Fiscal Literacy: Why Public Understanding is Key to Fiscal Sustainability

Governments are facing growing demands on public spending, while difficult choices about taxes, debt and public services are becoming unavoidable. Yet these choices cannot be made by experts alone. Citizens need to understand the challenges their governments face and the trade offs involved. Building that understanding is not easy, but it is increasingly important. This is why fiscal literacy matters. For most of my career, I was an analyst focused on getting the numbers right. But when I joined the Peterson Foundation, I gained an equally strong appreciation for helping people understand those numbers.

Fiscal literacy is having the knowledge needed to understand government finances, and it empowers people to make informed choices about public finances and their country's future.

While experts often focus on reaching elected officials and key stakeholders, my focus is different. I want to explore how we can attract a broader public audience to these critical topics.

We face an immediate hurdle. Across a group of 13 countries, including 11 OECD members, around 72% of respondents perceive government debt to be somewhat high or very high. However, resolving these issues are not always their top priority.  

Our task is to elevate this fiscal problem on people's list of concerns.

In the non-profit sector, we use a "theory of change." Ours is simple: fiscal literacy enhances fiscal sustainability.

• The Problem: The outlook for deficits and debt is bad and getting worse.
• The Cause: A lack of political will to change policy.
• The Action: Raise the level of fiscal literacy.
• The Result: We hope elected officials will respond to public pressure and adopt policies to reduce deficits.

To design this strategy, we must answer four major questions: Why (our goal), Who (our audience), What (our message), and How (our delivery). We must also be realistic about constraints, such as limited staff and financial resources.

First, we must set realistic goals. What does "raising fiscal literacy" mean to you? Is it enough for citizens to know basic facts? Is knowing the level of debt-to-GDP meaningful to them? Or do you want to motivate them to engage with their elected officials or even become advocates for change?

Next, who is your audience? You cannot be all things to all people. The hard part is matching who you want to reach with those who might actually be interested. The good news is that Gallup polling indicates up to 75% of people are already worried. The Peterson Foundation focuses on enlarging the audience, aiming not at those who are already concerned, but at the 13% who are currently "only a little concerned" because they might be persuadable. At the same time, it is important to reinforce the concerns of those who are already worried.

This is the hardest part. The content you provide must encourage citizens to demand better fiscal outcomes.

Make it Accessible
People are overloaded with information. If you grab their attention, how do you keep their interest? It helps if website headlines use questions like, "How big is the debt?" or "How much does the government spend on defence?" This content is more likely to appear in Google searches, because that is how people ask questions.

Frame it Carefully
We must recognise that fiscal choices — raising taxes or cutting spending — are ones people do not want to make. It is important to emphasise what is saved or gained, not what is lost. Polling shows people prefer spending cuts, but only as long as the cuts do not affect programmes they benefit from.

Make it Personal
Making the topic personal helps. The Foundation's polling shows greater support for a message to “secure retirement for current retirees" than for a message calling to “reform the system for future generations.” When appealing to the public interest, bring the issue closer to home. Focus on local infrastructure and known community projects, rather than just the abstract “national good.”

Avoid Jargon
We must avoid jargon. Terms like “structural deficit” or “contingent liabilities” are shortcuts for experts. But to everyone else, they sound like “inside baseball” (or “inside football”). They distance experts from non-experts. Does knowing these terms really indicate elevated fiscal literacy?

Establish Your Voice
Finding and keeping a consistent tone in your messages and content helps to build credibility and trust.

Finding the 'How': Reaching the Audience
Finally, how do you reach your audience? Where do they get their information?

This is a challenging time for mass media. It used to be that we could rely on mainstream media to spread information. But trust in mass media has plummeted. The Reuters Institute for the Study of Journalism surveyed 48 countries and found only 37% trust in news overall. This varies sharply by political party and by age.

This brings us to social media. 54% of people get their news from social media.  Looking at 18-24 year olds, that figure rises to 64%. If you want to reach that audience, it is difficult to ignore social media. However, the quality of information on these platform is, at best, mixed. This means it is vital for us to identify good influencers who can spread a reliable message.

Countries cannot put their fiscal policies on a more sustainable path without public support. Our efforts to improve public understanding are incredibly important. It is not an easy task, and these comments are offered with great humility. But we must not give up. If nothing else, better fiscal literacy will help citizens navigate the misinformation and competing claims that increasingly shape public debates on fiscal policy. We need citizens to understand the challenges so they can support the solutions.

This blog is part of a series of opinion pieces that highlight diverse perspectives on the need to restore public finances. Building public support for budget reforms has become a pressing need for OECD countries. This collection offers insights into some of the most promising ongoing efforts to empower public understanding, featuring contributions from thought leaders and practitioners in national governments, multilateral organisations, academia, and civil society.

A key reference in this discussion is the OECD report “The People and the Budget: Empowering Public Understanding of Public Finances”, which offers practical guidance for governments on improving the communication of public finances, strengthening citizen engagement, and highlighting the vital role of independent bodies in an environment of high fiscal pressure and low trust.

This blog article should not be reported as representing the official views of the OECD or of its Member countries. The opinions expressed and arguments employed are those of the authors.