Measuring financial literacy, its
determinants and correlates: A study
of fifteen-year-olds in Oxfordshire and
Greater London
Jessie Sim, DPhil Student, University of Oxford
Supervisor: Prof Ken Mayhew
Research fellow, CHASM, University of Birmingham
Outline
•
•
•
•
•
•
•
Introduction to research topic
Children and financial literacy
Research aims and questions
Theoretical framework
Methodology
Sample
Findings
What is financial literacy?
“Financial literacy is a combination of
awareness, knowledge, skill, attitude and
behaviour necessary to make sound financial
decisions and ultimately achieve individual
financial wellbeing.” (Atkinson and Messy,
2012:14)
Children and financial literacy
Knowledge and money management habits
formed from young.
Children’s financial literacy are affected by
parents.
Different levels of financial education provision.
Knowledge, skills and attitudes are best taught
when young and in schools.
Likely to face a different set of financial
challenges in a different landscape than what
their parents experienced.
Research aims
Carry out a literature review to determine core
and measurable aspects of financial literacy in
children.
Design, pilot and refine a suitable instrument to
measure financial literacy of children
Investigate variables that determine or correlate
with financial literacy
Rationale
Research gap; lack of studies that focuses on
core aspects of children’s financial literacy in
England
Lack of empirical data or suitable instrument
Results have potential to shape financial
education in the curriculum and policies.
Research questions
• What levels of financial knowledge and skills are
found in fifteen-year-olds?
– How do these levels vary by personal, family and
school characteristics?
• How do fifteen-year-olds feel about different
aspects of personal finance?
– How do these attitudes vary by personal, family and
school characteristics?
• What is the relationship, if any, between financial
knowledge and skills and attitudes about
personal finance?
• What are the key determinants of financial
knowledge and skills for fifteen-year-olds?
FCA’s conceptual model
experience and
circumstances
knowledge and
understanding
skills
Financial Capability
Behaviour
(FSA, 2006)
personality
confidence
and attitudes
Theoretical Model
environmental factors
knowledge
skills
Financial Literacy
personal
characteristics
attitudes
Methodology
• Survey research design
• Self-completed questionnaire
• Objective measurement of financial
knowledge and skills
• Self-assessment of attitudes
• questions for independent variables
• Length of survey (About 30 questions, to be
completed within 1 school period)
Construction of test
• Examined current standards for children’s financial
education programs
• Construct Table of Specifications
• Item Banking
• Content validation by subject matter experts
• Pilot study in 3 schools
• Item and reliability analysis using Classical Test
Theory and Modern Test Theory (Item Response
Theory)
• Final test of 25 questions
Assessment of attitudes
• “Desired attitudes towards personal finance”
• Syllabus and recommendations from pfeg and
Ofsted
• There is no wrong or right attitudes about
financial matters.
• But there is an obvious case about desired
attitudes.
• Formulated 7 likert-type statements on a 5
point rating scale
Sample
• Pilot
2 schools in Greater London, 1 school in
Oxfordshire
479 valid cases
• Main Study
24 schools in Greater London, 4 schools in
Oxfordshire, 20 Local Authorities
3115 valid cases
Findings
“Knowing how to manage money is important to me”.
“Money is there to be spent”.
“I should start saving money only when I have a paying job”
“I would rather earn my own money than to ask my parents
for money”
“I am comfortable about owing someone money”.
“I like to compare prices”
“I am confident of managing my own money”.
FKS
MT
PMF
FRR
Knowing how to
manage money is
important to me.
.16**
.13**
.14**
.11**
Money is there to
be spent.
.11**
.08**
.09**
.09**
I should start saving
money only when I
have a paying job.
.25**
.20**
.23**
.15**
I would rather earn
my own money
than to ask my
parents for money.
.04**
.02
.05**
.04*
I am comfortable
about owing
someone money.
.14**
.12**
.13**
.07**
I like to compare
prices.
.18**
.16**
.16**
.08**
I am confident of
managing my own
money.
.02
.05**
.01
-.01
Multiple Regression
• Model with 9 sets of variables which
accounted for 35.1% variance
Gender (male>females)
Ethnicity (white>Asian; white>Black)
Books (Highest>lowest)
Behaviour type (mixed>spender)
FSM (No>Yes)
EL and Maths (Levels 6to 8>level 1 to 5)
Multiple Regression
Non-significant variables (t-test for Beta values,
sig. >.05)
• Enrolment in business studies course
• Highest education qualification of one parent
• Removal of non-significant variables resulted
in model which explained 33.6% of variance
Next Steps
What next
• Investigate school and neighbourhood effects
• To carry out multiple regression multilevel
modelling
• Compare results to current literature
• Await PISA 2012 Financial Literacy results (due
in July 2014)
Email: [email protected]