Financial literacy rates around the world

[Maciamo]

McGraw Hill Financial has just released the results of their Global Financial Literacy Survey, which aims at evaluating people's knowledge of basic financial concepts such as risk diversification, inflation, interests, and compound interests on loans and credit cards. Only about a third of the world population passed the test. Countries scoring highest were:

1. Norway, Denmark, Sweden : 71%
2. Canada, Israel : 68
3. United Kingdom : 67
4. Germany, Netherlands : 66
5. Australia : 64
6. Finland : 63
7. New Zealand : 61
8. Singapore : 59
9. Czech Republic : 58
10. Switzerland, USA : 57

Here is the ranking for Europe only:

1. Norway, Denmark, Sweden : 71%
2. United Kingdom : 67
3. Germany, Netherlands : 66
4. Finland : 63
5. Czech Republic : 58
6. Switzerland : 57
7. Belgium, Ireland : 55
8. Estonia, Hungary : 54
9. Austria, Luxembourg : 53
10. France : 52
11. Spain : 49
12. Latvia, Montenegro, Slovakia : 48
13. Greece : 45
14. Croatia, Malta, Slovenia : 44
15. Poland : 42
16. Ukraine ; 40
17. Lithuania : 39
18. Belarus, Russia, Serbia : 38
19. Italy : 37
20. Bulgaria, Cyprus : 35
21. Bosnia and Herzegovina, Moldova : 27
22. Portugal : 26
23. Turkey : 24
24. Romania : 22
25. Macedonia : 21
26. Kosovo : 20
27. Albania : 14

I have made a map with all the data for Europe and around, which I have added to my Social & Economic Maps of Europe.

It is shocking to see how poorly Romance speaking countries score in comparison to their GDP per capita. France lags 15 points behind the UK, while Italy is a good 30 points lower and even 20 points behind the Czech Republic. Balkanic countries suffer from the same problem (apart from Montenegro). Albania got the second lowest score worldwide, 1% higher than Yemen. Albania and other Southeast Europeans displayed a particularly bad understanding of risk diversification ("don't put all your eggs in one basket").

Poorer European countries (Moldova, Bosnia, Albania, Kosovo) had the lowest scores in Europe for compound interest, which means they may not be able to manage their personal finances properly. The Portuguese and Italians did not do much better, and indeed did worse than half of Africa.

What we can learn from these results is that Southern European countries would be better off by introducing personal finance classes in the school curriculum during the years of compulsory education.

Also noteworthy are the incredibly low scores of rich East Asian countries like Japan (43%), Taiwan (37%) and South Korea (33%), who are roughly equal or behind many African countries (Botswana 52%, South Africa 42%, Zimbabwe 41%, Zambia 40%, Senegal 40%).

 

[DuPidh]

McGraw Hill Financial has just released the results of their Global Financial Literacy Survey, which aims at evaluating people's knowledge of basic financial concepts such as risk diversification, inflation, interests, and compound interests on loans and credit cards. Only about a third of the world population passed the test. Countries scoring highest were:

1. Norway, Denmark, Sweden : 71%
2. Canada, Israel : 68
3. United Kingdom : 67
4. Germany, Netherlands : 66
5. Australia : 64
6. Finland : 63
7. New Zealand : 61
8. Singapore : 59
9. Czech Republic : 58
10. Switzerland, USA : 57

Here is the ranking for Europe only:

1. Norway, Denmark, Sweden : 71%
2. United Kingdom : 67
3. Germany, Netherlands : 66
4. Finland : 63
5. Czech Republic : 58
6. Switzerland : 57
7. Belgium, Ireland : 55
8. Estonia, Hungary : 54
9. Austria, Luxembourg : 53
10. France : 52
11. Spain : 49
12. Latvia, Montenegro, Slovakia : 48
13. Greece : 45
14. Croatia, Malta, Slovenia : 44
15. Poland : 42
16. Ukraine ; 40
17. Lithuania : 39
18. Belarus, Russia, Serbia : 38
19. Italy : 37
20. Bulgaria, Cyprus : 35
21. Bosnia and Herzegovina, Moldova : 27
22. Portugal : 26
23. Turkey : 24
24. Romania : 22
25. Macedonia : 21
26. Kosovo : 20
27. Albania : 14

I have made a map with all the data for Europe and around, which I have added to my Social & Economic Maps of Europe.

It is shocking to see how poorly Romance speaking countries score in comparison to their GDP per capita. France lags 15 points behind the UK, while Italy is a good 30 points lower and even 20 points behind the Czech Republic. Balkanic countries suffer from the same problem (apart from Montenegro). Albania got the second lowest score worldwide, 1% higher than Yemen. Albania and other Southeast Europeans displayed a particularly bad understanding of risk diversification ("don't put all your eggs in one basket").

Poorer European countries (Moldova, Bosnia, Albania, Kosovo) had the lowest scores in Europe for compound interest, which means they may not be able to manage their personal finances properly. The Portuguese and Italians did not do much better, and indeed did worse than half of Africa.

What we can learn from these results is that Southern European countries would be better off by introducing personal finance classes in the school curriculum during the years of compulsory education.

Also noteworthy are the incredibly low scores of rich East Asian countries like Japan (43%), Taiwan (37%) and South Korea (33%), who are roughly equal or behind many African countries (Botswana 52%, South Africa 42%, Zimbabwe 41%, Zambia 40%, Senegal 40%).

Now! 71% of Norwegian's and Swedish know what compound interest is, and only 14% of let say Albanians don't?
Who ever wrote this, or believes this, needs a serious mental evaluation. I have been to school and I know that once you put in the bank a Principal of money, or take from the bank a Principal of of money there an interest rate attached to it. Let say my principal I put to the bank was $100. If my monthly interest was 5% at the end of the first month I expect to have at the bank $105. My next months principal is no longer the initial $100 principal but the second one $105 and the interest of the second month will be calculated on the principal of the end of the first month that in my example is $105. If I continue to do the same thing for the coming months we get what is called compound interest, a nice mathematical formula, where natural logarithms became a must. Its not a hard formula for a person with mathematical background like me, but its not an easy one for an average person. Now 71 people in every 100 Norwegians, or Swedish are familiar with the compound interest means, they know that if they put in the bank with an interest they get more at the end of the year than their principal, but southern European and Latin Countries in Europe do not know.
Its an interesting point of view, But I will be seriously shocked if the publication is true.

 

[DuPidh]

McGraw Hill Financial has just released the results of their Global Financial Literacy Survey, which aims at evaluating people's knowledge of basic financial concepts such as risk diversification, inflation, interests, and compound interests on loans and credit cards. Only about a third of the world population passed the test. Countries scoring highest were:

1. Norway, Denmark, Sweden : 71%
2. Canada, Israel : 68
3. United Kingdom : 67
4. Germany, Netherlands : 66
5. Australia : 64
6. Finland : 63
7. New Zealand : 61
8. Singapore : 59
9. Czech Republic : 58
10. Switzerland, USA : 57

Here is the ranking for Europe only:

1. Norway, Denmark, Sweden : 71%
2. United Kingdom : 67
3. Germany, Netherlands : 66
4. Finland : 63
5. Czech Republic : 58
6. Switzerland : 57
7. Belgium, Ireland : 55
8. Estonia, Hungary : 54
9. Austria, Luxembourg : 53
10. France : 52
11. Spain : 49
12. Latvia, Montenegro, Slovakia : 48
13. Greece : 45
14. Croatia, Malta, Slovenia : 44
15. Poland : 42
16. Ukraine ; 40
17. Lithuania : 39
18. Belarus, Russia, Serbia : 38
19. Italy : 37
20. Bulgaria, Cyprus : 35
21. Bosnia and Herzegovina, Moldova : 27
22. Portugal : 26
23. Turkey : 24
24. Romania : 22
25. Macedonia : 21
26. Kosovo : 20
27. Albania : 14

I have made a map with all the data for Europe and around, which I have added to my Social & Economic Maps of Europe.

It is shocking to see how poorly Romance speaking countries score in comparison to their GDP per capita. France lags 15 points behind the UK, while Italy is a good 30 points lower and even 20 points behind the Czech Republic. Balkanic countries suffer from the same problem (apart from Montenegro). Albania got the second lowest score worldwide, 1% higher than Yemen. Albania and other Southeast Europeans displayed a particularly bad understanding of risk diversification ("don't put all your eggs in one basket").

Poorer European countries (Moldova, Bosnia, Albania, Kosovo) had the lowest scores in Europe for compound interest, which means they may not be able to manage their personal finances properly. The Portuguese and Italians did not do much better, and indeed did worse than half of Africa.

What we can learn from these results is that Southern European countries would be better off by introducing personal finance classes in the school curriculum during the years of compulsory education.

Also noteworthy are the incredibly low scores of rich East Asian countries like Japan (43%), Taiwan (37%) and South Korea (33%), who are roughly equal or behind many African countries (Botswana 52%, South Africa 42%, Zimbabwe 41%, Zambia 40%, Senegal 40%).

I can't stop laughing with this publication if its true. It shows a high level of idiocy. ( Criticism not directed to Maciamo who simply republished something from the press).
About diversification:! Because of luck (the case with Norwegians(oil)), or talent and hard work( the case with Swedes) the population of these countries always have an amount of extra money which they want to invest. As such they want to make the maximum possible profit. But banks are associated with risk always, and as such the need for diversification becomes necessity. Some money goes to the bank who pays the highest interest rate, other money real estate or paintings of value, or maybe gold or silver, or stocks. Now, the case with Albanians or Southern Europeans! A high percentage of populations in these countries lives in low government payed wages, welfare and many are indebted. So they have no extra money at the end of the year and as a result nothing to diversify. The professor who wrote this article, asked them if they now how to diversify money they don't have, and they said no. And the professor published a statistic. What tragic and comic study!!!

 

[LeBrok]

I can't stop laughing with this publication if its true. It shows a high level of idiocy. ( Criticism not directed to Maciamo who simply republished something from the press).
About diversification:! Because of luck (the case with Norwegians(oil)), or talent and hard work( the case with Swedes) the population of these countries always have an amount of extra money which they want to invest. As such they want to make the maximum possible profit. But banks are associated with risk always, and as such the need for diversification becomes necessity. Some money goes to the bank who pays the highest interest rate, other money real estate or paintings of value, or maybe gold or silver, or stocks. Now, the case with Albanians or Southern Europeans! A high percentage of populations in these countries lives in low government payed wages, welfare and many are indebted. So they have no extra money at the end of the year and as a result nothing to diversify. The professor who wrote this article, asked them if they now how to diversify money they don't have, and they said no. And the professor published a statistic. What tragic and comic study!!!

Actually a good point. Richer countries' citizens have higher incomes, therefore spare money to invest. By investing they are learning, as they go, about capital market, interest, mortgages, financial risks, etc. This survey don't necessarily point to school curriculum or IQ level of citizens, but real life education from necessity. However, some of it can correlate, and most likely do, with financial education or lack of it in schools around the globe.

 

[RobertColumbia]

Now! 71% of Norwegian's and Swedish know what compound interest is, and only 14% of let say Albanians don't?
Who ever wrote this, or believes this, needs a serious mental evaluation. I have been to school and I know that once you put in the bank a Principal of money, or take from the bank a Principal of of money there an interest rate attached to it....But I will be seriously shocked if the publication is true.

...The professor who wrote this article, asked them if they now how to diversify money they don't have, and they said no. And the professor published a statistic. What tragic and comic study!!!

The problem with educational research is that it is very hard to define, or sometimes even identify, a passing standard that can be applied consistently to large groups of people. Since there's no clear standard, researchers are tempted to use whatever standard best supports their hypothesis. Basic literacy (reading) statistics in the USA are very broken in this respect, with varying surveys giving the illiteracy rate as being anywhere from 1% to as high as 30% of the adult population. If you want more funding for schools to teach basic reading skills and you find that 90% of people pass your 9th grade reading test, then you can redefine "literacy" to mean a 10th grade reading level or above and then publish another shocking expose about illiteracy in America. If you are on the other side and are trying to defend schools against allegations that you are letting illiterate people graduate, then you can water down the definition of "literacy" to mean little more than the ability to read a comic book and a watered-down newspaper.