Sociological Perspective on Financial Literacy
Three assumptions underlying financial literacy programmes in OECD member countries are discussed from a sociological perspective. The first concerns a correlation between a lack of financial literacy and an unsatisfactory economic situation. The second a
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Sociological Perspective on Financial Literacy A Critical Examination of Three Assumptions Underlying Financial Literacy Programmes Caroline Henchoz Abstract Three assumptions underlying financial literacy programmes in OECD member countries are discussed from a sociological perspective. The first concerns a correlation between a lack of financial literacy and an unsatisfactory economic situation. The second assumes that financial literacy is essentially acquired via access to relevant information, instruction and advice, and the third concerns the existence of equal individual capacities and opportunities for mobilizing and translating that information and instruction into effective financial actions. With the help of literature on development, education and socialization from the fields of sociology and psychology, and of the results from a Swiss study, I attempt to demonstrate that these assumptions fail to take into account the “social embeddedness” (Granovetter 1985) of financial activities and of learning processes. Consequently, and although the OECD literacy programmes are intended to provide relevant information and instruction, this is not sufficient to fully empower citizens, and particularly those in precarious financial situations. The said programmes do not address the capabilities (Sen 1985) for converting the information or the instruction obtained into financial competency or into financial well-being. To achieve that objective, financial literacy programmes must become anchored in the relevant social and relational framework, which means they must develop an educational approach going beyond individual skills and shortcomings.
Keywords Education Finance Economy Rationality
Literacy Learning process Switzerland
C. Henchoz (&) Domaine Sciences des sociétés, des cultures et des religions, Département des sciences sociales, Université de Fribourg, Bd de Pérolles 90, 1700 Fribourg, Switzerland e-mail: [email protected] © Springer Science+Business Media Singapore 2016 C. Aprea et al. (eds.), International Handbook of Financial Literacy, DOI 10.1007/978-981-10-0360-8_8
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Introduction
At the beginning of the twenty-first century, the financial crises and the increasing sophistication of financial markets convinced the Organization for Economic Co-operation and Development (OECD) Council that households needed financial education in order to assume “the responsibility and risk for financial decisions, especially in the field of retirement savings” (OECD 2005b: 2). In the context of the retirement of the baby boom generation, which is associated with changes in pension policies and increased life expectancy, financial education is seen as beneficial to “consumers of all ages and income levels” (OECD 2005a: 12). It can provide tools for budgeting, saving and making “wise investment choices” and also benefit the economy by “positive effects on both investment levels and economic growth” (OECD 2005a: 13). In June 2012, G20 leaders recognized the importance of financial literacy and
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