Remarks by Angel Gurría
Paris, France, 24 May 2017
(As prepared for delivery)
Your Majesty Queen Máxima, Mr. Francisco González, Ambassadors, Ladies and Gentlemen:
I am delighted to launch the Programme for International Student Assessment (PISA) 2015 Results: Students’ Financial Literacy. We are honoured to be joined by Her Majesty Queen Máxima of the Netherlands ─ a global champion of financial literacy ─ who serves as both the UN Secretary General’s Special Advocate for Inclusive Finance for Development and Honorary Patron of the G20 Global Partnership for Financial Inclusion.
I would also like to thank Mr. González, Chairman and CEO of Banco Bilbao Vizcaya Argentaria, for BBVA’s continued support.
Financial literacy is an essential life skill. Financial knowledge lays the groundwork for many important decisions facing all citizens throughout their lives, whether it’s evaluating a job contract, purchasing a first home, or much later, managing retirement savings. And, as shown by the G20 OECD INFE report ─ Ensuring Financial Education and Consumer Protection for All in the Digital Age ─ financial literacy is also critical for managing the opportunities and risks of rapid digitalisation that has put financial services, quite literally, at our fingertips.
Young people and society have so much to gain from promoting financial knowledge. PISA 2015 data show that students with high proficiency in financial literacy are more likely than those with low proficiency to be oriented towards saving, to expect to complete a university education, and to work in a high-skilled occupation.
So education systems cannot afford to get this wrong. PISA offers a unique and effective framework to measure the financial knowledge and skills of 15-year-olds. This study ─ which covers 15 countries and economies ─ is the second report of its kind on financial literacy, following on from the PISA 2012 Results. It will help governments design policies to empower our youth with the skills they need to make the most of economic and financial opportunities.
Let me highlight some of our key findings.
The Chinese provinces of Beijing, Shanghai, Jiangsu and Guangdong rank first overall, with more than one in three students performing at the highest level (compared to the OECD average of one in ten). In these provinces, the most socially and economically disadvantaged quarter of students performed as well as the second wealthiest quarter of students in the US, and better than the wealthiest quarter of students in Brazil, Chile and Peru.
Among OECD countries, the Flemish Community of Belgium and the seven participating Canadian provinces are the standout performers. Australia and the Netherlands also perform above the OECD average, but their mean performance has actually declined since 2012. In fact, of the eight countries covered in both 2012 and 2015, only Italy and the Russian Federation have shown significant improvements in average financial literacy from 2012 to 2015.
PISA 2015 also contains a very troubling finding. Far too many students ─ at least one in five ─ fail to attain a baseline level of proficiency, even in high- and middle-performing OECD countries and economies. So while almost 60% of these students have a bank account, and more than 60% earn money from some type of working activity, many cannot recognise the value of a simple budget, let alone understand a bank statement or a pay slip. This is shocking!
On top of this, the results also show some alarming statistics for inclusiveness. Disadvantaged students score 89 points lower than advantaged students ─ the equivalent of more than one PISA proficiency level in financial literacy. And immigrant students score 26 points lower in financial literacy, on average, than native-born students of similar socioeconomic status.
While we don’t yet have all the answers, the PISA 2015 Financial Literacy Assessment presents several policy considerations.
First, parental engagement remains key. The results show that students who have the chance to talk to their parents about money and saving also tend to have higher financial literacy. But given that financial skills are strongly related to socioeconomic background (or whether a student ─ or his/her parents ─ are foreign-born), not all students can learn equally from their family. Targeted policies are necessary to complement parental advice and place all students on an equal footing.
Second, while a solid foundation in mathematics and reading is critical for financial literacy, it is not enough. PISA 2015 data reveal that there are many features unique to financial literacy (around 38% of the score) ─ for example, being aware that some deals are too good to be true, understanding the role of income tax, being vigilant for fraudulent e-mails, and knowing one's rights and responsibilities in the financial marketplace. There is thus a clear case for introducing more targeted financial literacy content in school curricula.
Third, we need to support and protect young people as they explore the financial marketplace. Access to financial services from a young age provides students with great opportunities to learn by experience, but it also creates new risks, including exposure to fraud, data insecurity, and access to short-term credit. It is important that young people have not only the knowledge and skills to start experimenting with the financial marketplace and begin to know its dangers and traps, but also that financial products and services ─ especially those targeted to minors ─ are safe and regulated.
These are just a few examples of the types of recommendations you will find in this report.
Your Majesty, Ladies and Gentlemen:
Let me conclude with a great quote by Benjamin Franklin: “An investment in knowledge pays the best interest”. Basic financial literacy can make a crucial difference in the lives of people, in their opportunities, in their success. It is a foundation stone for well-being, for entrepreneurship, for social mobility, for inclusive growth. These results provide a tool to understand better the state of financial skills and literacy at a key age, and better target policy. The next edition of PISA in 2018 will continue this work, looking specifically at the types of financial literacy content to which students are exposed in school.
I would now like to invite Her Majesty to share with us her insights.
Press release: Many teenagers struggle to understand money matters
OECD work on Financial education and consumer protection