1.
OECD EMPLOYER
BRAND
Playbook
1
PISA 2012
Students and Money
Financial literacy skills for the
21st Century
HIGHLIGHTS
9 July 2014
Launch

2.
What is PISA?
What is Financial Literacy?
CONTEXT AND DEFINITION

3.
PISA in brief
• Over half a million students…
– representing 28 million 15-year-olds in 65 countries/economies
… took an internationally agreed 2-hour test…
– Goes beyond testing whether students can
reproduce what they were taught…
… to assess students’ capacity to extrapolate from what they know
and creatively apply their knowledge in novel situations
– Mathematics, reading, science, problem solving, financial literacy
… and responded to questions on…
– their personal background, their schools
and their engagement with learning and school
• Parents, principals and system leaders provided data on…
– school policies, practices, resources and institutional factors that
help explain performance differences .
Financial literacy: 29 000 students in
18 countries/economies took a two
hour paper test on financial literacy,
mathematics and reading
3

4.
PISA in brief
PISA has developed the first international framework for
financial literacy. It defines financial literacy for youth as:
“Knowledge and understanding of financial concepts
and the skills, motivation and confidence to apply such
knowledge and understanding in order to make
effective decisions across a range of financial contexts,
to improve the financial well-being of individuals and
society, and to enable participation in economic life”.
4

5.
5 Examples of what this might mean for 15 year olds
• If they go to the cinema, will they still have
enough money for the bus fare home?
Balance their
priority and plan
what to spend
money on
• … a motorbike will need fuel and tyres and
services and an insurance coverage.
Remember that
some of the
purchases have
implications
• …Some emails that look like they came from
their bank might not be legitimate, they
should know what to do if they are not sure.
Being alert
to possible risk
and fraud
5

6.
Why does financial literacy matter to
15-year-olds?
RELEVANCE

7.
Big decisions start early:
such as continuing
education vs working
Shrinking welfare
systems; increased
personal responsibility
Shifting
demographics-
increased
longevity
Changing labour-markets
and reduced job security
Access to
financial products
at young ages
Increasingly
complex financial
markets
Relevance of financial literacy for 15-year-olds7

8.
0 20 40 60 80
Shanghai-China
Croatia
Spain
Italy
Latvia
OECD average-13
Estonia
France
Slovak Republic
Israel
Russian Federation
Slovenia
United States
Czech Republic
Flemish Community (Belgium)
Australia
New Zealand
Most students receive money from some type of work
(PISA data)
…such as a holiday job, part-time work, or from working in a family business, or from occasional
informal jobs (e.g. baby-sitting or gardening) (%)
Students earning money outside of school hours
8

9.
0 20 40 60 80 100
Poland
Slovak Republic
Israel
Italy
Croatia
Czech Republic
Latvia
United States
Shanghai-China
OECD average-13
Spain
Flemish Community (Belgium)
France
Australia
Estonia
New Zealand
Slovenia
Percentage of students with a bank account
Many students have a bank account (PISA data)9

10.
0
10
20
30
40
50
60
70
80
China
RussianFederation
CzechRepublic
Estonia
SlovakRepublic
Poland
OECDaverage
Germany
Australia
UnitedStates
Belgium
NewZealand
Isreal
Italy
Spain
France
2010 or latest available year
1970 or first available year
Their decisions today will impact their future financial wellbeing:
Source: OECD Factbook 2013: Economic, Environmental and Social Statistics - © OECD 2012
Life expectancy is high, and has been growing for the last decade.
Young people today will need to be able to support themselves for many years.
10

11.
What is in
the PISA financial literacy assessment?
FRAMEWORK AND ITEMS

12.
Content
Money and
transactions
Planning and
managing finances
Risk and reward
Financial landscape
Processes
Identifying financial
information
Analyse information
in a financial context
Evaluate financial
issues
Apply financial
knowledge and
understanding
Contexts
Education and work
Home and family
Individual
Societal
PISA financial literacy assessment framework12

13.
http://www.oecd.org/pisa/test/
Take 5 questions from the test yourself13

14.
14
Sara receives this invoice in the mail
Sample Question: INVOICE
This is an easy item – Level 1 on the financial literacy
scale (below baseline)
Difficulty: 360
The task is to recognise the purpose of an invoice
Content: Money and transactions
Process: Identify financial information
INVOICE Question 1
Why was this invoice sent to Sarah?
A. Because Sarah needs to pay the money to Breezy Clothing.
B. Because Breezy Clothing needs to pay the money to Sarah.
C. Because Sarah has paid the money to Breezy Clothing.
D. Because Breezy Clothing has paid the money to Sarah.
14

15.
15
NEW OFFER
Mrs Jones has a loan of 8000 zeds with FirstZed Finance. The annual interest rate
on the loan is 15%. Her repayments each month are 150 zeds.
After one year Mrs Jones still owes 7400 zeds.
Another finance company called Zedbest will give Mrs Jones a loan for 10 000
zeds with an annual interest rate of 13%. Her repayments each month would
also be 150 zeds
NEW OFFER- Question 1
If she takes the Zedbest loan, Mrs Jones will immediately pay off her existing
loan.
What are two other financial benefits for Mrs Jones if she takes the Zedbest
loan?
1. …………………………………………………………………………………………………
2. …………………………………………………………………………………………………
Sample Question: NEW OFFER
Question type: Constructed response
Description: Recognise positive consequences of
transferring a loan to a lower interest rate
Content: Planning and managing finances
Process: Analyse information in a financial context
Difficulty: Full credit: 663 (Level 5)
15

16.
16
SHARES
This graph shows the price of one Rich Rock share over a 12-month period.
Rich Rock Share Price
SHARES - Question Which statements about the graph are true?
Sample Question: SHARES
The best month to buy the shares was September. True / False
The share price increased by about 50% over the year. True / False
Price
(zeds)
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Time (months)
Question type: Complex Multiple Choice
Description: Analyse information in a financial context by c
onsidering the information in a line graph about an invest
ment product
Content: risk and reward
Process: analyse information in a financial context
Difficulty: 545 (Level 3)
16

17.
Describing performance levels
Level 5
Level 4
Level 3
Level 2
Level 1
or below
Financial literacy
Performance levels
Top performers
Baseline
• Apply understanding of a wide range of financial terms and concepts
to contexts that may only become relevant to their lives in the long term.
• Analyse complex financial products and take into account features of financial
documents that are significant but unstated or not immediately evident.
• Describe the potential outcomes of financial decisions, showing an understand
ing of the wider financial landscape, such as income tax.
• Apply understanding of less common financial concepts and terms to
contexts that will be relevant to them as they move towards adulthood (e.g.
bank account management and compound interest in saving products).
• Interpret/ evaluate a range of detailed financial documents
• Explain the functions of less commonly used financial products.
• Make financial decisions taking into account longer-term consequences
• Apply understanding of commonly used financial concepts, terms and
products to situations that are relevant to them.
• Begin to consider the consequences of financial decisions
• Make simple financial plans in familiar contexts.
• Interpretate a range of financial documents
• Begin to apply knowledge of common financial products, terms and concepts.
• Recognise the value of a simple budget.
• Make financial decisions in contexts that are immediately relevant
• They show an understanding of relationships such as the amount something is
used and the costs incurred (such as running a car).• Identify common financial products and terms
• Interpret information relating to basic financial concepts.
• Recognise the difference between needs and wants; make simple decisions
• Recognise the purpose of everyday financial documents such as an invoice
17

18.
How well prepared are young people to
make complex financial decisions?
THE RESULTS

19.
Strong performance in
financial literacy
Low performance in financial literacy
Average performance
of 15-year-olds in
financial literacy
19
Shanghai-China
Flemish
Community
(Belgium)
EstoniaAustralia
New Zealand
Czech Republic Poland
Latvia
United States
France
Russian
FederationSlovenia Spain
Croatia
Israel
Slovak Republic
Italy
Colombia375
385
395
405
415
425
435
445
455
465
475
485
495
505
515
525
535
545
555
565
575
585
595
605
Mean score

20.
15%
23%
30%
22%
10%
OECD average-13
Distribution of student performance
625 and
above
550 to
<625
475 to
<550
400 to
<475
Less than
400 points
Financial literacy
performance levels
Top performers
Baseline
20

21.
Wide skill gaps within countries…
190
290
390
490
590
690
Colombia
SlovakRepublic
Israel
Italy
France
UnitedStates
Slovenia
Croatia
Spain
RussianFederation
OECDaverage-13
NewZealand
Latvia
Poland
CzechRepublic
Australia
Estonia
FlemishCommunity(Belgium)
Shanghai-China
Difference 75th and 25th 5th 95th
21

22.
United States
Poland
New Zealand
Estonia
Croatia
Latvia
Slovak Republic
Czech Republic
France
Australia
Israel
Spain
Slovenia
Colombia
Russian Federation
Italy
R² = 0.1632
370
390
410
430
450
470
490
510
530
550
9 000 14 000 19 000 24 000 29 000 34 000 39 000 44 000 49 000
Scorepoints
Per capita GDP (USD converted using PPPs), 2010 or the latest year
GDP per capita explains only 16%
of the country level variation in
financial literacy
Differences only partially explained
by GDP per capita
22

23.
How equitably
are learning opportunities distributed?
GROUPS TO BE TARGETED

24.
Are there gender differences in financial literacy?
Italy
350
400
450
500
550
600
650
350 400 450 500 550 600 650
Girls'meanscore
Boys' mean score
Boys perform
better than girls
Girls perform
better than boys
17
22
28
22
11
14
24
32
22
8
0 10 20 30 40
Level 1
and below
Level 2
Level 3
Level 4
Level 5
Girls
Boys
OECD analysis on adults finds that men outperform women. PISA indicates
that among 15 year-olds, on average there are no gender differences
(except in Italy) but there are fewer girls at the top and the bottom
Policies should aim to enhance girls abilities and support underperforming boys
24

25.
0
2
4
6
8
10
12
14
16
18
20
Estonia
Italy
RussianFederation
Croatia
Australia
FlemishCommunity
(Belgium)
Poland
Shanghai-China
Colombia
Latvia
CzechRepublic
OECDaverage-13
Israel
Spain
France
Slovenia
UnitedStates
SlovakRepublic
NewZealand
Financial literacy Mathematics Reading
Percentageofvariationinperformance
explainedbysocio-economicstatus
Socio-economic status matters
and in some countries more than for mathematics or reading25

26.
-40
-20
0
20
40
60
80
100 France13
FlemishCommunity(Belgium)10
Slovenia8
Spain11
Estonia10
CzechRepublic2
OECDaverage-1311
Italy7
RussianFederation10
NewZealand27
UnitedStates22
Croatia12
Israel17
Latvia3
Australia20
Statistically significant Not statistically significant
Percentage of
immigrant
students
Difference between the scores of non-immigrant
students and immigrant students
(not accounting for other factors)
Students without an immigrant background perform
better than those who are 1st or 2nd generation migrants26

27.
400
450
500
550
600
650
Shanghai-China
FlemishCommunity…
Estonia
NewZealand
Australia
Poland
CzechRepublic
Latvia
OECDaverage-13
Croatia
Spain
RussianFederation
UnitedStates
Slovenia
SlovakRepublic
Israel
Italy
Colombia
Students attending schools located in a village, hamlet or rural area (fewer than 3 000 people)
Students attending schools located in a city (100 000 or more
Students attending school in rural locations do less
well than those in urban locations
Mean scores of students in schools in different locations
27

28.
How do students
develop financial literacy skills ?
Importance of reading and mathematics
as foundation skills
Relevance of experience and attitudes

29.
Israel
Colombia
Shanghai-China
Latvia
UnitedStates
OECDaverage-13
Croatia
Poland
SlovakRepublic
Spain
Estonia
FlemishCommunity(Belgium)
NewZealand
RussianFederation
Australia
CzechRepublic
France
Italy
Slovenia
-30
-20
-10
0
10
20
30%
Mathematics and reading are foundations of financial literacy but
the situation is uneven across countries
Students' performance in financial
literacy is higher than their expected
performance in mathematics and reading
29
Students' performance in financial
literacy is lower than their expected
performance in mathematics and
reading
29

30.
200
300
400
500
600
700
800
200 300 400 500 600 700 800
Relative financial literacy performance when compared to
mathematics
Financial literacy performance
Mathematics performance
Average relationship
between financial literacy
and mathematics
performance
Australia performs better-than-expected in financial literacy.
The difference between observed and expected performance is
larger among strong performers in mathematics
The Czech Republic perform better-
than-expected in financial literacy. The
difference between observed and
expected performance is larger among
low achievers in mathematics
France’s performance is lower-than-expected in
financial literacy. The gap between observed
and expected performance is similar at all
levels of mathematics performance.
30
Italy’s performance is lower-than-
expected in financial literacy. The gap
between observed and expected
performance is wider among high
achievers in mathematics.
Students in the Flemish
community (Belgium) and Israel
perform as high as expected in
financial literacy at all levels of
mathematics performance
30

31.
-25
-15
-5
5
15
25
35
45
55
65
75 SlovakRepublic
Latvia
Italy
Croatia
Israel
Shanghai-China
CzechRepublic
Spain
UnitedStates
Australia
Poland
France
OECDaverage-13
Estonia
FlemishCommunity(Belgium)
Slovenia
NewZealand
Learning financial literacy through experience:
Relevance of bank account holding (accounting for socio-demographics)
On average across OECD countries and economies,
students who hold a bank account score 21 points
higher than students with similar socio-economic
status who do not.
31

32.
0
10
20
30
40
50
60
70
80
90
Estonia
Shanghai-China
FlemishCommunity(Belgium)
Croatia
Latvia
RussianFederation
Poland
CzechRepublic
Italy
SlovakRepublic
Spain
Israel
OECDaverage-13
Slovenia
Australia
Colombia
France
NewZealand
UnitedStates
Score-point difference: Students who disagree minus students
who agree with the statement
"When confronted with a problem, I give up easily"
Attitude such as perseverance matters32

33.
-5
0
5
10
15
20
25
30
35
40
45
50
Colombia
CzechRepublic
Poland
Israel
FlemishCommunity(Belgium)
Shanghai-China
Croatia
Italy
SlovakRepublic
Latvia
OECDaverage-13
Spain
RussianFederation
Australia
Estonia
UnitedStates
Slovenia
France
NewZealand
Statistically significant Not statistically significant 2
Openness to problem solving is also important
Score-point difference: Students who agree minus students who
disagree with the statement "I like to solve complex problems"
33

34.
• This first PISA Financial Literacy exercise
revealed important gaps in the financial
competencies of students in most countries
and room for improvement in all
• It however does not provide a definitive
answer as to what model works best to
strengthen financial literacy
• More research and future PISA exercises will
be instrumental in further exploring and
gauging countries’ practices and policies.
The bottom line and next steps34

35.
Thank you
Find out more about PISA at www.pisa.oecd.org
All national and international publications
The complete micro-level database
Find out more about the work of the OECD on financial
at www.financial-education.org
OECD publications, data and instruments
Databases of financial education initiatives and research
Email: Adrian.BLUNDELL-WIGNALL@oecd.org
Flore-anne.MESSY@oecd.org
Michael.DAVIDSON@oecd.org