Financial literacy@School

General goal:

There is need for increased financial education in view of widespread financial illiteracy and the benefits for individual well-being and society at large that are associated with high levels of financial literacy. Although the OECD policy recommendation to introduce financial education at school is well accepted, there is no consensus on the optimal way to implement financial education at school. We will develop a holistic approach to financial education at school in which we will explicitly acknowledge the influence of the main agents of financial socialisation (such as parents and teachers) and will assess the impact of the learning environment by examining the effect of class differentiation. The possible academic and practical contribution is empirically examined based on randomised field experiments in which the innovative teaching material developed is evaluated in close collaboration with the valorisation partners.

Financial literacy is defined as “knowledge and understanding of financial concepts and risks, and the skills, motivation and confidence to apply such knowledge and understanding in order to make effective decisions across a range of financial contexts, to improve the financial well-being of individuals and society, and to enable participation in economic life.” (OECD 2014c). The importance of financial literacy for individuals’ financial well-being, together with the documented lack of financial literacy, has spawned a growing body of literature on (determinants of) financial literacy and has led to the implementation of financial education programmes. The literature is fragmented across various disciplines, reflecting the multi-faceted nature of factors that impact financial education and financial capability. As each (sub)discipline stresses the role of a limited number of agents of financial socialisation or key variables within the discipline that are related to successful implementation of such programmes, the combined effects of elements rooted in different disciplines are largely ignored. Moreover, current evaluations commonly rely on an identification strategy that does not allow for causal inference. In view of the lack of (sound and causal) empirical research on this topic for Europe, the OECD calls for academic research that explicitly evaluates the effectiveness of financial education programmes at school in Europe.

Drawing on the multidisciplinary background of the project partners (economists, educationalists, subject-specific experts, econometricians), we will investigate the factors that explain variation in students’ (progress in) financial literacy levels and aim to develop innovative financial education teaching materials that help to take into account inter-student differences in prior financial knowledge, (meta)cognitive skills, family background or learning preferences. More specifically, we will develop and test a financial literacy approach that allows for class differentiation and parental involvement, given that parents are one of the main agents of financial socialisation. As this approach is new and contrasts with the existing one-size-fits-all approaches to financial education, its effectiveness will be researched based on a randomised controlled trial in Flemish schools. Besides differentiation, the learning environment at schools is also shaped by the role that teachers play in this process. Hence, this SBO project also examines the effect of teacher professionalisation in financial literacy for both prospective teachers and senior teachers.

In conclusion, this project proposes strategic basic research in which innovative tools are developed and empirically validated within a holistic approach and in close collaboration with the project’s valorisation partners in order to introduce effective financial literacy in a comprehensive and differentiated way in the Flemish educational system. Given that class differentiation, parental involvement and teacher professionalisation are largely ignored in the current literature and existing initiatives, the best practices resulting from the project will be valuable for the implementation of financial literacy at school in other countries and regions as well.  

Concrete objectives:

The ‘Financial literacy @ School’ project aims at evaluating the effectiveness of a differentiated and integrated approach to financial literacy at school and has the following specific scientific objectives:

1. to approach financial education from a holistic and multi-disciplinary perspective;
2. to focus on the impact of teachers and parents as main agents of socialisation;
3. to incorporate the interaction between teachers’, parents’, and students’ characteristics;
4. to assess the contribution of class differentiation to financial literacy initiatives at school;
5. to assess the effect of teacher professionalisation on financial literacy initiatives at school;
6. to gather unique data on the implementation of financial education in the Flemish Community;
7. to examine the effectiveness of teach-the-teacher training programmes.

Besides academic publications, this project will result in three PhD dissertations: (1) Financial Literacy @ School: integration in a financial socialisation framework, (2) Financial Literacy @ Shool: effect of teach-the-teachers initiatives, and (3) Financial Literacy @ School: integrating class differentiation.