{"id":5329,"date":"2024-11-21T15:03:25","date_gmt":"2024-11-21T14:03:25","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=5329"},"modified":"2024-11-21T15:03:25","modified_gmt":"2024-11-21T14:03:25","slug":"finance-becomes-mandatory-in-schools","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2024\/11\/21\/finance-becomes-mandatory-in-schools\/","title":{"rendered":"Finance Becomes Mandatory in Schools"},"content":{"rendered":"

A recently approved law makes financial education a subject that should be taught in all schools. This is an unmissable opportunity to reduce the gap between Italy and other countries as well as to address some of the disparities that Italy faces in financial literacy. However, an innovative teaching approach is necessary\u2014one that focusses on engaging students directly in understanding real-world scenarios.<\/span><\/i><\/p>\n

Today, having skills in economics and finance is essential for young people. The recent law that mandates integrating these skills into the civic education curriculum presents an extraordinary opportunity\u2014not only to increase the financial knowledge of young people but also to reduce some of the gaps present in our country. However, it is crucial to exploit its pedagogical potential to teach this knowledge in an innovative way. Let’s explore why this is important.<\/span><\/p>\n

Why Financial Education is Crucial for Young People<\/b><\/h3>\n

Today, financial literacy is a critical skill for navigating successfully in a complex economic and financial landscape, which affects everyone intimately. This has been discussed in previous articles. For young people\u2014much more so than in the past\u2014an innovative and complex financial system offers easily accessible products and services that provide great opportunities (consider the ease of using digital payment tools today). However, it also presents new risks that public protection systems alone cannot fully address (for instance, the growing risk of sophisticated scams or the ease of incurring debt with just a few clicks, without understanding the obligations that follow). Furthermore, young people today often have fragmented and varied career paths (rather than a single lifelong job), which require them to actively manage their finances, including planning for retirement in light of the reduced generosity of public pension systems.<\/span><\/p>\n

For these reasons, it is essential that young people are equipped with the knowledge necessary to face these challenges with confidence.<\/span><\/p>\n

The Current Situation: OECD-PISA Data on Fifteen-Year-Olds<\/b><\/h3>\n

To understand how well-prepared young people are, it is useful to examine the data provided by the OECD\u2019s Programme for International Student Assessment (PISA), which in Italy is coordinated by INVALSI. This programme evaluates the competencies of 15-year-olds in various domains, including financial literacy. For financial literacy, these competencies are measured through a comprehensive questionnaire with responses scored on a scale from 0 to 625.<\/span><\/p>\n

The 2022 results (published in June 2024) show both positives and negatives, providing valuable insights into what can be done. First, the average financial literacy level of Italian youth is still slightly below the OECD average (we score 484 points compared to the OECD average of 498).<\/span><\/p>\n

Levels of Financial Literacy in Countries Participating in the PISA Assessment<\/b><\/p>\n

 <\/p>\n

Note: The global average is 475, while the average among OECD countries is 498.<\/span>
\n<\/span>Source: PISA survey.<\/span><\/p>\n

However, this level has improved compared to ten years ago (our average was 467 back then) and has not worsened since 2018, unlike other countries where the negative impact of COVID on school learning has led to a regression in financial literacy skills.<\/span><\/p>\n

Levels of Financial Literacy in the Four Years of the PISA Assessment<\/b><\/p>\n

 <\/p>\n

Note: The countries listed in the graph are those that participated in all four editions. For Italy, there has been a significant improvement between 2012 and 2022, partially recovering from 2018.<\/span><\/p>\n

Source: PISA survey.<\/span><\/p>\n

About 18% of Italian students do not reach the minimum level of competence, which corresponds to being able to distinguish between needs and wants and make simple decisions about daily spending.<\/span><\/p>\n

In addition to this average figure, Italy continues to face significant gaps, some of which have worsened. The first is the gender gap: since 2012, when this gap already existed, the difference between the results of boys and girls has grown to 20 points (it was 8 points in 2012)\u2014the highest value among all countries in the survey, where the average gap is just 5 points (and in some countries, the gap has even reversed in favour of girls). The widening gap is largely due to a higher increase in the proportion of boys in the top-performing category compared to girls.<\/span><\/p>\n

Gender Gaps in Financial Literacy Levels<\/b><\/p>\n

 <\/p>\n

Note: Italy has the largest gender gap, while in some countries the gap has reversed (girls outperform boys).<\/span>
\n<\/span>Source: PISA survey.<\/span><\/p>\n

There are also other disparities: 15-year-olds in southern Italy have an average score of 448, compared to 509 in the Northwest and 506 in the Northeast. There are further differences between types of schools: the average score in high schools is 507, while in vocational schools it is 409. Differences also arise based on the socioeconomic conditions of the students\u2019 families: all other factors being equal, students from more advantaged backgrounds score 68 points higher than those from disadvantaged backgrounds (although this gap is smaller than the OECD average). The socioeconomic and cultural backgrounds of students tend to perpetuate a cycle of economic inequality, indicating that financial literacy is not just a matter of personal skills but has broader social implications.<\/span><\/p>\n

Average results and disparities are explained by many factors, which can guide us in developing solutions.<\/span><\/p>\n

First of all, the lack of structured economic and financial education in all school curricula has contributed to these disparities. In Italy, economics and finance have not been curricular subjects in all educational pathways, so they have only been taught occasionally. Where teaching has been more structured (we measure this in the survey by determining if students have learned certain technical terms at school), results are indeed better. The benefits of the mandatory integration of financial education, as required by Law 21\/2024, could therefore be significant.<\/span><\/p>\n

Secondly, teaching methods can have a major impact: in Italy, the PISA survey shows that financial literacy scores are closely related to students’ math and reading skills (73% of the differences in financial literacy are explained by differences in these two subjects), but less so than in other countries. In other words, math skills are less easily translated into financial and economic capabilities. Moreover, we have evidence that where math teaching more actively engages students\u2019 cognitive skills, the positive effects on financial literacy are greater. In short, teaching methods matter.<\/span><\/p>\n

Finally, cultural reasons also explain the results and disparities: the difficulty of discussing economic and financial issues within families (especially with girls) and the perception that the topic is inherently difficult. Although 6 out of 10 young people think it is important to know about finance today, only 4 out of 10 feel comfortable discussing it\u2014and even fewer girls do. These reasons must be considered when designing a path for integrating financial education into the curriculum in Italy.<\/span><\/p>\n

Law 21\/2024: An Opportunity to Innovate Education<\/b><\/h3>\n

These findings provide important insights into how to make the most of the opportunities offered by the recent approval of Law 21\/2024, which introduces financial education as a mandatory component of the school curriculum, starting from primary school (as part of civic education and therefore across different subjects). Some educational experiments in teaching economics (mostly conducted in US universities for students encountering the subject in their first year) offer interesting insights for two key objectives: a) attracting students who perceive the subject as difficult or unwelcoming, and b) reducing performance gaps (particularly gender gaps).<\/span><\/p>\n

The experiments suggest that an inclusive and engaging method, linked to students\u2019 concrete experiences, is effective in achieving these goals. The contents of economic and financial education lend themselves particularly well to this method due to the many possible connections with real life, adaptable for all age groups with the right adjustments. In Italy, some projects\u2014such as those carried out by the Bank of Italy with school teachers\u2014also confirm the benefits of interdisciplinarity and cross-curricular approaches. Introducing economic and financial topics can enhance the understanding of core subjects, while experiential and hands-on learning (many examples from students’ direct experiences allow for interactive engagement) stimulates cognitive activation. All of these methods help foster autonomy, responsibility, and active citizenship skills.<\/span><\/p>\n

The Role of Schools and Teachers<\/b><\/h3>\n

In summary, the introduction of financial literacy competencies could represent an opportunity to make the most of innovative teaching methods aimed at directly engaging students in observing and understanding reality, facilitating informed peer discussions, and experimenting with a hands-on approach. By doing so, the mandatory inclusion of financial education could help reduce some of the disparities seen in schools, particularly gender and socioeconomic gaps.<\/span><\/p>\n

Achieving this goal will require a joint effort from teachers and subject-matter experts (as well as experts in innovative teaching methods). It will be essential for teachers to make financial education accessible and relevant to all students, not only transmitting theoretical knowledge but also promoting the development of practical skills and critical thinking about financial issues.<\/span><\/p>\n

If properly implemented, the law will not only improve young people\u2019s understanding of economics and finance but will also contribute to creating a more equitable and prosperous society, where every individual is capable of making informed decisions that positively impact their lives and their communities. Financial education will ultimately be an investment in everyone\u2019s future.<\/span><\/p>\n

 <\/p>\n

Bio<\/span><\/em><\/p>\n

Magda Bianco is the head of the Customer Protection and Financial Education Department at the Bank of Italy, dedicated to supervising the conduct of intermediaries, financial education, and the individual protection of customers.<\/span><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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