OeNB Report 2024/13: International Survey of Adult Financial Literacy 2023: first results for Austria

Valentin Voith and Maximilian Zieser ¹

Enhancing financial literacy through large, coordinated efforts has become a policy priority for many countries worldwide. While the concept of financial literacy was initially regarded as a skill necessary to make sound financial decisions in one’s best interest, the 2008 financial crisis highlighted the crucial role of consumer financial literacy in ensuring financial stability (Pinto, 2016). Recent events such as the COVID-19 pandemic and Russia’s invasion of Ukraine have introduced high inflation rates paired with high interest rates, making the cost of living a major concern for a considerable proportion of households. At the same time, the financial sector has been gripped by an even more extensive wave of digital transformation, both through the mainstreaming of digital banking and investing and through technological advancements such as generative artificial intelligence.

The ever-changing economic and financial landscape thus constantly brings about new challenges policymakers need to address. Indeed, pivotal global developments, the increasing complexity of a globalized economy and a highly digitalized financial sector demand the constant evolution of financial literacy and financial education in theory and practice, while still building on a solid basis of timeless financial principles. Advancements in the field, such as the continuous refinement of the concept of financial literacy, new ways of teaching, the recognition of financial well-being as the ultimate goal of financial literacy (e.g. ANZ, 2021; CFPB, 2015; OECD, 2022a) and a heightened focus on digital financial literacy (e.g. Morgan et al., 2019), reflect the constant efforts to meet this demand.

In 2021, Austria adopted its first national financial literacy strategy. Led by the Austrian Ministry of Finance, the initiative follows a nation-wide coordinated approach to bring together public, nonprofit and private stakeholders with expertise and interest in financial literacy (OECD, 2021). In these efforts, the Oesterreichische Nationalbank (OeNB) takes a leading role in the respective decision-making bodies, making contributions based on its core competencies, such as monetary policy and price stability, as well as on its expertise in financial literacy research and education. The main goals of the national financial literacy strategy for Austria are preventing overindebtedness especially among the young, promoting long-term planning for sustainable financial well-being as well as improving access to high-quality financial education while constantly considering gender balance, digital transformation and environmental sustainability.

Besides increased efforts to foster financial literacy, special attention is also being given to the evaluation of education programs and their outcomes (OECD, 2022a). Indeed, Austria’s financial literacy strategy is characterized by a strong commitment to evidence-based policymaking, including evaluation efforts both of the overall national strategy and individual financial education measures. However, improving the financial literacy of a population requires, above all, the accurate identification of strengths and weaknesses by precisely and repeatedly measuring current financial literacy levels.

In this context, the International Survey of Adult Financial Literacy (ISAFL) of the Organisation for Economic Co-operation and Development/International Network on Financial Education (OECD/INFE) and the corresponding Austrian Survey of Financial Literacy (ASFL) represent a unique opportunity to gage financial literacy and related concepts on the national and the international level. This report presents the first results of the ASFL conducted in 2023 among a representative sample of Austrian residents and compares them to the available international results of the 2023 ISAFL.

The main findings of this report can be summarized as follows:

• Among the 40 countries participating in the 2023 ISAFL, Austria achieved financial literacy results that were high above the international average in terms of financial knowledge, financial behavior and financial attitudes.

• Compared with 2019, Austria again posted a statistically significant increase in financial knowledge.

• By international comparison, Austria’s resident population exhibited high financial knowledge with regard to basic questions. However, half of the population was found to struggle with understanding compound interest.

• People living in Austria generally appear to be in control of their day-to-day finances. Only little more than half of the population, however, reported setting long-term financial goals. This potential lack of future-orientation is further reflected in financial attitudes, as only about one-half of respondents indicated that long-term plans took priority over short-term gratification.

• High financial literacy is associated with holding a larger number of financial product types. Generally, holding credit or investment products shows a positive correlation with financial literacy. However, for consumer and microfinance loans, the relationship is reversed.

• The financial knowledge score exhibits a gender gap conditional on age, with young women, in particular, obtaining lower scores than young men.

• In digital financial literacy, Austria ranks midfield by international comparison. Interestingly, in Austria, digital financial literacy does not appear to be correlated with the use of sophisticated digital financial services or the overall number of digital financial services used.

• With regard to financial literacy, Austria also ranks high in terms of financial well-being.

• In Austria, age appears to be one of the strongest predictors of financial well-being, with respondents over the age of 74 scoring almost twice as high as respondents under the age of 25.

• Financial well-being exhibits a gender gap, with women indicating lower financial well-being than men.

• Overall, financial literacy is significantly and positively associated with financial well-being.

• While financial knowledge appears to be an important driver of financial well-being for individuals from medium-income households, prudent financial behaviors have a particularly strong effect for people with low incomes.

The remainder of this report is structured as follows: Section 1 provides background information on the ISAFL and ASFL. Sections 2 to 4 are each dedicated to one of the concepts measured by the ASFL/ISAFL in line with the OECD Toolkit, namely financial literacy , digital financial literacy and financial well-being . In each of these sections, we conduct cross-country comparisons as well as detailed analyses of the results specific to Austria. In addition to univariate analyses, we also investigate the relationships between variables of interest across various sociodemographic groups to identify bi- and multivariate associations. Additionally, we include a brief exploration of how a concept is related to important contextual factors besides sociodemographics concerning the personal financial situation, e.g. financial product holding. Finally, we conclude the report by summarizing results and deriving general policy recommendations to foster financial literacy and well-being in Austria. Annex A presents results from additional analyses. The survey questions in English and German can be found in annex B.

1 The OECD/INFE International Survey of Adult Financial Literacy

Given that it is regularly conducted in many countries around the world, the International Survey of Adult Financial Literacy (ISAFL), coordinated by the OECD’s International Network of Financial Education (INFE), is one of the most comprehensive efforts to measure financial literacy that is aimed at informing policymaking. Despite certain limitations, the primary benefit of such standardized financial literacy surveys lies in their capacity to enable both cross-country comparisons and longitudinal assessments (within countries) if the surveys are conducted repeatedly.

The ISAFL has been conducted three times since 2014. In 2023, the ISAFL counted 40 participating countries (including Austria) from Europe, Asia, South America and the Middle East (OECD, 2023). It was conducted in 21 of the 27 EU member states and in 20 of the 38 OECD member states. Notably absent are most of the OECD’s English-speaking countries, namely Australia, Canada, New Zealand, the United Kingdom and the United States. These countries, among others, typically measure financial literacy in national assessments or other international efforts, frequently relying on the concept of financial capability (see, e.g. Financial Consumer Agency of Canada, 2019; Lin et al., 2022; Money Advice Service, 2018) instead of financial literacy, with a varying degree of overlap between the two concepts.

Since its inception, the ISAFL has measured financial literacy as a combination of financial knowledge, financial attitudes and financial behaviors, with a distinct set of questions covering each of these components. While the financial knowledge score indeed relies on a set of knowledge questions with right or wrong answers, the other two scores rely on self-assessment or agreement to statements. These questions have remained largely unchanged since 2014, thus allowing longitudinal comparisons over time. Responding to recent developments in the field, the 2023 ISAFL was the first to also include an independent digital financial literacy score and a financial well-being score (OECD, 2022b, 2023).

The ISAFL joins the ranks of several other efforts to assess financial literacy levels internationally. For example, a recent Eurobarometer survey assessed levels of financial literacy, resilience and inclusion in the 27 EU member states (European Commission, 2023). In 2014, the Standard & Poor’s Ratings Services Global Financial Literacy Survey was conducted in 143 countries as part of the Gallup World Poll Survey (Klapper et al., 2015). While goals and content of these international surveys are similar, they differ from the ISAFL in key aspects concerning the participating countries, the operationalization of financial literacy in specific questions and score calculations, as well as sampling and interview methods. Thus, despite strong similarities on the surface, results of these surveys are not directly comparable.

The Austrian Survey of Financial Literacy (ASFL) is Austria’s contribution to the ISAFL. It is the only international survey of financial literacy that is conducted regularly in Austria. As in the previous two waves ² , the OeNB was responsible for ASFL data collection and analysis also in 2023 and carried out the survey based on the OECD/INFE Toolkit (OECD, 2022b). The ASFL target population are individuals with a private address in Austria, aged 16 or older, irrespective of their citizenship. Data for the ASFL 2023 were collected between August 21, 2023, and December 17, 2023, as part of the OeNB Barometer survey.

To ensure representativity by minimizing different types of bias, elaborate sampling and weighting methods were employed, resulting in population weights that combine design, nonresponse and post-stratification weights. An in-depth view of the data collection process of the ASFL 2023 wave including a detailed description of sampling techniques and weighting methods applied can be found in the methodological notes on the OeNB Barometer (Voith and Zieser, 2024).

Using a mixed-mode approach combining personal and online interviews, the ASFL 2023 yielded 1,414 observations in total, consisting of 987 computer-assisted personal interviews (CAPIs) and 427 computer-assisted web interviews (CAWIs). Exclusively for the purpose of cross-country comparison and in line with the guidelines of the OECD/INFE Toolkit, the target population and, consequently, the sample was restricted to individuals aged between 18 and 79, leading to a reduced sample size of 1,317 observations. Apart from cross-country comparisons, i.e. for all detailed analyses of the Austrian sample, the total sample of 1,414 individuals aged 16 and older was used.

2 Financial literacy

The OECD/INFE defines financial literacy as “a combination of financial awareness, knowledge, skills, attitudes, and behaviours required to make sound financial decisions and ultimately achieve individual financial well-being” (2020c, p. 6). In line with this definition, the OECD/INFE Toolkit (OECD, 2022b) used for the ISAFL distinguishes three components of financial literacy: financial knowledge, financial behavior and financial attitude.

To measure these components, each survey participant was asked several specific questions. Responses were used to calculate scores for each participant, with a higher score indicating a stronger degree of financial knowledge, behaviors or attitudes considered necessary or beneficial for long-term financial well-being. The OECD/INFE Toolkit (OECD, 2022b, p. 39–44) explains in detail how scores for the three components are calculated. The exact set of German-language questions used in the ASFL and the original English questions from the OECD/INFE Toolkit can be found in annex B.

As is typical for international measurement exercises, it is difficult for questions and scores to measure complex constructs validly, reliably and fairly across many countries without compromises. It is thus important to point to the potential drawbacks of the measurement approach used in the ISAFL/ASFL to make explicit how conceptual and operational choices affect eventual outcome and to avoid a misinterpretation of results.

First, the questionnaire tests the components of financial literacy only on a basic level, neither requiring expert knowledge nor special skills. This means that a high financial literacy score indicates a basic understanding of fundamental financial concepts as well as the application of financially prudent everyday behaviors as opposed to exceptional abilities. In the financial knowledge score, in particular, this is also reflected in severe ceiling effects, with a large proportion of people living in Austria reaching the maximum of seven points. This may affect the sensitivity of the instrument in detecting differences among population groups. In future ISAFL/ASFL waves, more advanced questions might thus be useful to further discern financial literacy levels.

Second, financial behavior and attitude scores rely entirely on self-reporting. There is thus no external verification of whether respondents actually apply behaviors or have attitudes as indicated. This might be problematic especially as being financially prudent may be considered socially desirable, which may bias reports of such behaviors (for discussions on the social desirability bias, see e.g. Krumpal, 2013; Tourangeau and Yan, 2007). Moreover, financial literacy itself may influence the accuracy of reports on one’s own financial situation (see Madeira and Margaretic, 2022). Responses may also be biased systematically across borders or between cultural or socioeconomic groups (see Lacko et al., 2022; Teh et al., 2023).

Third, it is unclear how the three financial literacy components are intended to interact with each other to constitute financial literacy. In contemporary studies on financial well-being, financial knowledge and financial attitudes are regarded as determinants of financial behaviors (see e.g. ANZ, 2021; Hwang and Park, 2023). In the ISAFL, however, the three components can be regarded as (arbitrarily) weighted formative indicators of the latent construct of financial literacy, where each component focuses on different types of individual characteristics. However, components also appear to capture different content dimensions. For example, the knowledge component appears to focus more strongly on concepts related to investment decisions, whereas the behavior component appears to focus on day-to-day money management.

While we do not conduct in-depth analyses of relations between the three components, we indeed find modest correlations only between financial behavior and financial knowledge ( r = 0.20) as well as between financial attitude and financial behavior ( r = 0.22) but not between financial attitude and financial knowledge ( r = 0.06). We thus report detailed results on all three components as well as on potential differential relationships with financial well-being. For a detailed analysis of the relationships between the financial literacy components of knowledge, attitudes and behavior based on Austrian data from the 2014 ASFL wave, see Fessler et al. (2020).

2.1 Cross-country comparison of financial literacy results

In this subsection, we use the financial literacy scores for comparisons across countries that participated in the 2023 ISAFL. The OECD/INFE already performed the same analysis in their official report of the 2023 ISAFL (OECD, 2023). Since the Austrian data could not be submitted to the OECD/INFE early enough, they are not included in the report. We therefore add the Austrian data to the existing cross-country comparisons as reported by the OECD to expand the number of countries and benchmark the Austrian results. For the sake of legibility, we rank countries from the highest to the lowest score for the respective financial literacy indicator. However, although the OECD/INFE Toolkit ensures a certain uniformity in the approach to measuring and data collection, there are substantial differences concerning the sampling period, sampling design, survey mode and other methodological aspects such as weighting that affect the presented values. ⁵ As the population intended for international comparisons consists of individuals aged 18 to 79, the ASFL sample has been reduced accordingly.

Chart 1 shows the average overall financial literacy score consisting of the three component scores for financial knowledge, financial behavior and financial attitude. With an average financial literacy score of 72 out of 100, Austria ranks very high among the 40 participating countries. Only Germany, with an average score of 76, exhibits higher financial literacy levels. Also reaching above 70% of the maximum average score, Thailand, Hong Kong (China) and Ireland are among the top nations as regards financial literacy. Within the EU, there is considerable heterogeneity regarding financial literacy scores: While the populations of most other EU member states also tend to perform well or at least around the OECD average, Lithuania, Cyprus, Romania and Italy lag behind with scores between 53 and 56.

Considering the components of financial literacy individually, chart 2 compares financial knowledge across countries, showing the proportion of respondents who answered at least five out of seven financial knowledge question correctly. Overall, we find that countries displaying a high average financial literacy score also have a higher proportion of adults who reach what the OECD/INFE defines as the “minimum target score” for financial knowledge. Therefore, Hong Kong (China), Germany and Austria again are at the top of the field. Still, there are some countries that rank high on the financial literacy score but rank comparatively low in terms of financial knowledge and vice versa, showing a certain disconnect between financial knowledge and the other components. Notably, Hungary and Cyprus, despite a low average financial literacy score, have a comparably high share of people with at least basic financial knowledge.

In a similar way, chart 3 examines financial behavior, where the “minimum target score” is defined as reporting six out of nine financially prudent behaviors that make up the financial behavior score. Again, we find countries that displayed high financial literacy scores leading in this statistic, again with some discrepancy between the rankings, i.e. populations with comparably high financial knowledge do not necessarily apply financially literate behaviors to the same extent. With two out of three persons reporting at least six behaviors, such as saving, budgeting or shopping around, Austria ranks considerably above average.

2.2 Financial literacy results in detail

We now turn to the results of the ASFL 2023 and examine financial literacy in Austria in more detail. Since the ASFL was conducted for the third time in 2023 and its measurement approach has remained sufficiently consistent ⁶ , we can make longitudinal comparisons of financial literacy scores and their items to learn how financial literacy levels in Austria developed over the last decade. However, this comparison should be treated with caution as some changes in data collection and weighting were made between the 2023 ASFL wave and previous waves, which is likely to lead to systematic deviations. ⁷

Chart 4 presents the average financial literacy score for Austrian residents aged 16 and older, showing each component for the years 2014, 2019 and 2023. It is evident that financial literacy scores in Austria were at a consistently high level over these years, ranging from 67 in 2015 and 2019 to 72 in 2023. For the current wave, we can observe a statistically significant increase in financial literacy compared with 2019, which can largely be attributed to respondents’ better performance in financial knowledge. ⁸ Starting with a value of 4.8 in 2014, the average financial knowledge score for Austria increased to 5.3 in 2019 and reached 5.8 in 2023. The remaining two components, financial behavior and attitude, remained rather stable over the years and show no statistically significant variation once controlled for survey mode and sample composition.

The changes in the distribution of financial knowledge scores between the ASFL 2014, the ASFL 2019 and the ASFL 2023 are depicted in chart 5. Less than 20% of respondents were able to reach the maximum financial knowledge score in 2014, almost 30% did so in 2019, however, and over 40% in 2023. Conversely, the proportion of respondents scoring less than five points, which the OECD/INFE defines as the minimum target, shrank from one-third in 2014 to one-quarter in 2019 and then again to one-sixth in 2023. Additional regression analyses presented in chart A2 in annex A reveal that respondents scored significantly better for all financial knowledge questions than in 2019. The difference becomes even more pronounced when controlling for survey mode and sociodemographic characteristics, which is mainly due to CAPI respondents obtaining higher scores than their CAWI counterparts. Therefore, it is highly unlikely that the observed improvement is due to sample composition or mode effects.

The further improvement in financial knowledge among Austrian residents may be attributed to several factors beyond the scope of the survey. Two explanations already discussed by Fessler, Jelovsek and Silgoner (2020) come to mind. First, financial knowledge may have improved due to an increasing salience of economic topics in the news media, exemplified lately by coverage on the euro area inflation rate. Such widespread coverage may have facilitated informal learning about the core characteristics of inflation and may have increased interest in economic and financial topics among the population.

Second, the intensification of policymaking efforts and the proliferation of financial education initiatives in Austria over the last four years might begin to show first effects. The national financial literacy strategy for Austria was implemented in 2021 as a nation-wide coordinated approach to fostering financial literacy. Currently, it comprises about 140 individual measures, more than 30 of which are provided by the OeNB. Taken together, these measures reach tens of thousands of people each year through workshops and e-learning modules. Apart from the fact that it is generally difficult to reliably attribute causal effects in natural settings, the ASLF 2023 itself cannot provide any empirical evidence for either of the above explanations.