How do I modify an invoice, in which a purchase that has not been made has been erroneously entered, by recalculating the VAT on the amount due? What is the monthly net salary of an employee, calculating the effect of tax brackets on gross income? Questions and problems like these were posed by the OECD to around 29 students in 18 countries, including Italy, a representative sample of almost nine million fifteen year olds. In Italy, 7.068 students from 1.158 schools completed the Pisa 2012 survey on financial literacy, the results of which were presented on 9 July in Paris, the headquarters of the OECD, and in Rome, at the Bank of Italy, which is very engaged on this front.
15% of the students surveyed in the 18 countries that participated in the financial literacy study do not reach the basic level of skills. At best, these boys and girls are able to make simple daily spending decisions, recognize everyday documents such as an invoice, but cannot interpret it. Only 10% of students can analyze complex financial products and demonstrate financial skills in a broader context.
Shanghai, China, had the highest average score (603), followed at a distance by Belgium (541) in second position and Estonia (529) in third position. Italy took the penultimate position, with a score of 466, followed only by Colombia. Italian students are at the rear in the OECD financial literacy ranking – overtaken by Slovaks, Israelis, Croatians, Slovenians, Spaniards, French, etc. – and 21,7% do not reach the basic level of skills, compared to the Average 15% detected by the Pisa survey. Almost one out of four Italian students, therefore, does not reach the basic level of skills. And, looking at the best levels, only 2 out of ten boys obtain the highest Pisa score, compared to an average of 9,7% in OECD countries.
Looking at the regional results, significant differences emerge: Friuli Venezia Giulia and Veneto (with a score of 501) are placed together with Trento and Bolzano (500) on the average value recorded by the OECD. Followed by Lombardy (491), Emilia Romagna and Piedmont (481), Valle d'Aosta (476). Then Marche and Umbria (474), Tuscany (471), Liguria (468), Puglia (462), Lazio (460), Molise (453), Abruzzo (449), Basilicata and Sardinia (446), Campania (439), Sicily (429) and, lastly, Calabria (415).
The northern regions are all above the national average (466), while the south is lower, with the best score assigned to Puglia. The difference between the Italian regions with the best and worst scores is 86 points, higher than one level of skills in the Pisa evaluation scale. Italy is also the only country where a gender gap has been found in terms of financial literacy in favor of males.
Poor financial education in the adult population
The Pisa evaluation identified significant gaps in financial literacy among students in all countries, and the OECD called for financial education to be included in school curricula. But, beyond the Pisa survey, financial literacy is also lacking among adults, underlines Brigitte Miksa, head of International Pensions at Allianz Asset Management. Previous OECD research shows how much room for improvement there is, especially among women.
Studies conducted by Annamaria Lusardi, of the George Washington School of Business, and Olivia Mitchell, of the University of Pennsylvania, confirm the following data: only 30% of respondents in the United States showed interest rate expertise or investment diversification. Similar results also emerged in Japan and France and, in Germany, just over half of the respondents answered all three questions correctly.
Lusardi and Mitchell have shown that the costs of such financial illiteracy are high. Studies show that people with low financial literacy tend to go into more debt and hoard fewer assets. Many overspend, resort to cash advances, and are less likely to know the terms of their mortgages and other loans. According to Miksa, “if it lasts a lifetime, such behavior can lead to serious economic hardship.
Considering the demographic development and the fact that the responsibilities for financial choices - for example in terms of social security provisions - are increasingly transferred to individuals, it is essential that preparation on these issues is adequate. “We all know that we don't always make good and right decisions – concludes Miksa -, but above all it is important to give people the tools they need to make informed financial decisions”.
