German students outperform US peers on financial literacy test | Nebraska today

Welcome to Pocket Science: an overview of recent research by Husker scientists and engineers. For those who want to quickly learn the “What”, “So what” and “Now what” of Husker research.


Between earning, renting, buying, insuring, saving and investing, most adults need a foundation of financial literacy on which to build a life. The digitization of fiat currency, the pressures of retirement planning, and the emergence of cryptocurrencies only add to the importance of choosing the right path in the modern financial landscape.

So what?

William Walstad from Nebraska teamed up with Andreas Kraitzek and Manuel Förster from the Technical University of Munich to compare American and German approaches to educating young people about personal finance and examine the results of this education.

One of the commonalities between the two countries, the team concluded, is their lack of a federal, centralized approach to financial literacy education. Both countries generally delegate decisions about the financial program — what it contains and how it is dispensed, if it is dispensed at all — to individual states. While this lack of regulation has resulted in a myriad of approaches to teaching financial literacy within and between the two countries, researchers have found reasonable overlap in the actual content taught to teens and young adults.

But major differences materialized when the team analyzed data from the financial literacy multiple-choice test, specifically responses from 1,218 US high school students and 1,108 first-year college students in Germany. On the one hand, German students seemed to differentiate between the three facets of personal finance – banking, day-to-day money management and insurance – to a greater extent than WE students, who were more likely to cognitively group domains together. They also surpassed their WE counterparts in all three areas, particularly in financial management and insurance. On average, German students answered 9% more questions correctly across the entire test.

American students showed a better understanding of factors influencing credit scores, which may reflect the greater influence of credit scores on interest rates in the United States, the researchers said.

Now what?

While slight differences in age and life experience may explain some of the disparities in knowledge, these disparities likely also stem from cultural distinctions that future studies would do well to investigate, the team said. A closer look at the test data could also reveal country-specific misconceptions about personal finance.