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Levels of Financial Literacy: Comparing findings from an OECD/INFE pilot with the Portuguese SurveyAdele Atkinson, PhDPolicy AnalystFinancial Education and Consumer Protection UnitLisbon 8 November 2011Overview of presentation The work of the OECD/INFE Definition of financial literacy The reasons to measure financial literacy A summary of findings from our pilot Comparisons with Portugal Conclusion2The OECD and Financial Education International leadership; 2006 recognition from G8 and call for further developments G20 mandate: Seoul 2010; Paris 2011 Consumer protection and financial education IGFE global clearinghouse sharing resources, data, good practice guidelines INFE network of experts from over 90 countries Expert subgroups addressing a range of issues and sharing findings at regular meetings Secure, members-only online discussion portal3Common Principles; Good Practices4International methodologies on:Measurement Financial literacy of adults and 15 year olds (PISA)EvaluationDedicated programmes on financial education and:SchoolsNational strategiesFinancial inclusionWomenStudies and research into financial education and:CreditSaving and investmentPensions issuesBehavioral economicsSocial marketing and communication strategiesFinancial consumer protection Financial literacy is: a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing.Source: OECD/INFE Financial literacy is a complement to adequate consumer protection and sound regulation 5Benefits of measuring financial literacy A robust measure of financial literacy is essential for policy makers and a vital component of national strategies for financial literacy A first measure provides a baseline. It helps policy makers to Identify priorities (subjects to focus on, people to target) Set targets Measure success, by comparing the baseline to repeated measures6Contents of the OECD/INFE Measure Behaviour and attitudes relating to day to day money management & financial planning Choosing and using financial products Knowledge relevant to financial decisions Socio-demographic information (age, gender, education, employment etc)Most questions are identical across countries but some have context flexibility e.g. product typesThe questionnaire includes several indicators of financial inclusion (results not presented here)7Piloting the OECD/INFE measurement survey13 countries drawn from 4 continents: Africa, Asia, Europe, South America Includes developed and emerging economies including middle (lower and upper), and high income economiesArmenia, Albania, Czech Republic, Estonia, Germany, Hungary, Ireland, Malaysia, Norway, Peru, Poland, South Africa, UK8Summary of findingsAmongst participating countries: Most people do have some basic financial knowledge but there are important gaps in all countries: especially understanding compound interest & the benefit of diversification Financial behaviour is a concern in most countries. Few participants exhibit a wide range of positive behaviours; many fail to set long term goals or make informed product choices Attitudes vary widely by country: in some countries almost everyone favours the short-term Combining these three components to give an overall score: Average scores range from 12.4 to 15.0 (out of a max of 22), showing relatively low levels of financial literacy in every country9Gender differences Knowledge: More men than women gained a high score in every country except Hungary (identical scores) Behaviour: Men scored more highly than women in 6 countries. In Czech Republic, Estonia, Ireland and Norway women had higher scores. No gender differences in Germany, Hungary & Peru. Attitudes: In 9 countries women more likely than men to focus on the long term; but converse true in Albania and Poland. No gender difference in Armenia and SA Combined score: Men scored more than women in 8 countries; and the same in 5 (Czech Republic, Estonia, Hungary, Ireland and Malaysia). 10Drawing comparisons with Portugal Portuguese survey based on OECD/INFE principles Both surveys cover knowledge, behaviour and attitudes, but actual questions differ Both also capture aspects of financial inclusion Portuguese sample is larger and questionnaire is longer, providing additional information, but It includes younger participants (aged 16+), so compare with caution as younger people tend to have lower levels of financial literacy11How do the findings compare? Portuguese appear to be more likely to budget and keep an eye on their financial affairs, but less likely to be saving Knowledge questions rather different, difficult to compare. However, consistent with other countries, people do have basic knowledge and women score lower than men As with most countries in the pilot, peoples attitudes are not entirely focused on short-term gratification12Conclusions Relative to other countries, Portugal has a population of responsible day-to-day money managers who pay attention to their financial situation Given low propensity to save, Portuguese population needs particular support and encouragement to increase protection against future income shocks As in most countries, the relatively low levels of financial knowledge of women is a concern13Thank you!Comments and questions are email@example.com:firstname.lastname@example.org://www.financial-education.org/Levels of Financial Literacy: Comparing findings from an OECD/INFE pilot with the Portuguese SurveyOverview of presentationThe OECD and Financial Education Common Principles; Good PracticesFinancial literacy is:Benefits of measuring financial literacyContents of the OECD/INFE MeasurePiloting the OECD/INFE measurement surveySummary of findingsGender differencesDrawing comparisons with PortugalHow do the findings compare?ConclusionsThank you!