I S S U E 6 / MARCH 2015
by Sue Thomson
Financial literacy
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www.acer.edu.au/snapshots
Surveys like the Programme for International Student
Assessment (PISA), Trends in International Mathematics
and Science Study (TIMSS) and Progress in International
Reading Literacy Study (PIRLS) enable educators, policy
makers and the wider community to compare Australian
students with each other, as well as their counterparts
across the world.
E N Q U IRIES :
[email protected]
Young people face financial issues at an earlier age than their parents.
Decisions about higher education, the need to be able to manage online
payment facilities or even mobile phone plans require a level of financial
literacy.
PISA 2012 offered an opportunity to collect information about the financial
literacy of Australian 15-year-old students, and compare that with their
peers internationally.
Australian Council for Educational Research
Overall, Australian students set a high baseline mark, with a score of 526
points, significantly higher than the OECD average of 500 points. Students
in Shanghai-China and in the Flemish community of Belgium performed at
a significantly higher level than Australian students.
Sixteen per cent of Australian students were top performers, while 10
per cent were found to be performing at the lowest level of proficiency.
This compares to 43 per cent of Shanghai-China students at the highest
proficiency level, and just two per cent in the lowest.
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Why financial literacy?
While low levels of financial literacy might not
have been the root cause of the Global Financial
Crisis in 2008/09, there is evidence that they
played a key role in worsening its effects.
Responses to a key questionnaire conducted by
the OECD and the International Network on
Financial Education in 2009 indicated that the
lack of understanding by households of common
financial issues such as credit and investment
led to a deepening of the crisis. While the
financial sector has grown increasingly complex,
OECD research has shown that consumers
are generally unaware of their financial risks,
Not significantly Significantly
different from higher than
Australia
Australia
Individuals are required more and more often
to make their own financial decisions –options
regarding higher education loans, managing
online payment facilities, mobile phone plans, and
even decisions about self-managed retirement
funds – and young people face such decisions at
an increasingly early age. The need for additional
education was recognised and endorsed by
Australia’s ministers for education in 2011 and
financial literacy has been incorporated into the
Australian Curriculum.
Mean score
SE
Confidence
interval
Difference
between
5th & 95th
percentiles
Shanghai-China
603
3.2
596-609
269
Belgium
541
3.5
534-547
317
Estonia
529
3.0
523-534
261
Australia
526
2.1
521-530
333
New Zealand
520
3.7
512-527
388
Czech Republic
513
3.2
506-519
288
Poland
510
3.7
502-517
264
Latvia
501
3.3
494-506
251
OECD average-13
500
1.0
497-501
317
United States
492
4.9
482-501
331
Russian Federation
486
3.7
479-493
289
France
486
3.4
479-492
341
Slovenia
485
3.3
478-491
300
Spain
484
3.2
478-490
280
Croatia
480
3.8
472-487
283
Israel
476
6.1
464-488
383
Slovak Republic
470
4.9
460-479
350
Italy
466
2.1
462-470
284
Colombia
379
4.7
369-387
352
Country
Significantly lower
than Australia
overestimate their financial skills, and show little
interest in financial issues.
Distribution of scores
150
250
350
450
550
650
750
Mean Financial literacy performance
Note: OECD average-13 refers to the average of the 13 OECD countries participating in the financial literacy assessment
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At the lowest proficiency level (Level 1), students can typically:
identify common financial products and terms and
interpret information relating to basic financial concepts.
They can recognise the difference between needs and
wants and can make simple decisions on everyday
spending. They can recognise the purpose of everyday
financial documents such as an invoice and apply single
and basic numerical operations (addition, subtraction or
multiplication) in financial contexts that they are likely to
have experienced personally.
How Australian students
performed
Overall, Australian students performed
well, achieving an average of 526 points.
Students in Australia were outperformed
by their peers in Shanghai-China and
in the Flemish community of Belgium
but in turn outperformed all remaining
countries other than New Zealand and
Estonia.
At the highest proficiency level (Level 5), students can typically:
apply their understanding of a wide range of financial terms
and concepts to contexts that may only become relevant
to their lives in the long term. They can analyse complex
financial products and can take into account features of
financial documents that are significant but unstated or not
immediately evident, such as transaction costs. They can
work with a high level of accuracy and solve non-routine
financial problems, and they can describe the potential
outcomes of financial decisions, showing an understanding
of the wider financial landscape, such as income tax.
Performance scales in PISA describe the
performance of students in terms of their
attainment of particular skills associated
with increasing levels of competence – or
‘proficiency levels’. Each proficiency level
represents a range of scores, and five
proficiency levels cover the continuum
of scores.
Shanghai-China
2 5
Estonia
5
19
32
19
43
36
Belgium
9
Australia
10
19
Czech Republic
10
21
Latvia
10
Poland
10
15
28
26
30
29
33
27
23
16
Russian Federation
17
25
Spain
17
26
35
Slovenia
18
27
31
United States
18
26
France
19
23
Colombia
100
23
60
40
23
23
30
19
27
26
13
20
4
18
6
19
9
19
8
15
19
28
4
19
32
23
4
21
27
30
0
17
33
26
20
10
32
23
7
22
31
56
80
30
18
5
26
New Zealand
Slovak Republic
23
34
16
23
10
36
Croatia
Israel
16
26
15
22
20
25
OECD average-13
Italy
11
17
2
9
6
41
40
60
80
100
Percentage of students
Level 1 or below
Level 2
Level 3
Level 4
Level 5 or above
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About one in 10 Australian students
were at Level 1 or below, a level at which
they were only able to participate in a
very basic way in financial activities. This
level of skills, and probably even those
at the baseline of Level 2, are likely to
impede students in making financial
decisions in the future.
?
DI D YO U K NOW ?
?
SO M E TH ING TO TH IN K A BO U T
In general, the higher the level of a student’s socioeconomic background, the better the student’s
performance in financial literacy. Students in the highest socioeconomic quartile achieved an
average score of 569 points, 87 score points on average higher than students in the lowest
socioeconomic quartile.
Almost 30 per cent of Australian students were at Proficiency Level 2 or below. In contrast, just
seven per cent of students in Shanghai-China were at Proficiency Level 2 or below. This suggests
that financial literacy skills and knowledge can be taught, regardless of students’ socioeconomic
background. Does your school address financial literacy in a particular way?
Australia’s participation in the PISA 2012 financial literacy study was managed by ACER and funded by
the Australian Securities and Investment Commission.
The data presented here are drawn from the Programme for International Student Assessment (PISA),
which together with the Trends in International Mathematics and Science Study (TIMSS) and the Progress
in International Reading Literacy Study PIRLS), form the suite of international comparative education
studies in which Australian students participate as part of Australia’s National Assessment Program.
Further information about Australia’s participation in PISA can be found at www.acer.edu.au/pisa
IMA G ES : page 1 Shutterstock/Ivan Pavlov; page 2 Shutterstock/Monkey Business Images;
page 5 Shutterstock/michaeljung.
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