financial literacy -...
TRANSCRIPT
FINANCIAL LITERACY:
GLOBAL TRENDS, POLICIES AND
PRACTICES
Flore-Anne Messy Head of the Financial Affairs Division, OECD Executive Secretary, International Network on Financial Education [email protected]
OUTLINE
2
The financial education framework and the OECD/INFE
(Low) levels of financial literacy around the world
Improving the situation:
policy responses; the roles of BI; and digitalisation
Future areas of work for the OECD and its INFE
Financial education is one part of a multi-
dimensional approach to financial empowerment
Financial Education
Financial Consumer Protection
Financial Inclusion
G20 (2010)
Principles
for Innovative
Financial Inclusion
G20 (2016) High-
Level Principles for
Digital Financial
Inclusion
G20 (2011) High-Level
Principles on Financial
Consumer Protection
developed by the OECD
OECD/INFE (2012)
High-Level Principles on
National Strategies for
Financial Education
3
INFE created in 2008
10th Anniversary next year!
120 economies approx 250 public
authorities
A Technical Committee and Working Groups
Oversight from an Advisory Board
Community outreach and inputs through:
INFE Research Committee
Partnerships with NGOS and
private sector
Regular global events
Regional platforms and roundtables
Asia
Latin America and the Caribbean
Eurasia (CIS)
OECD International Network on Financial Education
(OECD/INFE) Project on Financial Education
Work started in 2002. Serviced by 2 OECD Committees
→ News, events and publications:
www.financial-education.org
TOO MANY ADULTS HAVE LOW LEVELS OF FINANCIAL
LITERACY
SOURCE: OECD/INFE SURVEYS ON
FINANCIAL LITERACY AND INCLUSION 2016, 2017
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, and
agreed to use an updated version in 2017 to measure financial
literacy in G20 countries
Available online for anyone to use: please consider sharing data with
the OECD
OECD/INFE survey to measure
financial literacy and financial inclusion
Countries covered
Note: Chile collected data with the OECD/INFE toolkit but its data have not yet been included in the analysis
Low levels of financial literacy globally
(with variations)
Sum of average financial knowledge, behaviour and attitudes scores (Max 21)
Source: OECD/INFE financial literacy and inclusion survey. The combined financial literacy score (sum of the three components) is reported in brackets next to the country name
0
5
10
15
20
Sa
ud
i A
rab
ia (
9.6
)
Ita
ly (
11.0
)
Arg
enti
na
(11
.4)
Ca
mb
od
ia (
11.5
)
Vie
t N
am
(11
.6)
Po
lan
d (
11.6
)
Bel
aru
s (1
1.7
)
Ind
ia (
11.9
)
Cro
ati
a (
12.0
)
Bra
zil
(12
.1)
Mex
ico
(12
.1)
Ru
ssia
n F
eder
ati
on
(12
.2)
Ma
lay
sia
(12
.3)
Geo
rgia
(12
.4)
Hu
ng
ary
(12
.4)
Tu
rkey
(12
.5)
Cze
ch R
epu
bli
c (1
2.6
)
Jo
rda
n (
12.6
)
Alb
an
ia (
12.7
)
Th
ail
an
d (
12.8
)
Bri
tish
Vir
gin
Isl
an
ds …
Un
ited
Kin
gd
om
(13
.1)
La
tvia
(13
.3)
Ind
on
esia
(13
.4)
Est
on
ia (
13.4
)
Net
her
lan
ds
(13
.4)
OE
CD
Av
era
ge-
20
(13
.4)
Lit
hu
an
ia (
13.5
)
Ger
ma
ny
(13
.8)
Ko
rea
(13
.9)
Po
rtu
ga
l (1
4.0
)
Ch
ina
(14
.1)
Au
stri
a (
14.2
)
Bel
giu
m (
14.3
)
New
Zea
lan
d (
14.4
)
Ho
ng
Ko
ng
, C
hin
a (
14.4
)
Ca
na
da
(14
.6)
No
rwa
y (
14.6
)
Fin
lan
d (
14.8
)
Fra
nce
(14
.9)
Knowledge Behaviour Attitudes
Large variation in % of population reaching the
minimum target score on financial knowledge
Percentage of adults who can answer correctly at least 5 financial knowledge questions out of 7
Source: OECD/INFE financial literacy and inclusion survey
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Ca
mb
od
ia
Vie
t N
am
S
ou
th A
fric
a
Ind
ia
Ita
ly
Ma
lay
sia
B
riti
sh V
irg
in I
sla
nd
s B
ela
rus
Arg
enti
na
M
exic
o
Th
ail
an
d
Alb
an
ia
Ru
ssia
n F
eder
ati
on
C
roa
tia
J
ord
an
U
nit
ed K
ing
do
m
Bra
zil
Ind
on
esia
S
au
di
Ara
bia
C
zech
Rep
ub
lic
Po
lan
d
Geo
rgia
T
urk
ey
OE
CD
Av
era
ge-
20
G
erm
an
y
Fra
nce
H
un
ga
ry
Bel
giu
m
Lit
hu
an
ia
Po
rtu
ga
l C
an
ad
a
Ch
ina
K
ore
a
New
Zea
lan
d
Net
her
lan
ds
Au
stri
a
La
tvia
N
orw
ay
F
inla
nd
E
sto
nia
H
on
g K
on
g (
Ch
ina
)
Men tend to have higher financial knowledge
than women in most countries
Percentage of male and female adults who can answer correctly at least 5 financial knowledge questions out of 7
Source: OECD/INFE financial literacy and inclusion survey. Countries and economies where the gender difference is statistically significant at the 5% level are marked in a darker colour.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
So
uth
Afr
ica
Ma
lay
sia
Ita
ly
Ind
ia
Bel
aru
s
Bri
tish
Vir
gin
Isl
an
ds
Arg
enti
na
Th
ail
an
d
Alb
an
ia
Cro
ati
a
Mex
ico
Ru
ssia
n F
eder
ati
on
Ind
on
esia
Bra
zil
Cze
ch R
epu
bli
c
Sa
ud
i A
rab
ia
Po
lan
d
Jo
rda
n
Un
ited
Kin
gd
om
Geo
rgia
Hu
ng
ary
Ch
ina
Tu
rkey
OE
CD
Av
era
ge-
20
Ko
rea
Fra
nce
Po
rtu
ga
l
La
tvia
Lit
hu
an
ia
Bel
giu
m
Au
stri
a
Ger
ma
ny
Ca
na
da
New
Zea
lan
d
Est
on
ia
Fin
lan
d
Net
her
lan
ds
No
rwa
y
Ho
ng
Ko
ng
(C
hin
a)
Female Male
More than half adults in most countries do not
just “live for today”
Source: OECD/INFE financial literacy and inclusion survey
0
10
20
30
40
50
60
70
80
90
Sa
ud
i A
rab
ia
Jo
rda
n
Ho
ng
Ko
ng
(C
hin
a)
Ind
ia
Po
lan
d
Mex
ico
Ita
ly
Cze
ch R
epu
bli
c
Ind
on
esia
Ma
lay
sia
Bra
zil
Cro
ati
a
Arg
enti
na
La
tvia
Ru
ssia
n F
eder
ati
on
Th
ail
an
d
Est
on
ia
Ko
rea
Un
ited
Kin
gd
om
Ch
ina
Tu
rkey
So
uth
Afr
ica
Ja
pa
n
Ger
ma
ny
Net
her
lan
ds
OE
CD
Av
era
ge-
21
Bri
tish
Vir
gin
Isl
an
ds
Ca
mb
od
ia
Bel
aru
s
Hu
ng
ary
Bel
giu
m
Alb
an
ia
Lit
hu
an
ia
Po
rtu
ga
l
Ca
na
da
Au
stri
a
Vie
t N
am
Fra
nce
Geo
rgia
New
Zea
lan
d
Fin
lan
d
No
rwa
y
Disagrees with "I tend to live for today and let tomorrow take care of itself"
Disagrees with "I find it more satisfying to spend money than to save it for the long term"
Disagrees that "Money is there to be spent" %
When money is tight, many adults resort to
borrowing, showing a lack of financial resilience
Source: OECD/INFE financial literacy and inclusion survey
0%
10%
20%
30%
40%
50%
60%
70%
80%
Ko
rea
N
orw
ay
G
erm
an
y
Ho
ng
Ko
ng
(C
hin
a)
Au
stri
a
Sa
ud
i A
rab
ia
Po
lan
d
Cze
ch R
epu
bli
c U
nit
ed K
ing
do
m
Est
on
ia
Bel
giu
m
Un
ited
Sta
tes
Net
her
lan
ds
Hu
ng
ary
O
EC
D A
ver
ag
e-2
1 It
aly
L
ith
ua
nia
F
inla
nd
J
ord
an
C
an
ad
a
Bri
tish
Vir
gin
Isl
an
ds
New
Zea
lan
d
Cro
ati
a
Po
rtu
ga
l R
uss
ian
Fed
era
tio
n
Bra
zil
La
tvia
C
am
bo
dia
F
ran
ce
Ch
ina
In
do
nes
ia
Ma
lay
sia
In
dia
S
ou
th A
fric
a
Tu
rkey
A
lba
nia
M
exic
o
Bel
aru
s G
eorg
ia
Th
ail
an
d
Arg
enti
na
Respondent reported that their income did not always cover their living costs
Respondent borrowed to make ends meet (% of all respondents)
UNFORTUNATELY YOUNG PEOPLE (STUDENTS) DO NOT DISPLAY BETTER FINANCIAL
LITERACY
SOURCE: PISA FINANCIAL LITERACY 2012, 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
B-S-J-G (China)
Belgium (Flemish) Canadian
provinces
Russia Netherlands Australia
United States Poland
Italy
Spain
Lithuania Slovak Republic
Chile
Peru Brazil
380
400
420
440
460
480
500
520
540
560
580
Students’ mean performance in financial literacy
Mean financial
literacy score:
Green – above
OECD average
Amber – OECD
average
Red – below
OECD average
Figure IV.3.6
13 22 22 13
19 20 20 20 22 22 25
32 35 38 48
53
33 11 24 22 17 15 6 8
10 12 6 4 6 3
1 3
80
60
40
20
0
20
40
60
80
100
B-S
-J-G
(C
hin
a)
Russia
Belg
ium
(F
lem
ish)
Canadia
n p
rovin
ces
Neth
erlan
ds
Austr
alia
Italy
Pola
nd
United S
tate
s
OE
CD
avera
ge
-10
Sp
ain
Lithuania
Slo
vak R
epublic
Chile
Peru
Bra
zil
Students’ financial literacy by proficiency levels
%
BANK ERROR - Evaluate a potential financial
fraud and respond appropriately to a financial
scam e-mail message – Level 5
INVOICE Question 2 - Identify a delivery cost that
is explicitly stated on an invoice – Level 2
INVOICE Question 1 – Recognise the purpose of
an invoice - Below Level 2
PAY SLIP - Read a pay slip and recognise that
the employer will only pay net salary into the
employee’s bank – Level 4
INVOICE Question 3 (partial credit) - Interpret
various elements on the same invoice to correct a
mistake in the billing – Level 3
Many students hold basic financial products
or earn money from work
0
10
20
30
40
50
60
70
80
90
100
Neth
erlan
ds
Austr
alia
Canadia
n
pro
vin
ces
Belg
ium
(F
lem
ish)
OE
CD
avera
ge
-10
Italy
United S
tate
s
Spain
B-S
-J-G
(C
hin
a)
Russia
Slo
vak
Republic
Lithuania
Chile
Pola
nd
%
Student has both a bank account and a prepaid debit card
Student has a bank account but no prepaid debit card
Figure IV.2.1
Experience with money seems to matter…
-20
0
20
40
60
80
100
Slo
va
k R
ep
ub
lic
Ru
ssia
Lith
ua
nia
Pola
nd
B-S
-J-G
(C
hin
a)
Ch
ile
Un
ite
d S
tate
s
OE
CD
ave
rag
e-1
0
Ita
ly
Be
lgiu
m (
Fle
mis
h)
Au
str
alia
Spain
Ca
na
dia
n p
rovin
ce
s
Ne
the
rla
nd
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
Source: OECD PISA 2015 Volume IV Students ‘Financial Literacy
POLICY RESPONSES
Steady development of national strategies
Status of national
strategies in 2012
Status of national strategies in 2017
20
This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area
OECD/INFE work on national strategies
for financial education
21
2012 High-level Principles
endorsed by G20 Leaders
and supported by APEC
Ministers of Finance
2013 Publication on
NS status in G20 economies
welcomed by G20 Leaders
2015 Policy
handbook on the
implementation of NS
2017-2018 Ongoing work
on Implementation and Evaluation
including consolidation of
OECD FE instruments
USING BEHAVIOURAL INSIGHTS AND DIGITAL
TOOLS TO IMPROVE LEVELS OF FINANCIAL
LITERACY
• OECD Consumer Policy Toolkit, 2010
• Regulatory Policy and Behavioural Economics, OECD, 2014
• Behavioural insights and public policy, OECD, 2017
Application to general public
policies
• Focused papers, such as:
• Can behavioural economics be used to make financial education more effective? OECD, 2011
• Behavioural economics and FCP, G20/OECD, 2017
• Current approaches and good practices:
• Policy handbook on national strategies for financial education, G20/OECD, 2015
• Pensions Outlook, OECD, 2016
Application to financial
empowerment policies
The OECD has long recognised
the potential contribution of behavioural insights…
• the United Kingdom, Australia, the Netherlands, New Zealand, US, Armenia, Italy, Denmark, Indonesia, Peru, Thailand, Italy, Serbia, Spain, Namibia…
BI are employed in the design and implementation of financial
education initiatives:
• New Zealand (FMA; MINDSPACE and EAST), Peru (EAST methodology)
• UK (COM-B model) • Thailand (Field experiments)
Scientific frameworks are being applied to initiatives designed to
change behaviour
• Armenia (Deep interviews, prototyping, testing, mystery shopping),
• Peru (mystery shopping and experimental labs)
Various behaviour-centric approaches are used
• Armenia, Australia and New Zealand
Scientific methods such as randomized control trials are
being used to identify the impact of initiatives on behaviour
…and is currently working on a joint publication
on the application of BI with IOSCO C8
be salient and meaningful, and incorporate:
•Rules of thumbs, plain language, framing •Step-by-step guides, a focus on key concepts
be appealing and actionable:
•Make information entertaining •Encourage learning by doing •Overcome limited attention and present bias •Promote self-commitment
Providing a single source of information and
comparative tools at teachable moments can address:
• Ambiguity aversion • Procrastination
Applying BI to improve financial education
outcomes
The OECD is also leading work on understanding the
benefits and challenges of financial digitalisation for
consumers/investors and MSMEs (1)
A global phenomenon
DFS - Any financial transactions using digital technology,
including electronic money, mobile
financial services, online financial
services and branchless banking
The promise
- Easier and timely access
- More affordable
- Wider reach
- Seamless experience tailored to individual
needs
FL outcomes
* Better understanding of
finance/investment opportunities for all
* Interactive/fun platforms leading to
quick financial learning
* Increased awareness
(demystifying finance)
Financial digitalisation presents major opportunities for consumers and MSMEs…
Report delivered to G20 FMCBG in April 2017 focusing on financial literacy and digital finance
The OECD is also leading work on understanding the
benefits and challenges of financial digitalisation for
financial consumers (2)
Ris
ks
ha
ve
em
erg
ed
du
e t
o t
he
s
pre
ad
of
dig
ita
l in
no
va
tio
n..
• Market driven:
• New types of fraud; misselling; data safety and confidentiality
• Use of digital profiling
• Easier access to short-term credit (notably) and questionable market practices reinforce behavioural biases
• Regulation and supervision driven: Uneven protection within (inadequate disclosure and redress mechanisms) and across countries (variety of providers, cross border selling, regulatory arbitrage)
• Consumer driven: increased digitalisation but low digital and financial literacy
…p
ote
nti
ally im
pa
cti
ng
co
ns
um
ers
an
d s
mall b
usin
esse
s
• Lack or uneven safety and trust in DFS
• New types of exclusion:
• for particular groups; elderly, women, MSMEs, low level of digital and financial literacy
• from particular policies: insurance, credit
• Over-indebtedness of particular groups (potentially especially young)
Digital tools can be part of the financial literacy
solution and use BI findings
Smart and evaluated use of technology can support financial education outcomes
Improving access to financial information, advice and training
(e.g. through websites, online courses)
Developing competencies, confidence and experiences with finance
(e.g. through gamification)
Enhancing money management skills and control over finances
(e.g. through application, budget tools)
Addressing consumers’ biases (e.g. through self-commitment tools & alerts)
• Making investments, financial decisions on your own
*Robo-advisor technologies e.g. Sigfig, Motif, Betterment, Wealthfront, Acorns (automated micro-investments)
*Other apps such as Stash (includes educational content customised to your investment preferences)
• Getting investment, finance information, market news
*Digital portals and mobile apps e.g. Bloomberg apps, YahooFinance, CNBC ‘pro’ app (exclusive investment tips and analysis, emails, alerts, ad-free video clips, and live TV)
• Accessing real-time market data and more sophisticated investment platforms
*Stocktrading apps e.g.Robinhood
*Market intelligence, e.g. Benzinga, TD Ameritrade
*Also advanced platforms, e.g. thinkorswim and TradeArchitect
New digital finance tools for investors
WHAT NEXT?
ONGOING AND FUTURE AREAS OF WORK
Policy tools and evidence to address pressing
issues and accelerate regional and global efforts
31
• Drawing on existing tools, principles and guidance and latest findings A modern, comprehensive policy
standard on financial education
• Using the OECD/INFE Toolkit and PISA financial literacy option
Repeated global measures of financial literacy of adults (2020)
and students (2021)
• Feeding into the G20 agenda, and collaborating with G20 Task Force on FCP
Forward looking research and policy guidance on topical issues such as digitalisation and credit
• Identifying core competencies needed by this group and creating a tailored survey instrument
Focused work on the needs of specific target groups including
micro and small enterprises
• Further work to identify and disseminate good practices for the implementation of NS
Global and regional guidance on the implementation of policy standards and good practices
• Annual meeting of the OECD CVM Centre on Financial Education and Literacy in Latin America and the Caribbean (LAC)
• G20/OECD Task Force Research Seminar on Financial Consumer Protection
• Seminar on Technology and Innovation in the Brazilian and Latin American Financial Sector
Rio de Janeiro, Brazil – 11-14 December
• OECD/INFE biannual meetings
• 5th OECD-GFLEC Global Policy Research Symposium to Advance Financial Literacy ”A decade of financial literacy: What relationship with inclusive and sustainable growth?”
Paris, France – 16-18 May 2018
Upcoming global and regional events