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Consumer protection: OECD PISA Financial Literacy Study
22/02/2011 - The OECD is testing 15 year-olds on their knowledge of personal finances and ability to apply it to their financial problems. This is the first large-scale international study to assess the financial literacy[1] of young people. The results will be available in the next PISA study, to be released in 2013.
Sixty-five countries or regions are taking part in this PISA test, which will focusing on testing mathematics literacy. Students from 19 of these countries will also tackle problems related to financial literacy: Albania, Australia, Belgium (Flemish Community), Brazil, Shanghai-China, Colombia, Croatia, Czech Republic, Estonia, France, Israel, Italy, Latvia, New Zealand, Poland, Slovak Republic, Slovenia, Spain and United States.
Helping young people understand financial issues is important, as younger generations are likely to face ever-increasingly complex financial products and services. They are also more likely to have to bear more financial risks in adulthood than their parents, especially in saving, planning for retirement and covering their healthcare needs.
In many countries, at around the age of 15 to 18, young people face one of their most important financial decisions: whether to invest in college or higher education. The gap in wages between college and non-college educated workers has widened in many economies. At the same time, the cost of a university education is rising in many countries. Figures published in March 2010 in the UK suggest that half of all UK students are expected to leave university owing around €18,000.
The OECD has been promoting the importance of financial literacy for many years, recommending that it should start as early as possible. Guidelines on financial education at schools are also in the pipeline. This is part of broader OECD work on financial education supported by the International Network on Financial Education which involves more than 150 public institutions from 75 countries.
Comparing levels of financial literacy across countries will make it possible to see which countries perform best and begin to identify effective national strategies and good practices.
Aspects of financial literacy that will be tested include: dealing with bank accounts and credit/debit cards; planning and managing finances; understanding taxes and savings; risk and rewards; consumer rights and responsibilities in financial contracts.
[1] Defined by the OECD in this context 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”
More information : PISA financial literacy study
Source: OECD Website
