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Designing and Evaluating a National Strategy for Financial Literacy

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Designing and Evaluating a National Strategy for Financial Literacy Annamaria Lusardi Joel Z. and Susan Hyatt Professor of Economics Director, Financial Literacy Center – PowerPoint PPT presentation

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Title: Designing and Evaluating a National Strategy for Financial Literacy


1
Designing and Evaluating a National Strategy for
Financial Literacy
  • Annamaria Lusardi Joel Z. and Susan Hyatt
    Professor of Economics Director, Financial
    Literacy Center

2
Relevance
Why a national strategy?
  • Increase in individual responsibility
  • Demographic changes aging
  • Labor market changes more mobility
  • Pension changes
  • Financial markets more complex
  • Globalization of financial markets
  • Cost and consequences of financial mistakes at
    the aggregate level
  • Welfare system will be affected
  • Well informed citizens lead to more stable
    markets and better use of resources

3
Road map
  • What is a national strategy?
  • The institutional framework
  • Identifying the issues
  • Defining financial capability
  • National survey
  • Preliminary assessment
  • Objectives Long-term vs. short-term
  • Designing interventions
  • Targeted population sub-groups
  • Evaluation
  • Take-away

4
What is a national strategy
Defining a national strategy
  • A vision for financially capable citizenry
  • Aggregate stakeholders
  • Identify the gaps
  • Define a framework of action
  • Identify targets to be achieved in a specific
    time frame
  • Plan initiatives
  • Evaluation of initiatives

5
Benefits of a national strategy
Benefits
  • Guidance and coordination
  • Public and private initiatives
  • Avoid duplication of effort
  • Share expertise
  • Promote best practices
  • Cost effectiveness

6
Institutional framework
Some structure
  • Identify all stakeholders involved
  • Identify a national agency/institution to
    coordinate
  • Useful to create a Financial Capability Steering
    Committee sponsored by the coordinating agencies,
    involving all the stakeholders
  • (examples, UK and Ireland)

7
Identifying the issues
What are the problems?
  • Some examples
  • Pensions or changes in pensions
  • Low saving rates
  • High default rates on loans
  • Fraud and scams
  • Others

8
Defining financial capability
Financial capability/competency
  • Broad definition
  • What does it mean to be financially capable?
  • Knowledge versus behavior
  • Country-specific elements of the definition

9
Measurement A national survey
Benefits of a national survey
  • - Picture of current levels of capability
  • Identification of areas of intervention
  • Identification of at-risk population categories
  • Establishing a baseline for evaluation
  • Useful for both public and private sector
  • Building a base for longitudinal evaluation a
    new survey every 3-5 years

10
Case study U.S. National Financial Capability
Study
Four key components
  1. Making ends meet
  2. Planning ahead
  3. Managing Financial Products
  4. Financial Knowledge and Decision-Making

11
Preliminary assessment
Assessment of what exists
  • Existing initiatives
  • Identify gaps in the provision of resources and
    avoid duplication of initiatives
  • Agencies and organizations already involved with
    financial capability

12
Long term and short term objectives
Objectives
  • Long-Term vs. Short-Term Objectives
  • Long-Term Improvement of financial
    literacy/capability for the entire population
  • Short-Term specific problems to solve. Focus on
    specific subgroups (those more at risk)

13
Designing intervention
What to consider
  • Every objective (long term or short term)
    requires an intervention. For every intervention,
    these points should be considered
  • Target/beneficiarywho is it?
  • Current situation
  • Reasons for changes
  • Providers
  • Delivery methods
  • Budget
  • Design of evaluation
  • Pilot program
  • Evaluation

14
Intervention Some examples
UK experience
  • School Learning money matters
  • Young adult Helping young adults make sense of
    money
  • Workplace Make the most of your money
  • Consumer communication
  • Online tools
  • New parents Money box
  • Money advice

15
Targeted population
Different programs for different needs
  • Different population sub-groups have different
    needs and would benefit from targeted programs
  • Example Maori people in New Zealand, Native
    Americans in the United States. But also the
    elderly and women may benefits from targeted
    programs

16
Evaluation
The importance of evaluation
  • Must evaluate
  • Accountability
  • Efficient allocation of resources
  • Standardized framework for evaluation
  • Use scientific methods
  • Many biases
  • Measurement of success
  • Indicators of knowledge/behavior
  • Disseminate results widely and share experience

17
Longitudinal evaluation
In the long run
  • Can evaluate the national strategy itself
  • Redo a national survey
  • Re-adjust objectives
  • Focus on areas in need
  • Tailoring interventions
  • Allocate resources efficiently
  • over time

18
Some issues about evaluation
Evaluation is part of the program design
  • Have to design evaluation at the beginning of
    program not at the end
  • It needs resources and expertise
  • Independence
  • It is a requirement we need to know what works
    and what does not work
  • OECD can provide guidelines on evaluation

19
Take-away
Importance of a strategy and its evaluation
  • Need for direction
  • Importance of coordination
  • Many stakeholders
  • Different targets
  • Importance of evaluation at every stage
  • Efficient use of resources
  • Share experience across countries

20
The cost of ignorance
  • An ignorant people is the blind instrument of
    its own destruction
  • Simon Bolivar, 1819
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