US teens trail global peers in money matters

Three teens hold up hundred dollar bills.

A study released Wednesday by the Organisation for Economic Co-operation and Development (OECD) found that US 15-year-olds are in the middle of the pack when it comes to basic knowledge of finances and wealth-building.

For the first time, the OECD tested more than 29,000 teens around the world on basic financial literacy as part of its 2012 Programme for International Student Assessment (Pisa), which measures academic achievement in 18 participating nations (the UK did not participate).

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It's an unfair battle against the prowess of the financial-services industry that annually spends about $54 per person on financial marketing”

End Quote Nancy Cook National Journal

"Finance is a part of everyday life for many 15-year-olds - they are already consumers of financial services such as bank accounts with access to online payment facilities," write the study's authors. "As they near the end of compulsory education, students will also face complex and challenging financial choices."

The test presented questions about simple monetary transactions using bank cards, cheques and currencies, planning and managing income, interest rates, credit agreements, investing products and the larger economic forces.

For instance, it asked participants to analyse and identify relevant numbers on an employee pay slip, an invoice and a loan offer. (You can try your hand at the test here.)

Chinese teens finished first, with a score of 602 - well above the mean score of 500 for all participants. Coming in a distant second was Flemish Belgium (541), followed by Estonia, Australia, New Zealand and the Czech Republic. The US was ninth with a score of 492, just ahead of Russia. Italy (466) and Colombia (379) finished at the bottom of the group.

According to the survey, 17.8% of US test-takers did not reach a baseline level of proficiency in financial literacy. For China, that number was 1.6%

The Atlantic's Emily Richmond explains why these findings matter:

With money management the buzz phrase of post-recession America, there's an increasing push from both the public and private sector to make sure the nation's young people are taught the fiscal smarts to make wise decisions for themselves on everything from living within a budget to savings accounts to college loans.

A sample question from the OECD financial literacy test A sample question from the OECD financial literacy test

The National Journal's Nancy Cook says US teens face an uphill battle in learning about responsible money management:

Although the US alone boasts roughly 800 different financial-literacy curricula, no academic, institutional or personal-finance expert has yet uncovered the most effective method for teaching these key money skills. In many ways, it's an unfair battle against the prowess of the financial-services industry that annually spends about $54 per person on financial marketing versus the roughly $2 per person spent in the US on financial education.

The US performance shouldn't be surprising, according to the Atlanta Journal-Constitution's Maureen Downey.

"Most of us learn about money from making mistakes with it in our 20s and 30s," she writes. Better financial education at an early age, she continues, would help Americans own homes sooner and better endure financial difficulties, such as job losses.

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In our country, where education is highly valued as a means to a better life, failing to teach our children about financial matters is unacceptable”

End Quote Richard Cordray US Consumer Financial Protection Bureau

In addition to the nation-by-nation rankings, the OECD breaks down the results of the test and comes up with some other interesting findings.

Some nations that did well on the test, such as Australia, the Czech Republic and Estonia, performed better in financial literacy than their maths-test results would suggest. Others that fared poorly, such as France and Italy, did worse.

Students from wealthier backgrounds generally did better on the test than less-advantaged teens. Those with bank accounts scored higher than those without.

There was little measurable difference between the performance of male and female test-takers.

Only 10% of test-takers could answer the most challenging questions, such as determining a bank statement balance that includes transfer fees and understanding income tax brackets.

"In our country, where education is highly valued as a means to a better life, failing to teach our children about financial matters is unacceptable," Richard Cordray, director of the US Consumer Financial Protection Bureau, said in a statement. "A free market economy like ours is only as strong as its consumers, and we each need to be able to take responsibility for making sound and sustainable financial choices."

As the Pisa results show, US leaders like Cordray have their work cut out for them.



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  • rate this

    Comment number 17.

    There is a saying "A fool is soon parted from her money" which confirms who the fools are in the world that are unable to keep a tab on their financial matters. This extend not only to teens but to their governments.

  • rate this

    Comment number 16.

    Why am I not surprised with the outcome of the research. I suspect a majority of US teens couldn’t find China on a map even if their cell phone depended on it. As far as their financial illiteracy: Why should US teens care about all that financial stuff when they’ve got both parents working full-time trying to earn enough money to buy everything they demand? After all, it’s their birthright!

  • rate this

    Comment number 15.

    Most 15 year olds in the US aren't old enough to drive a car by themselves, let alone work a steady job. It shouldn't be a surprise that they have poor money management skills. They can now stay on their parents' insurance plans until they're 26. There's little incentive for them to learn these things until they have more responsibilities.

  • rate this

    Comment number 14.

    My friends whose parents gave them an allowance do pretty well with money. My friends whose parents just paid for everything are completely hopeless. I had a savings account from birth. Some people graduate college without knowing how to write a check.

  • rate this

    Comment number 13.

    China's standardized test determine the future of that person, so yes they are going to try hard to do well at it.

    Lets see where do I want to go for a heart transplant or if I want to send something to Mars, Hmm. This study has no bearing on reality.

  • rate this

    Comment number 12.

    Does Mr Zurcher ever write anything about Britain.
    Nah, no advertising revenue in that.

  • Comment number 11.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 10.

    My state Illinois has the most debt in all of America because Chicago is the worst money managers in all of America except Washington DC
    which is the worst money managers of all

    Michigan is getting their water cut off
    despite the fact the largest body of water in North America is next to them

    I am worried Michigan is going to sell their Great Lakes
    which is bad resource and money management

  • rate this

    Comment number 9.

    @8. LucyJ
    I pledge allegiance to the balance sheet of the federal reserve bank, and to the loans I've taken, one loan under God, irreversible, unpayable, with debt and injustice for all.

  • rate this

    Comment number 8.

    Considering that USA is 17 trillion in debt
    its no wonder many kids wouldn't know fiscal management
    because our federal govt has set a bad example for them

    In 2000 USA had little debt

    To go from less than a trillion to 17 trillion in 14 years
    tells us all our politicians need to take a fiscal management class

    Our students are learning money mismanagement from our federal politicians

  • rate this

    Comment number 7.

    "A free market economy like ours is only as strong as its consumers"

    America's consumers are weak

    The rich are getting richer
    but there is no Middle class left
    and the poor are getting poorer

    China's economy is rising and USA's economy is falling
    because USA Congress gave much of our manufacturing to them via trade deal in 1999/2000
    which is the greatest mistake USA has ever made in our history

  • rate this

    Comment number 6.

    Yep the American Student Loan Crisis is real. The banks like ignorant people.

  • rate this

    Comment number 5.

    more loans = fail.

    bankruptcy and rebuilding from nothing and learning a lesson = learning a lesson and earning what you have and not being a debt slave for the financial institutions that cling to the edges of the North American continent lest they be surrounded by the poor saps that they are using and abusing financially for their gains at any cost.

  • rate this

    Comment number 4.

    Any "test" like this can be taken with a grain of salt. When teachers in the US give these test, the first thing they tell the students is this test will not count against you.

    So what do the children do, not try. Why would they. They know that it has no bearing on them personally. Most of these "studies" are the same standardized test that the kids are told don't count against them.

  • rate this

    Comment number 3.

    There are millions of teenage illegal immigrants in USA
    who don't even speak our American language
    so its no wonder we trail others in such

    If you take the illegal immigrants out of the equation,
    the situtation is less dire

    That being said the Common Core is bad news
    and is actually making kids less smart
    by telling them the wrong way to do math,
    not stating the full Amendments, etc

  • rate this

    Comment number 2.

    The under-performance of US kids is not limited to economics and finance, but maths and sciences as well. Education is a lifetime investment to the individual, and important to the future of the country; what I want to say is self evident, and I have nothing more to add.

  • rate this

    Comment number 1.

    Understanding the central banking system would useful for young folk to know about, funny that no one knows where the money comes from.


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