spending

How U.S. Teens Rank in Financial Literacy

There’s room for improvement compared to other teens across the globe, according to a new international study.

Results of an international study of the financial savvy of teenagers around the world are in, and the verdict for the U.S. is disappointing, if not surprising: Our kids are right in the middle of the pack.

The study, conducted by the Programme for International Student Assessment (PISA), under the auspices of the Organisation for Economic Cooperation and Development (OECD), involved 29,000 15-year-olds in 18 countries. The students took an hour-long paper-based test designed to measure how young people deal with such things as monetary transactions, taxes, savings, risk and reward.

At the head of the class were Shanghai-China, the Flemish Community of Belgium, Estonia, Australia, New Zealand, the Czech Republic and Poland. The U.S. ranked between eighth and 12th on various measures—in the ballpark with Croatia, France, Israel, Latvia, the Russian Federation, Slovenia and Spain. Bringing up the rear were the Slovak Republic, Italy and Colombia.

Aside from the standings, the study turned up a number of noteworthy findings regarding the United States:

-- In the U.S., 9.4% of students performed at the highest of five possible levels. That was about even with the 9.7% average across all the countries but far below the 43% of Shanghai students who performed at that level.

-- At the other end of the spectrum, 17.8% of U.S teens didn’t reach the baseline level of proficiency, compared with an overall average of 15.3%.

-- There was an insignificant one-point difference in the scores of boys and girls.

-- In the U.S. (though not necessarily in other countries), financial literacy is strongly correlated with performance in mathematics and reading, also measured by PISA in other exams.

-- Students who have a bank account scored appreciably higher on the exam.

-- Students with at least one parent in a skilled occupation (such as engineer, chef or midwife) performed better than students whose parents have semi-skilled or elementary occupations (such as machine operator, farmhand or porter). Students with at least one parent working in a finance-related occupation did better than students of similar socioeconomic status whose parents work in other occupations.

Common ground. Aside from the worldwide breadth of the study, what set this assessment apart was its effort to come up with practical questions that 15-year-olds around the globe could be expected to answer. “The hardest thing was to find areas that all the countries had in common,” says Annamaria Lusardi, academic director of the Global Financial Literacy Excellence Center at George Washington University, who chaired the group that developed the methodology. “Some countries don’t use credit cards, and pension systems can be very different.”

Instead of asking direct questions about such things as credit and pensions, the group focused on how students would handle real-life situations, such as reading a pay stub or deciphering a store invoice (try your hand at some sample questions).

Test results were released in the U.S. at a daylong conference at GWU. Despite the lackluster performance of U.S. students, the tenor of the conference was upbeat. “U.S students have been exposed to financial literacy, but they didn’t do as well on the exam because they don’t have a good basic understanding of concepts such as risk and probability,” said Andreas Schleicher, director of the OECD’s Directorate for Education and Skills.

Schleicher thinks that could be remedied if students developed thinking skills by taking a deeper dive into fewer subjects—a theme echoed by U.S. Education Secretary Arne Duncan, who noted that classes in the U.S. are often “a mile wide and an inch deep.”

Next: How financial literacy can be taught effectively in schools.

Most Popular

2021 Child Tax Credit Calculator
Tax Breaks

2021 Child Tax Credit Calculator

See how much money you'll get in advance under the new child tax credit rules for 2021.
April 14, 2021
Monthly Payments of the 2021 Child Tax Credit Will Begin in July
Coronavirus and Your Money

Monthly Payments of the 2021 Child Tax Credit Will Begin in July

After doubts about whether it was up to the task, the IRS says it's on schedule to start sending monthly child tax credit payments this summer.
April 13, 2021
Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs
Coronavirus and Your Money

Child Tax Credit 2021: Who Gets $3,600? Will I Get Monthly Payments? And Other FAQs

People have lots of questions about the new $3,000 or $3,600 child tax credit and the advance payments that the IRS will send to most families in 2021…
April 14, 2021

Recommended

What You Need to Know about College 529 Savings Plans
529 Plans

What You Need to Know about College 529 Savings Plans

Do you know how much you’re able to contribute or what the funds could be used to pay for? How about how contributing affects your taxes? Check out th…
April 14, 2021
37 Ways to Earn Extra Cash in 2021
business

37 Ways to Earn Extra Cash in 2021

We flag a wide variety of cool side hustles to earn bonus bucks to cover expenses expected and unexpected as we begin to emerge from the pandemic lock…
April 8, 2021
6 Money-Smart Ways to Spend Your Third Stimulus Check
Coronavirus and Your Money

6 Money-Smart Ways to Spend Your Third Stimulus Check

If you don't have to use your third stimulus check for basic necessities, consider putting the money to work for you. You'll thank yourself later.
March 20, 2021
36 Best Amazon Prime Benefits to Use in 2021
Smart Buying

36 Best Amazon Prime Benefits to Use in 2021

At $119 for Amazon Prime, get your money's worth by taking full advantage of your membership. Here's a list of the best Prime perks.
March 17, 2021