MEASURING FINANCIAL LITERACY: RESULTS OF OECD/INFE SURVEY

Empower Consumers of Financial Products and Services through Improving Financial Literacy/Capability and Effective Consumer Protection

G20 Russia, OECD, World Bank 13 - 14 June 2013, Moscow

CHIARA MONTICONE – OECD

with the support of the Russia/World Bank/OECD Trust Fund

Monograph collecting results on the 14 countries that undertook the initial OECD/INFE survey about:

• Financial literacy• Analysis by gender and

other socio-demographics

• Financial inclusion

Results of the OECD/INFE survey

Simple division: most people can do it, basic maths is not a problem

Simple interest + compounding: problematic for a relatively large proportion of respondents across all countries – In Albania and Peru, fewer than 1 in 5 people

were able to apply their knowledge to this– In every country except Norway, at least half

of the population failed to identify the impact of compounding

Diversification is another key difficulty in many countries

Financial knowledge

Financial knowledge A

lbania

Arm

enia

Cze

ch R

epublic

Est

onia

Germ

any

Hungary

Irela

nd

Mala

ysia

Norw

ay

Peru

Pola

nd

South

Afr

ica

Unit

ed K

ingdom

BV

I

45% 46%

57%61%

58%

69%

60%

51%

40% 41%

49%

33%

53%

57%

• Eight knowledge questions – rescaled to 0-100 – “high” knowledge with at least 3/4 of correct answers

• In AL, AR, NO, PE, ZA fewer than half of the respondents achieved a “high” score

• No country had more than 70% of their population who could answer at least 3/4 of the questions

Percentage of respondents who gave at least ¾ correct answers to the financial knowledge questions

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%)

Borrowing to make ends meet is not widespread, but still a problem for a large minority in certain countries. – 47% of Armenians had resorted to borrowing

the last time their income fell short of their expenditure

– in Albania, Peru and South Africa over a quarter of respondents had also done so

Financial behaviour

Financial behaviourA

lbania

Arm

enia

Cze

ch R

epublic

Est

onia

Germ

any

Hungary

Irela

nd

Mala

ysia

Norw

ay

Peru

Pola

nd

South

Afr

ica

Unit

ed K

ingdom

BV

I

39% 41%

48%

27%

67%

38%

57%

67%

59% 60%

43% 43%

51%

71%

Percentage of respondents who exhibit at least 2/3 positive financial behaviours

• Overall we looked for 9 positive behaviours (rescaled to 0-100) - relatively high score if exhibit 2/3 of the behaviours

• At least 30% of respondents in each country exhibit fewer than 6 of them

• Three attitudinal statements – 54% of respondents in South Africa have

attitudes that tend towards the longer term compared with just 10% in Armenia

– 64% of Peruvians and 61% of Albanians found saving satisfying against only 8% in Armenia and 19% in Poland

– About half of Albanians and Peruvians disagree that money is there to be spent, but only 2% of Armenians and 12% of Polish respondents

Financial attitudes

Results by socio-demographics A

lbania

*

Arm

enia

*

Cze

ch R

epublic

*

Est

onia

*

Germ

any

*

Hungary

Irela

nd *

Mala

ysia

*

Norw

ay

*

Peru

*

Pola

nd *

South

Afr

ica *

UK

*

BV

I *

0

20

40

60

80

100 Male Female • Women typically have lower levels of knowledge. Average overall scores in every country are either lower for women, or the same for both genders

• Higher income and higher education are associated with higher overall scores, as is middle age

Average financial knowledge score by gender – Score based on 8 questions and rescaled on a 0-100 scale

Financial literacy and inclusion

Alb

ania

Arm

enia

Cze

ch R

epublic

Est

onia

Germ

any

Hungary

Irela

nd

Mala

ysia

Norw

ay

Peru

Pola

nd

South

Afr

ica

UK

BV

I

29%

1%

92%

20%

90%

14%

76%

90%

76%

8%

20%

31%

69%

87%

51%

1%

98%

25%

97%

20%

83%

97%

86%

10%

34%31%

83%

95%

Incorrect Correct• The survey allows to study the correlation between financial literacy and financial inclusion: o product

awareness o product holding o active choice

• For instance, knowing about interest compounding is associated to holding savings or investments

Percentage of respondents who hold a savings/investment product by ability to answer the interest compounding question

Initial OECD/INFE survey instrument

Albania, Armenia, British Virgin Islands,

Czech Republic, Estonia,

Germany, Hungary, Ireland,

Malaysia, Norway, Peru, Poland, South Africa, United

Kingdom

Revised survey instrument

Part/all questions to the national population: Iceland, Jamaica,

Lithuania, New Zealand, Puerto Rico, Serbia, South Africa, South

Korea, Turkey

Part/all questions to sub-populations: Canada, India,

United States

Way forward: revised OECD/INFE questionnaire

THANK YOU!

Questions and feedback welcome

Chiara.Monticone@oecd.org

OECD INFE www.financial–education.org

Russia/World Bank/OECD Financial Literacy and Education Trust Fund http://www.finlitedu.org/