Financial literacy – don’t touch maths to try to fix Australia’s poor results

So Australia came fifth in the latest PISA report on students abilities in financial literacy.

While the underlying numbers in terms of percentages of students who can do things like detect a scam email aren’t great it’s sort of amusing to see us decrying coming fifth in a PISA test when we’d kill for that ranking in core STEM subjects. But that’s not the disquieting thing here. No, my concern is the argument that “schools should be teaching students basic financial skills instead of higher-level algebra”.

The people saying that are equating two entirely different things. Sure it’s important that students leave high school with basic financial skills; although being able to spot a scam email these days is a basic life skill rather than a financial skill in my view. But what has spotting a scam or being able to interpret a payslip got to do with maths as a subject? It’s as much about English, or economics, or…

We need kids being able to understand maths simply so they can function in all aspects of a complex technological world. To be in a position to move on and do complex subjects at university they need to have more than basic arithmetic. That’s simply true and the fact that our participation in maths, and the quality of the maths taught, is declining is scandalous.  So fudging that by intruding yet more stuff into the curriculum is a bad idea.

And if you do want to slot financial literacy in art the top end of school, you really have to question whether it’s more important to be able to interpret a Shakespeare sonnet or to be able to interpret a payslip.

Also, once you get past the headlines and look at what’s really going on the falling scores on financial literacy are completely tied to the falling scores in reading and maths:

The Australian Council for Educational Research (ACER), which ran a separate analysis of the findings, revealed a strong link between Australian students’ financial literacy and their maths and reading skills.

The actual OECD report makes this quite clear. China tops the table by a significant amount and there is a very high correlation between the financial literacy results and the results in reading and maths. Proficiency in reading and maths is not the entire story, but it’s a big chunk of it.

So if we just focus on improving the core education we’ll do a lot to fix the financial literacy issue. And we’ll have students who can read and do maths at a higher level and so compete in a global job market . Equally, blunting the maths education we provide is definitely going to push down the results in financial literacy.

The best way to improve financial literacy is not to toss the problem back at the school. The demonstrated best way is for parents to discuss money matters with their children. That’s one of the key reasons that socially advantaged students significantly out-perform students from disadvantaged backgrounds. Advantaged students have parents who understand how the system they live in works and the students will often have some money of their own to apply lessons to.

So let’s not tangle financial literacy up with the maths curriculum. We need to do better in both and have differentiated strategies to achieve both those outcomes.

The scam email question

Now as an aside, but as I have read the OECD report, it’s probably worth mentioning that the question that has gained most publicity is the one about scam emails. Only 15% of Australian students were “able to detect a scam email correctly”. Well when I looked at the question I found I would have got it wrong too.

To get any marks on that question you not only had to say you wouldn’t reply to the message and wouldn’t click on the link in the email, but you also had to also say you would contact the bank. Out here in the real world I get a constant trickle of phishing messages and I’ve never once contacted my bank to tell them about the email and I wouldn’t advise anyone else to do that either. In fact this prompted me to take a look, and I can’t see any way of contacting my bank about a scam email short of just phoning their call center – and that doesn’t seem likely to produce useful results (another lesson in financial literacy?). So maybe things aren’t quite as bad as they look on the scam email front.