Teaching financial education in schools and students' financial literacy: A cross‐country analysis with PISA data

In the last decade, developed and emerging economies have become increasingly aware of the importance of ensuring that their citizens are financially literate. Eighteen countries and economies, including 13 OECD countries, participated for the first time in 2012 on the financial literacy assessment of 15‐year‐old students. Financial literacy scores varied according to the participating countries, and they were determined by factors related to the teaching‐learning process, especially those related to the delivery of financial education in schools. This paper assesses the effectiveness of the provision of financial education in the school curriculum across all the countries that participated in PISA 2012—data from 2015 did not allow such analysis. We measured the direct effect of different ways of financial education delivery on students' financial literacy scores, after controlling for math and reading performance, and individual characteristics of students and their schools. The majority of the countries have introduced financial education topics in the curriculum somehow. But only in the Flemish Community of Belgium, the United States, and Latvia—and to a lesser extent in Australia, Estonia, France, Israel, Poland, Spain, the Czech Republic, the Russian Federation, and the Slovak Republic—the way how financial education (FE) is delivered is positively correlated with students' financial literacy scores: FE taught as part of business or economics courses in Belgium, FE taught as part of a cross‐curricular subject in the U.S., and FE taught as part of mathematics in Latvia. Our main findings pose fundamental challenges for educational policy regarding school‐based FE. The first is to decide at what age (grade) interventions should be introduced into the education system so that students are not only financially literate but also financially competent. The second is to devise instructional approaches that more effectively lead young people to put pertinent financial knowledge into practice and to do so correctly when they make financial decisions.