U.S. Teens Lack Financial Savvy, New OECD Assessment Reveals


Washington, July 9, 2014 – More than one in six U.S. teens are unable to make even simple decisions about everyday spending, and only one in ten can solve complex financial tasks according to the results of a new financial literacy study by the OECD.


The assessment, which tested the knowledge and skills of teenagers in dealing with financial issues, such as understanding a bank statement, reveals that U.S. students perform around the average of the countries and economies that participated, ranking somewhere between 8 and 12. Shanghai-China had the highest average score in financial literacy, followed by the Flemish Community of Belgium, Estonia, Australia, New Zealand, the Czech Republic and Poland.


“Developing financial literacy skills and knowledge is critical now that individuals are becoming increasingly responsible at an ever earlier age for financial risks affecting their future,” said OECD Secretary-General Angel Gurría, launching the report.


“Some governments have started developing strategies and policies so that people have the skills they need throughout their lives,” he said. “More need to move this up the policy agenda so that citizens are prepared for an ever-more complicated financial world.”


The detailed results of the assessment reveal that 9.4% of students in the United States performed at the highest level, which is similar to the average of 9.7% across OECD countries. Thesetop performers can look ahead to solve financial problems or make the kinds of financial decisions that will be only relevant to them in the future. They can take into account features of financial documents that are significant but unstated or not immediately evident, such as transaction costs, and can describe the potential outcomes of financial decisions.


However, the OECD found that 17.8% of U.S. students do not reach the baseline level of proficiency in financial literacy, compared with 15.3% across OECD countries.At best, these students can recognize the difference between needs and wants, can make simple decisions on everyday spending, and can recognize the purpose of everyday financial documents such as an invoice.


About 50% of 15-year-old students in the United States report that they hold a bank account, and they perform better than those who do not; but this performance gap disappears after accounting for socio-economic status. While 32% of socio-economically disadvantaged students (i.e. those in the lowest quartile of socio-economic status) hold a bank account, 70% of advantaged students (those in the highest quartile) do, the largest such difference observed across participating countries and economies.


The study also revealed that skills in mathematics and reading are very closely related to financial literacy. In the United States, around 80% of the financial literacy score reflects skills that can be measured in mathematics and/or reading assessments (compared with the OECD average of 75%), while 20% of the score reflects factors that are uniquely captured by the financial literacy assessment (compared with the OECD average of 25%).


OECD’s PISA Financial Literacy assessment evaluated 29,000 15 year-olds students in 18 countries and economies* through a 60 minute paper-based test.  Students were also asked to participate in a math and reading assessment, and to provide information on their backgrounds, attitudes towards learning, and experience with money and financial products.  In the United States, 1,133 students in 158 schools completed the assessment.



Notes to editors:


* Participating countries and economies: Australia, Belgium (Flemish Community), Shanghai-China, Colombia, Croatia, Czech Republic, Estonia, France, Israel, Italy, Latvia, New Zealand, Poland, Russia, Slovak Republic, Slovenia, Spain and United States.


Country notes are available for Australia, France, Italy (with a regional comparison), Spain, and the United States.


Try sample questions at www.oecd.org/pisa/test

More information on the assessment and findings of Students and Money - Financial Literacy Skills for the 21st Century, including detailed results for the United States, is available at http://www.oecd.org/pisa/keyfindings/pisa-2012-results-volume-vi.htm   

The OECD’s PISA results reveal what is possible in education by showing what students in the highest-performing and most rapidly improving education systems can do. The findings allow policy makers around the world to gauge the knowledge and skills of students in their own countries in comparison with those in other countries, set policy targets against measurable goals achieved by other education systems, and learn from policies and practices applied elsewhere.


More information on the OECD’s work on financial education is available at www.oecd.org/finance/financial-education  


For further information, North American journalists should contact Allison Aaronson (Allison.Aaronson@OECD.org) or Miguel Rodriguez-Gorman (Miguel.Rodriguez-Gorman@OECD.org)


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