Few obtain high scores for financial literacy

By Andrew Rickard | March 28 2016 11:34AM

In a study conducted by Statistics Canada, only 22% of men and 15% of women were able to provide correct responses to five key financial literacy questions related to interest, inflation, and risk diversification.

Statistics Canada has released the results of a study that looked at financial literacy levels in Canada in 2014. In Gender Differences in the Financial Knowledge of Canadians author Marie Drolet, a senior researcher with Statistics Canada’s labour statistics division, notes that men obtained an overall score of 62% and women obtained an average result of 59% on the 14 question quiz.

Statistically significant difference

"Although relatively small, the difference between women and men was statistically significant," she writes. "However, women were less likely than men to correctly answer specific questions related to inflation (58% versus 69%) and risk diversification (38% versus 45%)."

The study also found that those with higher levels of education and income performed better on the test. While the average quiz score for high school graduates was 53.9%, those who had been to university had an average result of 72.6%. Those in the bottom income quartile obtained an average grade of 57.9%, while people in the top income quartile scored an average of 74.8%.

Positive financial behaviours

"Empirical evidence suggests that there is a link between financial knowledge and positive financial behaviours and economic outcomes — those with more financial knowledge are more likely to undertake retirement planning and those who plan tend to accumulate more wealth, while those with lower levels of financial knowledge tend to borrow more and accumulate less wealth, and report excessive debt loads, and are more likely to borrow against pension accounts," concludes the article.