The importance of financial education has been recognized by the governments of a number of OECD member countries. The OECD programme of work that the Council endorsed for 2003-2004 includes work related to financial education issues. These issues are also part of the programme of work of the three financial bodies - the Committee on Financial Markets (CMF), the Insurance Committee and the Working Party on Private Pensions - that are supported by the Financial Affairs Division.
The Insurance Committee, for example, has recognized the importance of financial education in its programme of work which states “there is a growing need for insurance policyholders and pension beneficiaries to be better informed but also educated. This is particularly relevant for defined contribution schemes where the investment risk is borne by the employee.” The Working Party on Private Pensions has also recognized the importance of financial education, including in its work programme a two-year project which would assess what choices people face in OECD countries with respect to saving, investment and retirement systems and the implications for pension plan design, regulation and taxation. In particular, the project would assess how much financial literacy and financial literacy education individuals need to make appropriate decisions.
The final objective of the programme is to seek to provide alternatives or ways to improve financial education and literacy standards through the development of common financial literacy principles. The importance of financial education to helping consumers make appropriate decisions with respect to pensions and insurance was also underlined in the responses to the questionnaires sent to the delegates of the Insurance Committee last summer.
Financial Education Project—Phase One
In response to this increased emphasis on the importance of financial education, the OECD has recently established a Financial Education Project to study financial education programmes in OECD member countries and selected non-member countries. In the first phase of this study, we will describe the types of financial education programmes that exist, analyze the effectiveness of these programmes, and develop a methodology that policymakers can use to compare strategies and programmes for improving financial literacy.
To help us identify these programmes, we circulated a questionnaire to the delegates of each of the three financial bodies, the CMF, the Insurance Committee, and the Working Party on Private Pensions, that are supported by the Financial Affairs Division. In this questionnaire, we asked for points of contact for information on financial education programmes in both the public and private sectors. To help us focus our analysis, we included in our questionnaire general questions directed to both delegates and experts in the countries about their views on important issues in financial education. We asked our respondents to provide information on how they view the level of financial education in their respective countries, what they see as the most important issues in financial education, what they consider the main obstacles to financial education, what major initiatives they have underway in the area of financial education, and whether they have attempted to measure the effectiveness of their financial education programs (see questionnaire ).
We have received replies from most of the countries to whom we sent questionnaires. We are now analyzing the responses to these questionnaires, contacting the designated experts in the public and private sectors and, where necessary, asking for additional information from the original respondents to our questionnaire. A summary of our preliminary results is reported below.
Analyze the effectiveness and efficiency of financial education programmes
Our next step in Phase One will be to analyze the effectiveness and efficiency of financial education programmes. We expect to build on the network of experts and institutions identified through the questionnaire. Our analysis will be based on a review of relevant studies in economics, social policy, education, and related fields, and on additional, more detailed surveys, as well as on discussions with experts in the area of financial education. An in-depth qualitative survey of financial education issues will also be conducted, focussing on relevant public and private organizations in a subset of countries. We will also review existing analyses of current programmes to determine the appropriate criteria and the best techniques for evaluating financial education programmes. We will use the information on the types of programmes and effectiveness of these programmes to develop a methodology that policymakers can use to compare strategies for improving financial literacy. Our aim is to help policymakers select the most effective strategies for improving the financial literacy of consumers. Past research suggests that these strategies may differ by the age, income, gender, education, and ethnicity of the consumers. The results of our analysis will be published in a handbook that will be available to policymakers in member countries.
Financial Education Project—Phase Two
The second phase of the Financial Education Project will focus on the production of guidebooks designed for regulators and policymakers to assist with the effective implementation of financial education programmes and to assist individuals with retirement planning decisions. As part of this second phase, there would be an in-depth survey of the financial literacy of individuals in a few selected pilot countries. The expectation is that interested countries will volunteer to conduct a survey of their consumers and share the results with the Financial Education Project. In the meantime, we are identifying already existing surveys on financial literacy in order to put together a questionnaire that countries could use if they decided to conduct such a survey. These surveys will be extremely useful to both the countries conducting them and to others in terms of providing information on how to effectively implement and target financial education programs. The lessons learned from these surveys will be collected in a handbook for policymakers.
For further information, see: