Financial Literacy Measurement in PISA 2012

INTERNATIONAL CONFERENCE ON FINANCIAL EDUCATIONUNIVERSITY OF AVEIRO

Aveiro, July 3 ‐ 4, 2012

Dusan Hradil

Financial Literacy Measurement in PISA 2012 AGENDA

Financial literacy option in PISA 2012 - basic facts

FL in PISA 2012

Organization of the domain - Contents, Contexts and Processes

Examples of the items

Disclaimer: information in this presentation is based on publicly available data or express private opinion, estimates or expectation of the author; the author speaks neither for the OECD nor for the Financial Expert Group

Financial Literacy Measurement in PISA 2012 PISA BASIC FACTS

PISA (Programme for International Student Assessment) is an international study which began in 2000 since 2000 over 70 countries and economies have participated

aims to evaluate education systems worldwide by testing knowledge and skills of 15-year-old students in participating countries

assesses how far students (near the end of compulsory education) have acquired some of the knowledge and skills that are essential for full participation in society

PISA goes beyond school curriculum - the domains are covered not merely in terms of mastery of the school curriculum, but in terms of important knowledge and skills needed in adult life

assessment conducted every 3-year 3 domains: reading, maths and science 2012: focus on mathematics + new domain: financial literacy

Financial Literacy Measurement in PISA 2012 FINANCIAL LITERACY IN PISA 2012

Why FL in PISA 2012?

FL generally recognized as one of the key competencies relevant not only for the future but also for young age OECD 2005 recommendation: FE should start at school level projects/programmes should be accompanied by a baseline survey and be

further monitored (development and outcomes) but currently only a limited data on FL level of students with no

international comparability

Financial Literacy Measurement in PISA 2012 FINANCIAL LITERACY IN PISA 2012

What type of outcomes do we get? cross-country comparison – scores and proficiency scales (500, STD 100) FL scores vs. economic, social and cultural background FL vs. math and reading scores FL vs. behaviour (fin. products, saving habits) FL vs. information/education – schools and out-of-school

Why to join PISA 2012? set FE strategies, define the content and identify priorities start evaluation process - change over time (effectiveness)adjustments international comparison high level of FL good practice common challenges and solutions

Who is already on board?Australia, Belgium (Flemish Community), Brazil (only the 2011 field trial), Shanghai-China, Colombia, Croatia, Czech Republic, Estonia, France, Israel, Italy, Latvia, New Zealand, Poland, Russia, Slovak Republic, Slovenia, Spain and United States

Financial Literacy Measurement in PISA 2012 FINANCIAL LITERACY IN PISA 2012

PISA 2012 Financial Literacy Assessment Framework FL definition Financial literacy is knowledge and understanding of financial concepts,

and the skills, motivation and confidence to apply such knowledge and understanding in order to make effective decisions across a range of financial contexts, to improve the financial well-being of individuals and society, and to enable participation in economic life.

basic knowledge essential + experience from family accessing information, comparing and contrasting, extrapolating and

evaluating some math and language skills non-cognitive attributes important – motivation to seek for information

and advice; confidence to engage in financial activities effective = informed and responsible real-life financial situations – familiar with or can imagine personal financial literacy vs. member of society

Financial Literacy Measurement in PISA 2012  FINANCIAL LITERACY IN PISA 2012

FL in PISA 2012 2010 – development of the framework and test items 2011 – field trial 2012 – data collection 2013/2014 – final report

The booklets 4 clusters – 2 FL, 1 Math, 1 Reading – rotation 60 minutes of FL test items cognitive and non-cognitive items multiple choice – simple or complex constructed response – word, figure, calculation, explanation coded by trained judges full credit or partial credit

Financial Literacy Measurement in PISA 2012 ORGANIZATION OF THE DOMAIN

knowledge and understanding

understand, analyse and evaluate

financial

Financial Literacy Measurement in PISA 2012 ORGANIZATION OF THE DOMAIN

Content areas of knowledge and understanding inspired by existing FL frameworks 4 content categories in PISA 2012 FL domain:

1. money and transactions- coins and notes; different ways of making payments; correct change;

understanding personal financial records e.g. bank statements2. planning and managing finance

- budgeting; priorities, wants and needs; long- and short-term perspectives; building wealth through investment in education;borrowing and saving

3. risk and reward- limiting risk of financial losses and understanding inherent risks in financial products (non-numeric)

- compounding4. financial landscape

- choices, changes and consequences, understanding the content oflegal documents, consumer rights and responsibilities, scams and fraud

Financial Literacy Measurement in PISA 2012 MONEY AND TRANSACTIONS

Financial Literacy Measurement in PISA 2012 PLANNING AND MANAGING FINANCE

Financial Literacy Measurement in PISA 2012 RISK AND REWARD

Financial Literacy Measurement in PISA 2012 FINANCIAL LANDSCAPE

Financial Literacy Measurement in PISA 2012 ORGANIZATION OF THE DOMAIN

Processes relate to cognitive processes describe the students‘ ability to recognise and

apply concepts relevant to the domain and to understand, analyse, reason about, evaluate and suggest solutions

4 parallel processes categories in PISA 2012 FL domain:

1. identify financial information- finding information; financial knowledge (financial terms)

2. analyse information in a financial context- recognizing sth. that is not explicit; comparing and contrasting financial products

3. evaluate financial issues- explaining, assessing and generalising; assessing consequences of financial decisions; discriminating between discretionary and necessary spending

4. apply fin. knowledge and understanding- making calculations, solving financial problems (multiple conditions), taking effective action

Financial Literacy Measurement in PISA 2012 IDENTIFY FINANCIAL INFORMATION

Financial Literacy Measurement in PISA 2012 ANALYZE INFORMATION IN A  FIN. CONTEXT 

Financial Literacy Measurement in PISA 2012 EVALUATE FINANCIAL ISSUES 

Financial Literacy Measurement in PISA 2012 APPLY FIN. KNOWLEDGE AND UNDERSTANDING 

Financial Literacy Measurement in PISA 2012 ORGANIZATION OF THE DOMAIN

Contexts financial decisions depend on the context or situation situations familiar to 15-year-olds 4 context categories in PISA 2012 FL domain:

1. individual- responsibilities borne by individual; decisions for personal benefit - personal financial products, buying electronics or sport equipment

2. home and family- running a household, shared accommodation, family budgets

3. education and work- understanding payslips, taking student loans, saving from salary, investing in education

4. societal- the environment people are living in- consumer rights and responsibilities - taxes, charity

Financial Literacy Measurement in PISA 2012 INDIVIDUAL 

Financial Literacy Measurement in PISA 2012 NON‐COGNITIVE ITEMS 

Non-cognitive components of FL definition motivation and confidence4 non-cognitive factors1. Access to information and education2. Access to money and financial products3. Attitudes towards and confidence about financial matters4. Spending and saving behaviour

Thank you for your attention

dusan.hradil@mfcr.cz