Can financial mathematics promote financial literacy?

Financial illiteracy is widespread and has important economic consequences (Lusardi & Mitchell, 2014), so the need to increase youth financial literacy is well-recognized. In this respect, the Organisation for Economic Co-operation and Development recommends that financial education starts at school to ensure exposure at an early age(OECD, 2005). There is however no consensus on how to implement this policy recommendation. Indeed, the optimal manner in which financial literacy goals can be integrated in curricula and the best way to expose children to financial literacy at school are still open for debate. We add to this discussion by setting up an exploratory study aimed at empirically examining the possible contribution of financial mathematics in the curriculum of secondary schools. Eighty-four 16-18-year-old secondary school students was subjected twice to a multiple-choice test on financial proficiency: a pretest – taken just before the start of the financial math course – and a posttest just after they had taken the financial math course. Post- and pretest were equivalent, as certified by experts. For further analyses, questions were categorized into the following three categories: ‘Methods’, ‘Concepts’, and ‘Spillovers’. The first two categories refer to different aspects of financial literacy related to the content of the financial math curriculum. ‘Spillovers’ consisted of questions that are not part of the learning outcomes of financial mathematics, but are part of financial literacy. Categories were not disclosed to participants and the questions were randomized over categories and tests. With the exception of the category ‘Spillovers’, the average value in the posttest was significantly higher than in the pretest (p-value of a paired sample T-test was lower than 0.001 in each instance). This result suggests that financial mathematics can help promoting financial literacy, both in terms of skills and knowledge. Results of this exploratory study are promising. In particular, the holistic approach adopted by financial math teachers ensures that the positive effect is not limited to a better understanding of math-technical aspects but also encompasses broader applications of the concepts to the financial world. References Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5-44. OECD. (2005). Improving financial literacy: Analysis of issues and policies. Paris, France: OECD Publishingstatus: publishe