Estonian kids on top in the world in terms of financial literacy

Loora-Elisabet Lomp
PISA test in School.
PISA test in School. Photo: Martin Ilustrumm

The results of the financial literacy part of 2018 PISA tests were published yesterday. Turns out that Estonian 15-year-olds are the best in the world, ahead of Finland and Canada, when it comes to making sense of financial affairs. Estonian children did universally well in the financial literacy category, no matter whether they were boys or girls, from rural or urban areas or from wealthy or less fortunate families.

While Estonia came in third on 529 points in the financial literacy category in the previous round of PISA testing in 2012, Estonian students took the cake in the recent 2018 tests, scoring an impressive 547 points. Estonian teenagers bested their Finnish counterparts by 10 points and the Canadians by 15. Latvian youths repeated their 2012 score of 501 points to land in eighth place in the recent test. Lithuania came in ninth on 498 points, with Russian rounding up the top ten on 495 points.

Minister of Education and Research Mailis Reps was glad Estonia scored 10 points over Finland. “Our first place comes courtesy of the relative importance of the most talented youths having grown, while we have also retained our general knowledge (PISA proficiency level 2 – ed). Our success has not resulted in less attention being paid to children for whom good results are more difficult to achieve.”

If in 2012, Estonia had 12 percent of participating students do exceptionally well on the test, the figure had grown to 19 percent in the recent round. Business education in general schools was boosted immediately after the first financial literacy test. “What sets us apart from other countries is that we have business classes that are available not just to elite schools. Larger and smaller county schools are also included in the program,” Reps said. Because teachers of different subjects have joined business education or other financial literacy programs, children also learn about these subjects in natural sciences or music class, for example.

Background of no significance

Tallinn students made up 31 percent of the test sample, those from other cities 33 percent and rural area students 36 percent. There was no difference in the scores of students from urban and rural areas. Young people from all counties consistently scored over 500 points as financial literacy has improved across the board since 2012. While students from Northeastern Estonia scored the lowest at 509 points (551 points in Southern Estonia), they have also improved since 2012 and performed better than the OECD average of 505 points.

The results show that financial literacy does not depend on the child’s family or the socioeconomic background of the school. Reps said it is because education is universally available and free in Estonia. “Secondly, our school system is there for those who need catching up. If a child who goes to first grade is already considerably behind their peers, the system has teachers, speech therapists and other specialists to help them catch up,” the minister explained.

The test sample included almost the same number of boys and girls (50.3 percent and 49.7 percent respectively) and there were no great differences in how they scored. A gap exists between Estonian and Russian-speaking students, however. In a situation where 24.2 percent of students who mainly speak Estonian at home scored top marks, only 10 percent of native Russian-speakers did.

“People who speak Russian as the first language are less prone to seeking out expert opinions than Estonians, while they save more often,” Liisi Kirch, coordinator for financial wisdom with the Ministry of Finance, said. Russian schools have mostly received translated versions of Estonian study aids that do not take into account cultural or methodological differences.

What is financial literacy?

Financial literacy means that young people understand where money comes from and where it is spent; can tell the difference between various types of loans, interest, know how to compare loans offered by banks and why it is necessary to start saving when you’re 18. “Once they start their own lives in the future, they will know to plan their finances instead of falling prey to irrational attitudes of spending all they’ve go,” Kirch said in terms of why these skills matter.