09 SES 07 B, Creativity Development, Cognitive Styles and Financial Literacy
In modern economies, the ability to reasonably deal with financial matters is becoming increasingly important—not just for professionals in the sector of investment and banking, but for every person responsible for managing his or her financial affairs in everyday life. This ability can be subsumed under the term ‘financial literacy’ (Aprea et al., 2016).
Financial literacy is of particular importance due to recent developments, e.g. the past economic and financial crisis as well as the recent debt crisis of many European countries. On an individual level, private over-indebtedness stresses the importance of the topic. Looking at the group of adolescents and young adults, almost 15% of them are indebted. As the main reason for over-indebtedness in adults under 25 years, uneconomic budget management could be identified.
Apart from that, there are political, social and economic changes that demand better financial literacy. For instance, there is an increasing need for private insurances for life crises and for a private pension scheme due to the demographical change and the continuing withdrawal of many states from social security systems. Such far-reaching changes cannot be met by informal knowledge transfer in every-day life and socialization in the family any more. The focus shifts to formal education, e.g. at schools. However, to be able to successfully implement financial education in schools, qualitatively good data are necessary to decide about the status quo of financial literacy of young adults.
Objectives and research question:
Unfortunately, there is a deficit in high quality instruments and measurement approaches. The existing ones are mostly limited (Aprea & Wuttke, 2016). This calls for an alternative method to measure financial literacy. The study at hand tries to fill this gap with a newly developed questionnaire. The aim was to develop an instrument that reliably and validly collects data about financial literacy in adolescents and young adults and to gain knowledge that helps to implement financial education in the school context and successfully teach it to young people.
The developmental activities were based on a competence-oriented view of financial literacy defined as the potential that enables a person to effectively plan, execute, and control financial decisions. As such, it is based on the availability of individual dispositions—that is, knowledge and skills, motivations and interests, attitudes and values—and contingent on situational characteristics (e.g., Weinert, 2001). To further elaborate our view and to define facets of financial competence, an extensive literature review as well as a preparatory study was conducted. This study, which included expert interviews with international stakeholders in the field of finance and youth education, lead to nine financial competence facets (for details see Leumann et. al. 2015). In the remainder of this proposal we wil focus on the individual cognitive facet “planning and managing financial matters of the every-day life” with three central sub-facets, namely “judging the own income”, “planning expenses” and “planning and monitoring a budget”.
According to Shavelson (2012), the assessment of competence as described above requires a measure that is able to tap complex abilities and skills, and to make them observable through a common, preferably standardized set of tasks that simulate the performances that are expected to be enacted in the real-world situations and to which inferences of competence are to be drawn. We therefore adopted a situational judgment test approach.
References Aprea, C. & Wuttke, E. (2016). Financial literacy of adolescent and young adults: setting the course for a competence-oriented assessment approach. In C. Aprea, E. Wuttke, K. Breuer, N.K. Keng, P. Davies, B. Greimel-Fuhrmann & J. Lopus (Eds.), International Handbook of Fi-nancial Literacy (397-414). Singapore: Springer. Aprea, C., Wuttke, E., Breuer, K., Keng, N.K., Davies, P., Greimel-Fuhrmann, B. & Lopus, J. (2016). Financial literacy in the twenty-first century: An introduction to the International Handbook of Financial Literacy. In C. Aprea, E. Wuttke, K. Breuer, N.K. Keng, P. Davies, B. Greimel-Fuhrmann & J. Lopus (Eds.), International Handbook of Financial Literacy (1-4). Sin-gapore: Springer. Leumann, S., Heumann, M., Syed, F. & Aprea, C. (2016). Developing a comprehensive finan-cial literacy framework: Voices from stakeholders in European Vocational Education and Training. In E. Wuttke, J. Seifried & S. Schumann (Eds.), Research in Vocational Education and Training. Opladen: Barbara Budrich Ray, J. & Najman, J. (1986): The Generaliziability of Deferment of Gratification. Journal of Social Psychology, 126, 117-119. Shavelson, R. J. (2012). ‘Assessing business-planning competence using the Collegiate Learn-ing Assessment as a prototype’. Empirical Research in Vocational Education and Training, 4(1), pp. 77–90. Weinert F.E., 2001. Concept of competence. In: L. H. Salganik (ed.) Defining and selecting key competencies. Seattle: Hogrefe, pp. 45-65 Whetzel, D.L. and McDaniel, M.A. (2009). ‘Situational judgment tests: An overview of current research’. Human Resource Management Review, 19, pp. 188-202.
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