Improving Financial Education Efficiency

Improving Financial Education Efficiency

OECD-Bank of Italy Symposium on Financial Literacy You do not have access to this content

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27 Oct 2011
9789264108219 (PDF) ;9789264107908(print)

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This symposium proceedings examines three aspects of financial education: monitoring and evaluation, use of behavioral economics,  and financial literacy and defined contribution pension plans.

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  • Foreword
    The financial crisis focussed the attention of governments around the world on the critical need to empower consumers through financial education. As governments launch new initiatives to improve their population’s financial skills, demand has grown for research to guide the development of these initiatives as well as tools to measure their impact and effectiveness. The OECD is working hard to meet this demand, providing guidance to governments and other concerned stakeholders based on research and tools developed over the past decade.
  • Acknowledgements
    The OECD would like to thank the Bank of Italy for its co-operation in organising and hosting the OECD-Bank of Italy International Symposium on Financial Literacy. The OECD is grateful to the authors for their valuable contributions of each of the chapters contained in this volume.
  • Executive Summary
    This book draws together expert opinions and recommendations on a number of cutting edge issues presented at the OECD-Bank of Italy Symposium on Financial literacy held in Rome on 9 June 2010. Such issues include the measurement of financial literacy, the evaluation of financial education programmes and the application of findings from behavioural economics, in order to improve financial education provision.
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  • Expand / Collapse Hide / Show all Abstracts Monitoring Financial Literacy and Evaluating Financial Education Programmes

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    • A Framework for Developing International Financial Literacy Surveys
      This chapter summarises the approaches taken to measuring financial literacy at the national level, and makes recommendations for developing a survey instrument that could capture financial literacy across a range of countries. It also describes the questions most frequently used to capture financial literacy, and identifies those which might be used in an international survey. It goes on to discuss the most appropriate survey method and briefly discusses possible ways of analysing the resulting data.
    • A Framework for Evaluating Financial Education Programmes
      It is still relatively unusual for financial education programmes to be evaluated. In this chapter, the main benefits of programme evaluation are discussed, along with the challenges faced by evaluation designers and the resulting limitations of existing evaluations. A five tier evaluation framework is assessed as a potential solution to improve evaluation design whilst still allowing flexibility.
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  • Expand / Collapse Hide / Show all Abstracts Behavioural Economics and Financial Education

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    • Can Behavioural Economics be used to make Financial Education more Effective?
      This chapter investigates the extent to which behavioural economics might explain some of the problematic financial behaviours that are observed amongst consumers, including low levels of retirement saving and high levels of credit use. It also asks how behavioural economics can help policy makers to improve financial education, from take-up to completion. Various tools available to policy makers to help consumers overcome psychological constraints are discussed. These include supervision and regulation of financial services, and the design of default options.
    • Can Economic Psychology and Behavioural Economics Help Improve Financial Education?
      This chapter starts by noting that the provision of knowledge and information in itself is not sufficient; the information must be incorporated into daily life. It then goes on to describe an innovative solution developed for Brazilian school children. The approach combines information and recommendations about personal financial issues with information about the way in which psychological factors may both help and hinder behaviour. This psychological guidance is intended to raise the pupil’s awareness of their own traits and trigger discussions about the typical psychological factors that influence financial decision making.
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  • Expand / Collapse Hide / Show all Abstracts Importance of Financial Education in the Context of Defined Contribution Pension Plans

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    • Financial Literacy and the Shift From Defined Benefit to Defined Contribution Pension Plans
      The shift to defined contribution pensions requires people to be knowledgeable about finance and economics, yet evidence suggests that even basic numeracy is poor amongst a sizeable proportion of working adults. This chapter discussed the evidence and the provision of financial education programmes that are designed to address the problem. It then goes on to consider ways of improving financial education and alternative ways of stimulating retirement planning.
    • Auto-Enrolment in Private, Supplementary Pensions in Italy
      This chapter discusses the Italian experience in developing its system of private, supplementary pensions, as a case study of the implementation of nation-wide auto-enrolment mechanisms; in the discussion, attention is devoted to pension awareness issues. The reasons for the limited success of auto-enrolment in Italy are summarised. Besides the importance of country-specific structural issues, the need for an overall, coherent, pension strategy is underlined, together with a consistent use of the different policy instruments available: not only in order to achieve the desired membership targets, but also as a prerequisite for effective awareness campaigns and education efforts. In addition, the chapter stresses the need for a balance of responsibilities between the individual, the State, and intermediate bodies (such as social partners), with appropriate default options that should back-up the individual when he/she is unable or unwilling to choose.
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