECD/INFE tools for cross- country surveys of financial literacy

1. OECD/INFE tools for cross- country surveys of financial literacy Adele Atkinson, PhD Policy Analyst adele.atkinson@oecd.org www.financial-education.org With the support of the Russian/World Bank/OECD Trust Fund

2. Outline • Questionnaire development • the development process • questionnaire content • Data collection • Final list of pilot countries • Data analysis and results • Some highlights: for more see the paper! • Conclusions, outputs and future plans

3. Questionnaire development process 2008/9 2010 2010/11 2011/12

4. Questionnaire content

5. Data collection A large-scale, robust data collection process 2009/10 2010/11 2011 2011

6. The pilot countries 14 countries drawn from 4 continents: Africa, Asia, Europe, South America Includes developed and emerging economies including middle (lower and upper), and high income economies Armenia, Albania, BVI, Czech Republic, Estonia, Germany, Hungary, Ireland, Malaysia, Norway, Peru, Poland, South Africa, UK

7. Ensuring comparable data

8. Analysis of financial literacy scores

9. Financial knowledge At least 30% of respondents in each of the 14 countries scored less than 6 in the knowledge test (67% in RSA) • Basic maths is not a problem: most respondents can do a simple division (79% RSA) • However, there are basic levels of knowledge with serious weaknesses in every country • Understanding the benefit of diversification and the impact of compound interest are the key difficulties (e.g. In RSA just 21% worked out interest after 1 year and then showed understanding of the benefit of compounding over 5 years)

10. Financial behaviours We looked for 9 positive behaviours. At least 30% of respondents in each country exhibit fewer than 6 of them. (in RSA 57% exhibited fewer than 6). • Shopping around for financial products is uncommon (UK most likely at just 16%) • Setting long term goals and striving to achieve them is also quite uncommon in some countries (e.g. Albania 30%) • The proportion actively saving ranges from below 30% in Hungary to 97% in Malaysia (RSA 53%)

11. Attitudes • Combining results from 3 questions shows that 54% of respondents in RSA have attitudes that tend towards the longer term compared with just 11% in Armenia • Very few people in Armenia (8%) and Poland (19%) find saving more satisfying than spending (RSA 48%) • 60% of South Africans disagreed that they tend to live for today and let tomorrow take care of itself

12. Relationship between behaviour and knowledge

13. Relationship between behaviour and attitude Financial attitude score

14. Variations by socio-demographics • Women typically have lower levels of knowledge. In some countries (but not all) they have lower behaviour scores. In most countries women have more positive attitudes towards the long term • Higher income and higher education are associated with higher overall scores, as is middle age

15. Conclusions of pilot • The OECD/INFE have created a survey instrument that is highly flexible and applicable across a wide range of countries • The simple, replicable measures of financial literacy allow analysis within and across countries and can be applied whenever the survey is used • Country level data allows identification of gaps and needs; international data can identify good practices and international priorities (e.g. gender differences) • The results are very interesting – some worrying findings, some findings that need further investigation, some interesting variations

16. Key outputs Framework for the Development of Financial Literacy Baseline Surveys: A First International Comparative Analysis, OECD Working Papers on Finance, Insurance and Private Pensions, No. 1, OECD Publishing. Measuring Financial Literacy: Results of the OECD / International Network on Financial Education (INFE) Pilot Study OECD Working Papers on Finance, Insurance and Private Pensions, No. 15, OECD Publishing. Questionnaire and Guidance Notes  A questionnaire that includes guidance on how to undertake the survey and how to code the data for analysis. The whole of the questionnaire should be used to enable comparisons. It can be integrated into other surveys or used alone. A set of supplementary questionsA collection of additional questions that may be of relevance to financial education policy in particular countries. Any number of questions from this set can be used.

17. Future plans Further data collection • Many countries are using/have used the questions: e.g. Jamaica, Korea, Iceland, Thailand, Turkey, South Africa again; or parts of it: Japan, New Zealand (knowledge) • We will encourage a repeat measure with pilot countries Additional analysis and reporting • The OECD/INFE will continue to use the pilot data to inform the work of the subgroups and related research; and publish the results

18. Thank you! Comments and questions are welcome adele.atkinson@oecd.org Please also let us know if you have used any of our questions, or intend to do so. The questionnaire and guidance plus supplementary questions are available on our website. www.financial-education.org See also http://www.finlitedu.org/ for outputs from the Russian Trust Fund