Addressing main challenges : International guidelines and effective practices Assessing needs and tracking progress : PISA Financial Literacy

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1 FINANCIAL EDUCATION FOR YOUTH AND IN SCHOOLS Addressing main challenges : International guidelines and effective practices Assessing needs and tracking progress : PISA Financial Literacy Flore-Anne Messy Senior Policy Expert Executive Secretary of the International Network on Financial Education OECD Financial Affairs Division

2 Outline I Financial education in schools: Increasing needs, obvious benefits but challenges II OECD/INFE guidelines and international efficient practices III Addressing the global evidence gap : PISA Financial Literacy IV A few takeaways

3 I. Rationale for financial literacy in schools: Increasing needs... New generations will bear more financial risks and financial services are getting more sophisticated Students have access to financial products (internet, mobile, credit cards) and make important financial decisions at younger age UK- 52% of teenagers who have been in debt by the time they are 17 Young generations are less financially skilled than their elders US- 27% of young adults who know about inflation and risk diversification and can do simple interest calculation Peru- only 41% of young adults who can do a simple interest rate calculation Youth are worried and want to learn UK -96% of teenagers say they worry about money on a daily basis Canada- 63% young adults think it is very important to learn about personal finances at young age

4 I. Needs which cannot be met without policy intervention Parents are not evenly equipped to transmit sound financial habits Financial literacy is overwhelming correlated with socio-economic status Financial literacy inequalities perpetuate across generations

5 I. Investing in financial literacy in schools bears multiple fruits Bridging the social and related financial literacy gaps The best context Teachable context Captive audience Quality of delivery Wide outreach Youth Parents Teachers Broader community 5

6 II....and challenges in most countries Ministries of education level of interest? Curricula are perceived to be too crowded Financial education is a new topic Finance and education : two different languages and worlds Teachers are not always well equipped, confident and may be reluctant Students motivation? Quality and Sustainability of resources! Lack of evidence of what works best

7 II- OECD/INFE project and policy tools on financial education for youth and in schools OECD Recommendation: Financial education should start at school Creation of the INFE expert subgroup on financial education in schools 2008/2011- Broad stock take exercise: 37 countries Supported by the Russian Trust fund on financial literacy and education OECD/INFE Guidelines on financial education in schools Case studies report Comparison of existing learning frameworks in schools New PUBLICATION! Rationale for financial education in schools Figures and quotes Main guidance New LEAFLET!

8 II- OECD/INFE guidelines and effective practices Aim to be flexible and take into account countries particularities and education systems 3 parts : 1- Framework and modalities of the introduction of financial education in schools 2- Involvement and responsibilities of relevant stakeholders 3- Design and implementation of adequate support means and tools Additional guidance on learning framework

9 1- General framework Objective : set a balanced, flexible and tailored scene Build the case : collect and analyse evidence! Integrate it in nationally coordinated strategy Know and adapt to education systems, national, regional and local circumstances and identified needs Involve relevant players and establish a leading authority

10 1- Appropriate, tailored and quatifiable goals through learning frameworks Identify objectives and outputs of financial literacy Few broad frameworks available (12) (e.g. Australia, Brazil, Czech Republic, England, Japan, Netherlands, Malaysia, NewZealand, Northern Ireland, Scotland, South Africa, US Jumpstart ) Often refined and implemented at various levels (e.g.national, regional, local, school) Content and objectives should be adapted to country s circumstances and education system

11 1. Learning framework : content and scope Learning frameworks generally cover : Financial knowledge Skills and behaviors Attitudes and values Entrepreneurship (e.g Australia, Japan, Netherlands, Scotland, South Africa) Content generally includes : Money and transaction Planning and managing finances Risk and rewards Financial landscape Vary by age/grade and depending on learning outcomes (e.g. Japan, New Zealand or Netherlands) Define a number of hours (one hour per week on average)

12 1. Flexible design and implementation Standalone vs cross curricular approaches? Few standalone examples Cross-curricular approaches prevail and are effective A mandatory approach is best to ensure all students receive financial education (but only recently implemented and still rare) Starting age: the earlier the better Often first introduced at secondary level (e.g. Brazil, Czech Republic, Indonesia, UK) Few (8) countries from kindergarten till high school (e.g. Australia, Japan, Malaysia, the Netherlands, New Zealand, Northern Ireland, South Africa, US)

13 1- Sustainability and efficiency Earmarked and sustainable financial and in-kind resources They often have various origins including private sector and financial authorities Monitoring and evaluation are essential but limited Financial education in key school examinations (-) Quality monitoring (+) Impact evaluation (>) (e.g. Brazil & Italy) PISA Financial Literacy will provide first cross comparable evidence

14 2- Involvement of key and relevant stakeholders : Public authorities It is a (long) process, to be effective it should : Include relevant stakeholders through consultative processes Adopt both bottom up & top down approaches (e.g. Australia and South Africa) All relevant public authorities should be: involved and leading the process The Ministry of Education may need particular support and incentives from other (financial) authorities

15 2- Involvement of key and relevant stakeholders : Teachers and civil actors Teachers and their association should be at the core of the process Students! Parents and their association Boader community School staff and leaders Media Champions

16 2- Involvement of key stakeholders : The role of the private sector Essential partners, they have The expertise (e.g. they can provide real life experience to students) The resources (financial and in-kind) And often the willingness to be involved But, their financial education activities should be monitored to avoid potential conflicts of interest Support to public and NGO activities (New Zealand) Public private partnerships (Malaysia) Role of self regulatory bodies In-kind support should be monitored (South Africa) Dedicated codes of conduct (pfeg, UK)

17 3-Support to implementation : Design and promotion of efficient means & tools Teachers should be well supported and incentivised to develop their confidence and expertise Promote financial education as a process to build values and support informed every day life decisions (Spain) Available and relevant training (Czech Republic) Incentives to train : part of professional and personal development (South Africa) Ongoing support and dialogue (Japan) Availability of quality and unbiased resources ready made for the classroom (Australia) Monitoring of financial education in schools (Australia)

18 3- Available and adequate resources Mapped, assessed and classified Quality certified by relevant authorities (Australia) In-line with and connected to relevant and national curricula Objective and marketing free (UK) Tailored to students (age, characteristics and contexts) Real context and engaging Use appropriate language : financial education covers social and family values Piloted and refined (New Zealand, South Africa) Easily accessible and (online) sources well advertised (New Zealand, US)

19 3- Right incentives and awareness raising Recognise achievements of students (examination) Continue to build evidence! Recognise and promote teachers and schools efficient practices (NZ) Involve media and community leaders Organise special events and contests (Japan, Estonia)

20 III- First international measure of Financial Literacy of Youth Programme for International Student Assessment (PISA) OECD-managed launched conducted every 3 years Cognitive assessment +: capacity of 15 year old students to apply knowledge and skills essential for their full participation in society More than 70 participating jurisdictions 3 core areas of assessment : Reading, Maths and Science 20 New in 2012: international option on Financial Literacy Participation of 18 countries : Australia, Belgium, Brazil (trial phase), China Shanghai, Colombia, Croatia, Czech Republic, Estonia, France, Israel, Italy, Latvia, New Zealand, Poland, Russia, Slovak Republic, Slovenia, Spain and US

21 III- PISA Financial Literacy - what it will offer? A first cross-country survey on FL of youth/students An analysis of FL in relation to socio demographic and macro economic contexts An analysis of the relation between reading and numeracy skills and FL skills An analysis of FL competencies and relevant experience with money and access to financial products An initial cross country identification of efficient practices in schools 21

22 III- Preparing PISA FL 2015 Enlarge the exercise to countries Allow 2012 participating countries to monitor trends/progress Allow comparison across a wider set of countries and circumstances 20 countries have expressed interest Countries should confirm participation NOW!

23 IV- A few take aways Promote financial education in schools : Appropriate setting part of national efforts agreed objectives key players onboard Consultation and bottom up and top down approaches Ongoing support and incentives Promote champions Map education frameworks for relevant integration Start as early as possible Remember that language is key Use real life content possibly supported by access to safe financial services Continue to assess, evaluate, compare nationally and internationally including through PISA Financial Literacy

24 THANK YOU!