BY JASON ALDERMAN
A first-time global financial literacy study shows that the keys to successful personal finance education are student perseverance and an openness to problem solving.
That’s one of the main findings in the inaugural financial literacy portion of the Program of International Student Assessment (PISA) test, which evaluated the skills and knowledge of 29,000 15-year-olds in 18 countries and economies in 2012. Final results were released in September, and PISA officials announced that the assessment of financial literacy will be offered as an optional component in 2015 testing.
PISA was launched in 2000 by the Organization for Economic Cooperation and Development (OECD), which promotes policies that support economic and social well-being around the world.
U.S. students earned an average score of 492 out of a possible 700, which ranks those teens between eighth and twelfth place among all 18 participating countries and economies, according to the PISA study. Other findings from the U.S. results:
- About one in 10 U.S. students is a top performer – 9.4 percent, compared with 9.7 percent across OECD countries. The report said this means they can “look ahead to solve financial problems or make the kinds of financial decisions that will be only relevant to them in the future.” It added that top performers “can take into account features of financial documents that are significant but unstated or not immediately evident, such as transaction costs, and can describe the potential outcomes of financial decisions.”
- More than one in six U.S. students – 17.8 percent, compared with 15.3 percent across OECD countries – do not reach the “baseline level of proficiency in financial literacy.” The report explained that “at best, these students can recognize the difference between needs and wants, can make simple decisions on everyday spending and can recognize the purpose of everyday financial documents such as an invoice.”
- About 50 percent of all U.S. 15-year-olds said they had a bank account and were found to perform better than those who did not. But the report said the performance gap vanished after accounting for socioeconomic status; only 32 percent of students in the lowest quartile of socioeconomic status had accounts, while 70 percent of those in the highest quartile did.