Financial Literacy - International Findings

International Findings

An international OECD study was published in late 2005 analysing financial literacy surveys in OECD countries. A selection of findings included:

• In Australia, 67 per cent of respondents indicated that they understood the concept of compound interest, yet when they were asked to solve a problem using the concept only 28 per cent had a good level of understanding.
• A British survey found that consumers do not actively seek out financial information. The information they do receive is acquired by chance, for example, by picking up a pamphlet at a bank or having a chance talk with a bank employee.
• A Canadian survey found that respondents considered choosing the right investments to be more stressful than going to the dentist.
• A survey of Korean high-school students showed that they had failing scores - that is, they answered fewer than 60 per cent of the questions correctly - on tests designed to measure their ability to choose and manage a credit card, their knowledge about saving and investing for retirement, and their awareness of risk and the importance of insuring against it.
• A survey in the US found that four out of ten American workers are not saving for retirement.

“Yet it is encouraging that the few financial education programmes which have been evaluated have been found to be reasonably effective. Research in the US shows that workers increase their participation in 401(k) plans (a type of retirement plan, with special tax advantages, which allows employees to save and invest for their own retirement) when employers offer financial education programmes, whether in the form of brochures or seminars.”

However, academic analyses of financial education have found no evidence of measurable success at improving participants' financial well-being.

Additionally, a growing number of financial literacy researchers are raising questions about the political character of financial literacy education, arguing that it justifies the shifting of greater financial risk (e.g. tuition fees, pensions, health care costs, etc.) to individuals from corporations and governments. Many of these researchers argue for a financial literacy education that is more critically oriented and broader in focus; an education that supports individuals better understand systemic injustice and exclusion rather than one which understands financial failure as an individual problem and the character of financial risk as apolitical. Many of these researchers work within social justice, critical pedagogy, feminist and critical race theory paradigms.