Finland is used to excelling at the the PISA study that is conducted every three years to evaluate the learning results of 15-year olds worldwide. Between 2000 and 2009, Finland placed in the top 10 in the world in mathematics, natural sciences and literacy.
The 2012 PISA study also evaluated financial literacy in thirteen OECD countries. The report gives the following reasons for evaluating financial literacy:
”Financial literacy is thus an essential life skill, and high on the global policy agenda. Shrinking welfare systems, shifting demographics, and the increased sophistication and expansion of financial services have all contributed to a greater awareness of the importance of ensuring that citizens and consumers of all ages are financially literate.”
This evaluation can be interpreted in at least two ways. First, financial literacy is already a necessary civic skill in current societies. Citizens need to make an increasing number of decisions requiring financial literacy at an ever earlier age as economic systems open up with the competitive pressure caused by globalization. Financial literacy has therefore become a competitive factor whose influence grows with the development of the global economy.
Second, attitudes towards financial literacy vary by nation, which is reflected in the sample and the results of the evaluation. Chinese students shone at the top of the list – representing the Asian culture and educational system. From Europe, Belgium and Estonia finished second and third, followed by Australia and New Zealand. The statistically relevant top group also included the Czech Republic and Poland, who, like Estonia, are part of “new Europe”.
The United States finished around the middle of the list, which might sound surprising given the country’s status as the cradle of capitalism. However, financial literacy pretty accurately reflects the country’s results in more traditional subjects. This is one of the interesting discoveries in the evaluation: success in mathematics and literacy correlates with financial literacy positively, but not perfectly.
A common denominator among the successful countries is that they are relatively more successful in financial literacy than in mathematics and literacy. Belgium, Australia, New Zealand and the Czech Republic were statistically significantly more successful in financial literacy than in mathematics and literacy. Similarly Colombia, Italy, Israel, Slovenia and France at the bottom of the list are statistically significantly weaker in financial literacy than in mathematics and literacy. Quelle catastrophe!
Success in mathematics and literacy presumably reflects the overall investments in educational systems. The differences in financial literacy probably can’t be explained by money alone, however. Otherwise, how can wealthy countries like France and Italy do so poorly – and a country like Estonia with a significantly lower GNP so well?
While traditional civic skills are invested in in all developed countries, the differences in financial literacy appear to be much bigger. The evaluation has the following to say about Estonia’s national strategy for financial literacy:
”The development of a National Strategy for Financial Literacy started in 2010 and a seven-year national programme was launched in 2013. The strategy targets the whole population, including youth. The Estonian Financial Supervision Authority, in partnership with other government departments and various private and nonfor-profit stakeholders, leads the implementation of the programme.”
Finland didn’t participate in the first evaluation of financial literacy in the 2012 PISA study, but hopefully will in the second one to be conducted this year. Even without seeing the results, it feels like there is lots of room for development in our national educational strategy for financial literacy. According to the editorial published in Helsingin Sanomat on July 19, 2014
, our country doesn’t even have one. The editorial speculates that the reason for the absence of a strategy is that
”Perhaps we are a bit too confident that the government will pay and the pension system will take care of things.”
This author’s personal experiences with the Finnish basic school system admittedly come from a quarter of a century ago, when the workings of the economy were demonstrated with bright red harvesters driving along the lush fields of the Soviet Union.
On March 3, 2015, Libera will publish the Markkinatalouden aapinen (ABC of the Market Economy) booklet by Anders Ekholm. The booklet studies the birth and development of the market economy all the way back from Stone Age. It is directed at everyone who wants a qualified, yet popular introduction to the economy. It is targeted in particular at youth.
Sign up for the publication event and discussion here >>
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