International Review of Economics Education 16 (2014) 22–38

Contents lists available at ScienceDirect

International Review of Economics

Education
journal homepage: www.elsevier.com/locate/iree

Comparison of financial literacy between Korean

and U.S. high school students§
Kyungho Jang a,1, Jinsoo Hahn b,*, Hyung Joon Park c,2
a
Department of Social Studies Education, Inha University, Yonghyeon-dong, Nam-gu, Incheon 402-751,
Republic of Korea
b
Department of Social Studies Education, Gyeongin National University of Education, 155 Sammak-ro,
Manan-gu, Anyang-si, Gyeonggi-do 430-739, Republic of Korea
c
Department of Social Studies Education, Sungshin Women’s University, 2 Bomun-ro 34da-gil, Seongbuk-gu,
Seoul 136-742, Republic of Korea

A R T I C L E I N F O A B S T R A C T

Article history: This study looks into the financial literacy between Korean and U.S.
Received 6 November 2013 high school students. The mean scores for Korean students fell
Received in revised form 14 June 2014 between those for U.S. students with and without FFFL, but much
Accepted 11 July 2014
closer to those with FFFL. Korean students tended to be stronger in
Available online 22 July 2014
such contents as ‘‘earning income.’’ A comparison of financial
literacy based on the Bloom’s cognitive level indicates that Korean
JEL classification: students showed relatively strong financial literacy at the cognitive
A21
level of knowledge, but weak financial literacy at higher cognitive
A22
levels of comprehension and application.
I21
ß 2014 Elsevier Ltd. All rights reserved.
Keywords:
Financial literacy
Financial education
International comparison
Financial fitness for life
Translation bias
Curriculum

§
We thank William B. Walstad and Ken Rebeck for providing us with the U.S. data. We are also indebted to William
Bosshardt, Seunghae O, and seminar participants at the 2013 Conference on Teaching & Research on Economic Education in
Chicago, Illinois, for their helpful comments. All errors and omissions remain the sole responsibility of the authors.
* Corresponding author. Tel.: +82 31 540 6221; fax: +82 31 540 6229.
E-mail addresses: kjang@inha.ac.kr (K. Jang), js.hahn@hotmail.com (J. Hahn), hjoon@sungshin.ac.kr (H.J. Park).
1
Tel.: +82 32 860 7861; fax: +82 32 876 7859.
2
Tel.: +82 2 920 7225; fax: +82 2 929 9376.

http://dx.doi.org/10.1016/j.iree.2014.07.003
1477-3880/ß 2014 Elsevier Ltd. All rights reserved.
 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38 23

1. Introduction

Financial literacy has received increasing attention worldwide because financially literate
individuals are more likely to make rational decisions as consumers, investors, and savers, which in
turn can facilitate sustainable economic growth. Many countries have addressed financial literacy by
implementing various initiatives (Orton, 2007). Despite being a latecomer, Korea has also emphasized
the public’s financial literacy.
Korea has witnessed a rapid change in its economic system since the East Asian economic crisis of
1997. Globalization and the opening of its financial market have been occurring at an increasingly
rapid pace. On the one hand, this has provided the Korean economy with new opportunities, but on the
other, it has seriously burdened those lacking sufficient financial literacy. According to the Financial
Supervisory Service, as of 2003, Korea had an estimated number of 3.7 million individuals with credit
delinquency (10.0% of the total population aged 15 and over) because they generally lacked the ability
to respond effectively to rapidly changing environments and thus overused their credit cards or
consumed more than they could afford. The number fell to 1.2 million at the end of 2012 due to the
government’s relief policies.
Korea’s growing income inequality has been another serious social issue arising from the widening
economic gap between those with the ability to take advantage of new opportunities afforded by
globalization and open financial markets and those without. For instance, Korea’s Gini coefficient
published by Statistics Korea, which was 0.245 in 1992, increased sharply to 0.288 by the end of the
1997 economic crisis and did not show any improvements even in the 2000s, increasing to 0.295 in
2009 (see Fig. 1). The income quintile share ratio of the highest 20% to the lowest 20% showed a similar
trend, peaking at 4.97 in 2009.
Korea implemented a reinforced financial education program to improve the public’s financial
literacy as a possible solution for the country’s income inequality, which has been driven in part by the
financial literacy divide, as well as for sustainable economic growth.3 For instance, the economics
education curriculum was revised in 2009 to incorporate finance into the economics course for high
school students for the first time, and in 2010, the Financial Supervisory Service (2010) developed
standards for personal finance.4 In this regard, measuring Korean students’ financial literacy and
comparing it with that observed in other countries should yield important implications for the
successful implementation of the new curriculum and the development of an effective promotional
strategy. The OECD (2012) stated the following:

Policy makers, educators and researchers need high quality data on levels of financial literacy in
order to inform financial education strategies and the implementation of financial education
programs in schools by identifying priorities and measuring change across time. . . . However,
there are currently very few data on the levels of financial literacy amongst young people under
the age of 18, and none that can be compared across countries. This is a serious omission (pp.
10–11).
Although many studies have been conducted in the U.S. to measure the financial literacy of various
groups of individuals including high school students, college students, and even adults, there are no
reliable data from Korea concerning this matter. According to the 2008 national Jump$tart survey
(Mandell, 2008a), which measured the financial literacy of U.S. high school and college students, the
mean score for high school seniors decreased from 52.4% in 2006 to 48.3% in 2008, whereas financial
literacy scores were higher for college students (59% for freshmen and 65% for seniors). Volpe et al.

3
The Bank of Korea (2013) conducted a research looking into the financial knowledge, behavior, and attitude of Korean adults
according to the method proposed by the OECD INFE (International Network on Financial Education). Consequently, they found
that those with higher incomes and better education, the middle-aged than the young, metropolitan residents, and salaried
employees than the self-employed had a relatively higher financial literacy. On the other hand, a report of the Financial
Supervisory Service (2011) stated that Koreans’ low financial competency contributed to the deepening of the financial crisis,
and that it is not an exaggeration to say that such low financial competency can be expressed as ‘financial illiteracy’ (p.1).
Furthermore, this report pointed out that individuals’ lack of financial literacy was the cause of financial exclusion and poverty
while arguing for the need to strengthen financial education in Korea (p.11).
4
The report for standards for personal finance is available in Korean at http://edu.fss.or.kr or from authors upon request.
24 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38

0.350 6.00
Gini Quinle

0.295 0.289
0.300 0.288
5.00
0.245 4.97 4.82
0.250 4.62

4.00
0.200

3.52
0.150 3.00
1990 2000 2010

Fig. 1. Income inequality in Korea. Note: ‘‘Gini’’ and ‘‘Quintile’’ denote the Gini coefficient and the income quintile share ratio,
respectively.
Source: Statistics Korea (http://kostat.go.kr).

(1996) and Chen and Volpe (1998) measured the financial literacy of college students and reported
that they did not have adequate knowledge of personal investment nor ability to make informed
decisions.
Mandell (2008b), by conducting tests to examine the financial literacy of high school students
every other year since 1997, found that students from families with greater financial resources tended
to be more financially literate than those from families that were less well-off, thereby widening the
economic inequality between families. In addition, Lusardi and Mitchell (2011) reported that the
financial literacy was particularly low among the young, women, and the less educated, and that all
groups were likely to rate themselves as relatively well informed in terms of financial matters
regardless of their actual performance in answering relevant questions. Hilgert et al. (2003) measured
the money management ability of households and found that credit management, saving, and
investment practices were positively linked to their financial knowledge. Lusardi and Mitchell (2008)
found that older women in the U.S. had very low levels of financial literacy and that a large majority of
women had not done any retirement planning calculations. Moore (2003) reported that the
respondents of Washington State of U.S., who had large predatory loans, had significantly lower levels
of financial knowledge compared to those of the general population.
Financial literacy has been an important issue in other countries, too. For example, Atkinson et al.
(2006) explored the financial literacy of individuals in the U.K. and found that those who were young
or with lower income scored below average in all domains of financial capability such as managing
money, planning ahead, choosing products, and staying informed. van Rooij et al. (2011) found that
very few Dutch investors knew more than basic concepts and that those with low literacy were much
less likely to invest in stocks. ANZ Bank (2011) conducted the fourth survey of adult financial literacy
and found that Australian people who were relatively young, with no formal post-secondary
education, with relatively low levels of income and assets, and females had lower levels of financial
literacy.
Compared to aforementioned country-specific literatures, studies on international comparison of
financial literacy have been relatively rare with only some recent exceptions. Borodich et al. (2010)
compared the financial literacy of students in the U.S., Belarus, and Japan to find that Japanese
students outscored all others and that American students scored higher at the application level. They
also showed that students of three countries commonly demonstrated their highest achievement in
the category of ‘‘earning income’’ and lowest in ‘‘saving.’’ Atkinson and Messy (2012) surveyed
financial knowledge, behavior and attitudes of students in the 14 countries by using a tool developed
by the OECD International Network on Financial Education. They found that the financial literacy of
Czech Republic, Germany, Hungary, Ireland, Norway, Malaysia, Peru, the UK and British Virgin Islands
were above average among the participating countries.
 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38 25

Despite the fact that there have been previous studies regarding the measurement of Korean
students’ financial literacy, to the best of our knowledge, attempts to compare it with those of other
countries have been absent so far. Hence, this study aims to mitigate the lack of literature by
comparing financial literacy between Korean and U.S. high school students. Our study maintains the
following research questions: what is the level of Korean high school students’ financial literacy? Is
there any difference in the level of financial literacy between Korean and U.S. high school students?
What financial concepts or principles do Korean students lack in comparison to U.S. students?

2. Financial education in Korea

2.1. Korea’s education system and curriculum5

In Korea, students go through 6 years of elementary school, 3 years of middle school and 3 years of
high school. Korea’s compulsory education now ends at the middle school. Most students are required
to attend local elementary and middle schools. Following middle school, students can choose one of
several types of high schools: general, vocational, and special purpose schools. General high schools
for students who intend to enter a college or a university offer advanced general as well as elective
courses, which students select based on their desired university major. Special purpose high schools
provide more specialized courses. Roughly top 10% of students are able to attend a special purpose
high school through intense competition for entrance. Vocational high schools provide education
programs to be an occupational specialist in areas such as agriculture, fishery, technology, and
commerce. According to OECD data, 97% of Korean young adults complete high school.
Every school in the country has to follow a national curriculum framework developed by the
Ministry of Education. Students at the elementary or lower secondary level learn required common
and core subjects: Korean language, mathematics, English, ethics, social studies, science, music, fine
arts, PE and practical arts. In high school, elective courses are offered in addition to some core subjects.
Economics in the middle school curriculum is presented in social studies classes, from which a
couple of drawbacks may be pointed out. First, macroeconomics contents, generally regarded as
difficult for young students, are taught even in eighth grade. As a result, many middle school students
fail to understand macroeconomics principles, and further become disinclined to continue learning
economics in high school. Second, because social studies classes are not offered in high school,
students lack any form of economics or financial education at a precollege level unless they select
economics offered as one of the 10 elective subjects.6

2.2. Financial education in the curriculum

In Korea, the topic of personal finance was rarely included in a regular school curriculum until the
application of a revised national curriculum in 2009, when the Ministry of Education decided to add
personal finance to the economics curriculum, one of the 10 elective subjects offered in grades 11 and
12.7 The new high school economics textbooks consist of six chapters in which personal finance is
introduced as an independent chapter (see Table 1).8 Although one chapter is not enough to
sufficiently cover all issues surrounding personal finance, it has been regarded as a considerable
improvement in a crowded curriculum. The key content of the new chapter covers money, financial
systems, interest rates, financial institutions, income, spending, credit, debt, the management of
financial assets, financial investment, life cycles, and financial planning.
Despite such efforts to promote economics and finance in the education system, the achievement
of the goals set by the new curriculum has remained out of reach because of a sharp decrease in
enrollments in economics courses in schools in recent years. In 2008, about 122,000 high school
students (13.5% of all high school students in Korea) took economics courses, but only 88,000 (8.6%)

5
See Hahn and Jang (2010) or NCEE website (http://www.ncee.org) for more information on Korea’s education system.
6
Elective subjects offered for high school students include life and ethics, ethics and thoughts, Korean history, Korean
geography, world geography, East Asian history, world history, law and politics, society and culture, and Economics.
7
See Hahn and Jang (2010) for economics education at the precollege level in Korea.
8
Because these economics textbooks follow the national curriculum guidelines, they show only minimal differences in their
content and structure.
26 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38

Table 1
Revision of the national economics curriculum for Grades 11 and 12.

Before After

1. Economic life and problems 1. Economic life and problems

2. Market and economic activities 2. Roles of economic agents and their decision making
3. Rational choice of economic agents 3. Market and economic activities
4. National economy and business cycles 4. National economy
5. World market and the future of the Korean economy 5. World market and the Korean economy
6. Economic life and finance

Table 2
Standards for financial education at the precollege level.

Main category Subcategory

I. Finance and decision making 1. Rational financial life

2. Personal financial management
3. Financial service and consumer protection
II. Income and expenditure management 4. Budget
5. Earning income
6. Spending
III. Saving and investing 7. Saving
8. Investing
IV. Credit and debt management 9. Credit and loan management
10. Debt management
V. Risk management and insurance 11. Risk management
12. Insurance
13. Retirement planning
Source: Financial Supervisory Service (2010).

took them in 2012. This implies that about 90% of all Korean students miss out on the opportunity to
learn concepts of personal finance. Despite the incorporation of personal finance into the national
curriculum by the Ministry of Education, it is not easy to find key concepts and benchmarks for each
student level because the curriculum is too concise to specify financial concepts and benchmarks in
detail. To complement the national curriculum, the Financial Supervisory Service developed non-
mandatory curriculum standards for finance for grades 1–12 in 2010. These standards consist of 5
main categories and 13 subcategories (see Table 2). Each subcategory is followed by a rationale for its
inclusion and then benchmarks indicating recommended levels of attainment for elementary (grade
6), middle (grade 9), and high (grade 12) school students.

2.3. Efforts by organizations to improve financial literacy

The most powerful method for improving the financial literacy of youths may be to increase the
coverage of finance in the school curriculum by the Ministry of Education or to designate economics as
a mandatory subject. However, such efforts are not practical because the curriculum is already
crowded enough and there are many other competing subjects with the same goal. This indicates that,
in reality, it is difficult to allocate more time to finance in the regular curriculum.
In addition, many organizations have expressed concern over financial education. A national
survey conducted in 2012 reported that 168 organizations (56% of which were public organizations)
offered economic education programs (Korea Association of Economic Education, 2012). These
organizations reported that 12% of the 365 offered programs focused on financial issues and 32% on
mixed issues of economics and finance.9 This implies that their growing concern may help promote
Korean students’ education in finance through the implementation of various programs.

9
The number of programs was over-reported because the same program was subject to double-counting by organizations for
different education groups.
 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38 27

Nevertheless, many researchers have been skeptical about whether such programs can efficiently
cultivate the financial literacy of youths based on cost-benefit analyses. Three general concerns may
be raised against such efforts by organizations. First, in most cases, organizations simply offer either
finance-oriented camps for students or training programs for teachers for a short period of time, not
being able to implement systematic and comprehensive programs. Accordingly it is difficult to expect
improvements in the level of literacy over just a few hours of fragmentary and nonsystematic
education, although such programs may be better than nothing. Second, there is a lack of financial
expertise among participating organizations. Finance-oriented programs offered by organizations
tend to be managed and conducted by nonprofessional staff members, and those in charge of such
programs tend to be replaced frequently, preventing them from accumulating sufficient knowledge
and experience. Thus, in many cases, the effectiveness of programs and the quality of materials cannot
be verified. Finally, some (if not all) organizations, particularly private ones, focus more on promoting
themselves rather than on enhancing the financial literacy of students, who these organizations
identify as their potential future customers.

3. Methods

3.1. Test of financial fitness for life

Financial literacy is generally defined the ability to make appropriate decisions in managing one’s
personal finances. This definition encompasses wide domains of concepts: knowledge, behavior, and
attitudes. For the purposes of this study, we focus on financial knowledge: financial literacy is the set
of knowledge and skills that allows an individual to understand financial principles to make informed
and effective decisions. To measure financial literacy of Korean high school students and to compare
their results with those of U.S. students, this study uses questions in the ‘‘Financial Fitness for Life:
High School’’ (FFFL-HS) test.
The FFFL-HS test was developed by the Council for Economic Education (then the National Council
on Economic Education) as an assessment tool for measuring the performance of high school students
based on the FFFL curriculum for personal finance and economics (Walstad and Rebeck, 2005).10 The
test includes 50 questions consisting of 10 items in each of the five respective themes.
A total of 40 items were selected in this study for the following reasons: first, no official FFFL
curriculum has been adopted in social studies or economics in Korea, and therefore the test cannot be
used for assessing the achievement of students before and after lessons from the curriculum. In
addition, institutions and terms used in the Korean insurance market are quite different from those in
the U.S. market, and therefore, some items in the FFFL-HS test cannot be translated on a word-for-
word basis, rendering international comparisons meaningless. Accordingly, 5 items for assessing
students’ understanding of risk management and insurance were dropped (items 46–50). Second, 5
additional items were dropped for a more meaningful comparison of financial literacy between
Korean and U.S. students. If an item addresses a specific aspect of a country’s economic and financial
environment, then the percentage of correct responses may depend on the respondent’s personal or
cultural background, not on his or her understanding of economics and personal finance (Hahn and
Jang, 2012). For example, a personal check is not available in Korea, and therefore, it is not appropriate
to refer to it. In this regard, 2 items addressing country-specific attributes (i.e., financial institutions
and intermediaries) were dropped (items 34 and 44). In addition, 3 items were dropped to prevent a
potential bias from cultural differences (items 12, 17, and 43).

3.2. The sample

The Korean version of the FFFL-HS test was implemented in mid-March 2013 by employing a
sample of 1478 students in 40 high schools. As a data-cleaning process, the responses of those

10
‘‘Financial Fitness for Life: Teacher Guide’’ and ‘‘Financial Fitness for Life: Student Workouts’’ for grades 9–12 (Schug and
Morton, 2001) were published in 2001 by the Council for Economic Education, which did not provide a standardized test for
assessing high school students’ achievement.
28 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38

Table 3
Sample characteristics.

Korea U.S.

Characteristics Sample Characteristics Sample

w/FFFL w/o FFFL

Gender Gender
Male 812 (55.4%) Male 273 (52.1%) 167 (49.9%)
Female 652 (44.4%) Female 227 (43.3%) 151 (45.1%)
No response 3 (0.2%) No response 24 (4.6%) 17 (5.1%)
Type of community Type of community
Seoul 548 (34.7%) Urban 312 (59.5%) 56 (16.7%)
Metropolitan cities 681 (46.4%) Suburban 72 (13.7%) 155 (46.3%)
Other 238 (16.2%) Rural 140 (26.7%) 124 (37.0%)
GPA – – –
Above average 278 (19.0%)
Average 917 (62.5%)
Below average 264 (18.0%)
No response 8 (0.5%)
Total 1467 (100%) Total 524 (100%) 335 (100%)

Note: The GPA indicates the subjective grade reported by students.

students with test scores below 25% were examined, and those of 11 students who provided no
responses to more than half of the questions or made responses in a regular pattern were excluded.
After this process, 3.6% of the students still had scores below 25%, as shown in Table A1 of the
Appendix. However, they were not excluded from the sample as long as they showed no systematic
patterns to avoid any arbitrary selection. Table 3 shows the characteristics of the sample of 1467
students.
Although the students were randomly assigned, the sample consisted of more males (55.4%). The
students were asked about their GPA in the survey. Here their subjective report might not have been
consistent with their actual GPA, but it was assumed to be a good proxy for their grade. A majority of
the students (62.5%) thought that their grade was about average, whereas similar percentages of the
students reported above-average (19.0%) and below-average (18.0%) grades. As shown by Table 3 for
types of communities, 37.4% of the students resided in Seoul; 46.4%, in metropolitan cities; and 16.2%,
in other areas.
The students were asked whether economics was included in their school curriculum. More than
half (66.2%) stated that they could choose economics as an elective course among several subjects.
However, noteworthy is that the students were in grade 10 or 11. That is, none of these students have
taken economics yet because the assessment was conducted in March11 and the economics class was
offered to students in grade 11 or 12 as an elective course. Students in grade 11 were exposed to some
basic principles of economics covered in middle school social studies, but generally had not learned
personal finance because it is rarely included in social studies. This feature suggests comparing
financial literacy between Korean students and U.S. students without, not with, FFFL.

4. Comparison of financial literacy between Korean and U.S. high school students

4.1. Aggregate statistics

Table 4 compares the aggregate statistics for the FFFL-HS test between Korean and U.S. students. As
mentioned in Section 3, it is more appropriate to compare the results with those of U.S. students
without FFFL because Korean students were exposed to neither the FFFL curriculum, nor personal
finance. The mean score of Korean students was between that of U.S. students with FFFL and that of
those without but was much closer to the former. Cronbach’s alpha for the items ranged from 0.8 to

11
In Korea, the academic year starts on March 1 and ends on February 28.
 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38 29

Table 4
Aggregate statistics for the FFFL-HS test.

Statistics Korea U.S. Test stat. (p-value)

With FFFL w/o FFFL Korea vs w/FFFL Korea vs w/o FFFL

Number of students 1467 524 335 – –

Mean 53.1 (16.5) 56.1 (17.4) 44.9 (13.3) 3.52e (0.000) 9.74u (0.000)
Male 52.4 (17.9) 55.4 (17.0) 44.1 (13.7) 2.45u (0.015) 6.77u (0.000)
Female 53.9 (14.7) 57.3 (17.4) 45.5 (12.9) 2.68u (0.008) 6.99u (0.000)
Coefficient alpha 0.815 0.843 0.721 – –
Standard error of measurement 7.118 6.898 7.020 – –

Notes: (1) Scores are reported on a 100-point scale for 40 items. (2) Numbers in parentheses denote standard deviations of
scores. (3) Superscript ‘e’ and ‘u’ denotes the t-test statistic that compares the mean under the assumption that the variances of
two p
groups
ffiffiffiffiffiffiffiffiffiffiffiffi are equal and unequal, respectively, from the Levene’s test. (4) The standard error of measurement is computed as
s  1  a, where s is the standard deviation of scores on a 100-point scale and a denotes Cronbach’s alpha (for further details,
see Miller et al., 2009, p. 121).

0.9, indicating sufficient internal consistency. The standard error of measurement was slightly higher
for Korean students, but there was no significant difference.
In terms of gender differences in financial literacy, previous studies have brought about mixed
results. Chen and Volpe (1998) and Atkinson and Messy (2012) found that females are likely to show
lower financial literacy than their male counterparts, whereas Walstad and Rebeck (2005) and Harter
and Harter (2007) reported no such evidence based on the FFFL-HS test. As shown in Table 4, the scores
of female students were slightly higher, which is inconsistent with the findings of Chen and Volpe
(1998) and Atkinson and Messy (2012), but this difference was not significant at the 5% level for both
countries.

4.2. Descriptive statistics for each item

Table 5 shows the discrimination index and the percentage of correct responses for each item.12
The discrimination index was the corrected item-to-total score correlation, that is, the correlation
coefficient between the students’ total scores (less the particular item) and their scores on a particular
item.
Unlike in the case of U.S. students, the discrimination indices for two items were negative. Item 24
questions the ‘‘rule of 72’’ in terms of compound interest rates. The percentage of correct responses for
Korean students was 21.6%, which was even lower than that for U.S. students without FFFL.
Noteworthy is that a substantial percentage of students for both countries selected a powerful
distractor that it would take 14.4 years for $1000 to become $2000 with an interest rate of 7.2%,
reflecting their misconception about simple and compound interest rates. The percentage of incorrect
responses remained the highest even after U.S. students took the FFFL-HS curriculum.13
Item 26 addresses the liquidity risk for several types of investment. The percentage of correct
responses for Korean students was 14.5%, which was the lowest among the 40 items and even lower
than that for U.S. students without FFFL. About 70% of the Korean students answered the question by
presuming that stock investment bears the highest level of liquidity risk. Korean students seemed not
to be familiar with the meaning of liquidity but quite familiar with the risk associated with
investment. Therefore, they were likely to answer the question based on ‘‘risk,’’ rather than on
‘‘liquidity risk.’’ As a result, 69.0% of the Korean students chose the answer that liquidity risk is highest
for individual stocks because they considered stock investment as the riskiest alternative.
Recall that the mean score for Korean students was between that for U.S. students with FFFL and
that for those without. This, however, does not imply that the score for each respective item lied
somewhere between them. Test results reveal that most scores fell outside of this range. Noteworthy

12
Although only 40 items were selected, the same item number is reported to compare the results between Korean and U.S.
students. Blank cells indicate those questions excluded from the Korean test.
13
The data for the percentage of alternative responses to each item are available from the authors upon request.
30 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38

Fig. 2. Items showing Korean students with higher scores.

is that the mean scores for 20 items were higher than those for U.S. students with FFFL. On the other
hand, the mean scores for 14 items were lower than those for U.S. students without FFFL. Only 6 items
showed mean scores between those scores for U.S. students with and without FFFL as expected by
aggregate statistics. These results imply that we need to compare the response pattern of items
between the two countries.
First, item 1 dealt with general characteristics of millionaires and showed the largest difference in
the percentage of correct responses between Korean students and U.S. students with FFFL. Most of the
Korean students and those U.S. students without FFFL tended to believe that most millionaires inherit
their wealth and that they are not likely to work more than 40 h a week. This indicates that the low
percentage of correct responses for Korean students may be because this item was too specific to the
FFFL-HS curriculum. A very low percentage of correct response by Korean students was naturally
expected. The Korean economy experienced a massive inflation in the price of assets as it underwent
rapid economic growth. There were many cases in which people who owned assets such as land,
property, stocks, etc. became rich as the prices jumped rather than those who worked hard to make
money. Furthermore, since it is a part of Korean tradition for parents to bequeath their fortune to their
children, there are more wealthy people who inherited their wealth than those who made their own
fortune. For this reason, 64.1% of Korean students chose the answer that most millionaires inherit
most of their wealth.
Second, for items 3, 9, 21, and 33, Korean students reported much higher scores than even those of
U.S. students with FFFL, as shown in Fig. 2. Item 33 showed the largest difference in the percentage of
correct responses between Korean students (67.3%) and U.S. students with FFFL (33.6%). This item
addressed the criteria for judging creditworthiness for purchasing houses or cars. During the last few
decades, there were many acts of speculation where people got loans to purchase homes to make a
huge profit from. While speculation was one of the general public’s matter of interest, the banks
indispensably required one’s capacity to repay, collateral, credit status in order for them to get loans.
For Korean students who are used to such environments, it seems for them to have had a relatively
better understanding of standards judging an individual’s credit ranking than that of U.S. students.
Item 21 addressed the opportunity cost of saving and showed the second largest difference
between Korean students and U.S. students with FFFL. The high score for this item indicates that
Korean students were very familiar with the concept of opportunity cost, which is one of the most
frequently covered topics in the Korea Scholastic Aptitude Test. This may also explain the high score of
Korean students for item 3, which addressed the opportunity cost of purchasing a certain product.
Item 9 questioned human resources. Here the answer ‘‘factory worker’’ was considered to be an
obvious choice, whereas others, not as attractive. This explains the high percentage of correct
responses for Korean students. However, noteworthy is that about 32% of U.S. students without FFFL
incorrectly considered ‘‘electricity’’ as an example of human resources. Human resources played a
significant role in the economic growth of the Korean economy. Korea’s economic growth is often seen
as a result of its intensive investment in human resources. It seems that the percentage of correct
responses of Korean students who were frequently exposed to the concept of human resources was
exceedingly higher than that of U.S. students.
Table 5
Item discrimination and percentage of correct responses.

Item Key concept Korea U.S.

DI Correct responses w/FFFL w/o FFFL

DI Correct responses DI Correct responses

1 Income 0.168 21.6 0.377 58.2 0.126 16.7

2 Saving and investing 0.256 70.6 0.271 93.5 0.343 88.1

K. Jang et al. / International Review of Economics Education 16 (2014) 22–38

3 Opportunity cost 0.238 49.4 0.308 30.3 0.117 13.7
4 Benefits and cost 0.348 62.0 0.395 81.7 0.402 80.3
5 Scarcity 0.049 49.3 0.130 40.5 0.092 31.3
6 Choice 0.291 69.0 0.300 79.8 0.230 82.7
7 Opportunity cost 0.304 57.1 0.455 84.4 0.434 78.2
8 Scarcity 0.411 75.5 0.342 62.4 0.304 56.4
9 Human resource 0.353 75.9 0.465 51.9 0.163 38.2
10 Decision-making 0.244 59.5 0.205 55.5 0.200 47.5
11 Job Application 0.359 81.1 0.341 76.0 0.432 68.1
12 Job Application – – – – – –
13 Job Application 0.231 72.0 0.326 64.9 0.338 46.0
14 Entrepreneur 0.420 64.9 0.388 85.5 0.390 76.1
15 Human capital 0.415 71.5 0.349 54.2 0.016 42.1
16 Supply and demand 0.202 56.3 0.185 55.9 0.185 48.7
17 Income – – – – – –
18 Taxes 0.492 61.0 0.397 53.8 0.245 42.1
19 Taxes 0.236 51.3 0.316 49.8 0.103 36.7
20 Taxes 0.393 69.5 0.347 78.4 0.365 66.0
21 Saving 0.396 56.7 0.213 31.7 0.017 22.7
22 Interest rate 0.226 36.1 0.127 33.2 0.044 23.0
23 Saving 0.261 45.3 0.305 44.1 0.297 31.9
24 Rule of 72 0.049 21.6 0.123 33.6 0.063 25.4
25 Risk 0.280 63.1 0.257 44.5 0.206 48.4
26 Liquidity 0.128 14.5 0.291 35.9 0.027 30.1
27 Risk and return 0.255 43.9 0.445 69.1 0.263 50.7
28 Inflation 0.192 32.3 0.187 21.6 0.060 20.0
29 Investment 0.073 35.2 0.365 55.0 0.270 47.8
30 Investment 0.479 65.0 0.380 73.5 0.340 53.7
31 Credit 0.473 54.6 0.374 74.8 0.389 60.6
32 Gains in trade 0.265 48.5 0.361 63.2 0.252 51.0
33 Credit 0.530 67.3 0.290 33.6 0.036 16.4
34 Credit – – – – – –
35 Interest 0.386 47.8 0.437 63.7 0.333 57.0
36 Interest 0.265 39.1 0.322 53.2 0.163 43.9
37 Interest 0.097 37.4 0.175 45.6 0.220 35.5

31
 32
K. Jang et al. / International Review of Economics Education 16 (2014) 22–38
Table 5 (Continued )

Item Key concept Korea U.S.

DI Correct responses w/FFFL w/o FFFL

DI Correct responses DI Correct responses

38 Credit protection 0.132 41.3 0.391 47.5 0.025 15.5

39 Pyramid scheme 0.351 53.2 0.448 66.8 0.437 48.4
40 Financial Institutions 0.473 59.2 0.429 43.5 0.111 24.2
41 Budgeting 0.216 44.7 0.170 42.2 0.176 37.0
42 Budgeting 0.351 42.9 0.395 41.4 0.256 33.7
43 Budgeting – – – – – –
44 Money management – – – – – –
45 Money management 0.371 56.0 0.368 69.3 0.285 58.5
46 Insurance – – – – – –
47 Insurance – – – – – –
48 Insurance – – – – – –
49 Insurance – – – – – –
50 Insurance – – – – – –

Note: DI (discrimination index) indicates the correlations between scores on each item and the total scores (corrected item-to-total correlation).
 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38 33

Fig. 3. Items showing Korean students with lower scores.

Finally, for items 2, 4, 7, and 26, Korean students reported much lower scores than even those U.S.
students without FFFL (see Fig. 3). Item 7 (opportunity cost of dropping out of high school) showed the
largest difference in the percentage of correct responses between Korean students (57.1%) and U.S.
students without FFFL (78.2%). Item 4 (cost-benefit analysis for insurance) showed the second largest
difference, followed by item 2 (role of saving in improving financial situations over one’s lifetime).
However, the percentages of correct responses for Korean students were at high enough rates for them
not to be taken into account as significant differences. On the other hand, the percentage of correct
responses for item 26 (liquidity risk for several types of investment) was much lower than 25%. As
discussed earlier, students’ unfamiliarity with liquidity, together with the preconception that stock
investment is very risky, may explain not only the lower scores but also negative discrimination index
for Korean students.

4.3. Comparison of scores by content categories and cognitive levels

For the purpose of comparing financial literacy between the two countries, the 40 items were
classified into several content categories according to the FFFL curriculum. As shown in the previous
section, each item had the potential to be too specific to the FFFL curriculum for a comparison of
student performance between the two countries. Therefore, scores for each item were aggregated into
a small number of categories to mitigate the effect of an individual item, and thus to compare the
general level of financial literacy in terms of content coverage between the two countries.
Table 6 shows FFFL-HS scores by theme for the FFFL. Here 10 items fell into each theme
sequentially from items 1–50 in Walstad and Rebeck (2005), but only 8, 9, and 3 items from the total of
40 items fell into themes 2, 4, and 5, respectively, in this study (see Table 7 for the content coverage of
each theme). In addition, the scores for themes 1–3 were higher than those for themes 1–4 and themes
1–5 for both countries, implying that the students showed low financial literacy in ‘‘spending and
using credit’’ and ‘‘money management.’’ As explained in the previous section, the total score for
Korean students fell between that for U.S. students with FFFL and that for those without but was much
closer to the former. This tendency remained with themes 1–3 and 1–4.
Table 7 shows FFFL-HS scores by content coverage for the FFFL classification based on Walstad and
Rebeck (2005), in which this coverage consisted of 5 themes with 22 FFFL lessons.14 The scores for 4
themes of Korean students were between those of U.S. students with and without FFFL, whereas the
score for theme 2 was slightly higher than that of U.S. students with FFFL. Identifying factors that can
account for Korean students’ high score for theme 2 seems to be of interest.
Theme 2 (earning income) comprises items on job application. The Korean society that is strongly
influenced by Confucius traditions puts a strong emphasis on modesty and manners when it comes to
personal relationships. Thus, in order not to stand out too excessively at important interviews,
Koreans are taught to avoid behaving or dressing up improperly from their parents or at school under
subjects such as ‘‘ethics’’ or ‘‘practical arts’’ starting at an early age. For item 11, only 2.9% of the Korean

14
See Table A2 for FFFL-HS Test scores for 22 FFFL lessons.
34 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38

Table 6
FFFL-HS test scores by the content coverage of themes.

Content Number Korea U.S. Test stat. (p-value)

coverage of items
With FFFL w/o FFFL Korea vs w/FFFL Korea vs w/o FFFL

Themes 1–5 40 53.1 (16.5) 56.1 (17.4) 44.9 (13.3) 3.52e (0.000) 9.74u (0.000)
Themes 1–4 37 53.5 (16.5) 56.5 (17.5) 45.0 (13.3) 3.52e (0.000) 10.08u (0.000)
Themes 1–3 28 54.7 (16.3) 57.1 (17.3) 46.9 (13.8) 2.86e (0.004) 9.05u (0.000)

Notes: (1) Scores are reported on a 100-point scale for 40 items. (2) Numbers in parentheses denote standard deviations of
scores. (3) Superscript ‘e’ and ‘u’ denotes the t-test statistic that compares the mean under the assumption that the variances of
two groups are equal and unequal, respectively, from the Levene’s test.

Table 7
FFFL-HS test scores by content coverage for the FFFL guide.

Themes # of items Korea U.S. Test stat. (p-value)

With FFFL w/o FFFL Korea vs w/FFFL Korea vs w/o FFFL

1. Economic thinking 10 59.0 (20.2) 63.8 (20.1) 53.3 (17.4) 4.71e (0.000) 5.21u (0.000)
2. Earning income 8 66.0 (24.1) 64.8 (22.7) 53.2 (21.4) 0.95e (0.343) 9.62u (0.000)
3. Saving 10 41.4 (18.1) 44.2 (20.2) 35.4 (16.1) 2.84u (0.005) 5.59e (0.000)
4. Spending and using 9 49.8 (24.1) 54.7 (24.6) 39.2 (19.0) 3.93e (0.000) 8.76u (0.000)
credit
5. Money management 3 47.9 (31.8) 51.0 (31.7) 43.1 (30.9) 1.89e (0.059) 2.51e (0.012)
Total 40 53.1 (16.5) 56.1 (17.4) 44.9 (13.3) 3.52e (0.000) 9.74u (0.000)

Notes: (1) Scores are reported on a 100-point scale for 40 items. (2) Numbers in parentheses denote standard deviations of
scores. (3) Superscript ‘e’ and ‘u’ denotes the t-test statistic that compares the mean under the assumption that the variances of
two groups are equal and unequal, respectively, from the Levene’s test.

students chose the wrong answer that dressing for an interview in a manner that is too provocative is
most likely to improve a person’s chances of getting a job while 15.3% of the U.S. students chose the
same answer. As a result, the percentage of correct responses of Korean students was higher than that
of U.S. students. Also, a higher percentage of correct responses for Korean students compared to that
for U.S. students in terms of item 13 seemed to result from the social phenomenon in which
discrimination and privacy issues are being raised in Korea’s society nowadays. It seemed to be easier
for Korean students to correctly answer this item as the idea that questions regarding an individual’s
marital status, religion, handicap, etc. during interviews are discriminative or violating one’s privacy
has been rapidly spreading throughout society. Likewise, due to the frequency of education regarding
discrimination issues being brought up in schools and the media seemed to make it comparatively
easier for Korean students to choose the correct answer. Lastly, an item regarding human capital is
included in theme 2, and as mentioned before, it seemed like Korean students were more familiar with
the concept to respond correctly as they were frequently exposed to the importance of human
resources compared to U.S. students.
It is often useful to compare financial literacy in terms of not only content coverage but also the
cognitive level. Walstad and Rebeck (2005) distributed the FFFL-HS test items according to the
cognitive levels developed by Bloom (1956), who classified cognitive ability into 6 sequential levels:
knowledge, comprehension, application, analysis, synthesis, and evaluation. Table 8 shows the scores
for items classified into the first three categories. The scores for knowledge were much higher for
Korean students than for U.S. students with FFFL, and the scores for comprehension and application for
Korean students were between those for U.S. students with and without FFFL.
Noteworthy is that, unlike the total score, the scores for the cognitive level of comprehension and
application for Korean students were relatively closer to those without FFFL. This result implies that
Korean students’ financial literacy was relatively strong at the cognitive level of knowledge but
relatively weak at higher cognitive levels of comprehension and application. This result is closely
related to the Korea’s instructional methods. Although active participation methods including group
discussions, surveys, inquiry-based learning, and problem solving, are widely introduced in their
 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38 35

Table 8
FFFL-HS test scores by cognitive level.

Cognitive level Number of items Korea U.S. Test stat. (p-value)

With FFFL w/o FFFL Korea vs w/FFFL Korea vs w/o FFFL

u
Knowledge 9 55.1 (23.7) 47.3 (21.8) 36.6 (17.3) 6.86 (0.000) 16.35u (0.000)
Comprehension 21 53.6 (17.0) 58.9 (19.1) 48.0 (16.2) 5.63u (0.000) 5.49e (0.000)
Application 10 50.3 (19.9) 58.1 (20.4) 45.8 (17.1) 7.69e (0.000) 4.21u (0.000)
Total 40 53.1 (16.5) 56.1 (17.4) 44.9 (13.3) 3.52e (0.000) 9.74u (0.000)

Notes: (1) Scores are reported on a 100-point scale for 40 items. (2) Numbers in parentheses denote standard deviations of
scores. (3) Superscript ‘e’ and ‘u’ denotes the t-test statistic that compares the mean under the assumption that the variances of
two groups are equal and unequal, respectively, from the Levene’s test.

school curriculum, teachers’ instructions still remain fairly traditional, as teachers are concerned with
preparing students for university entrance exams. Instruction focuses heavily on memorization of
concepts rather than on the development of reasoning and application. For this reason, Korean
students have tended to be relatively stronger at a cognitive level of knowledge compared to those of
comprehension and application.

5. Conclusions

Few studies have provided international comparisons of financial literacy. To close this gap in the
literature, this study provides a comparison of financial literacy between Korean and U.S. high school
students. In order to do so, a total of 40 items were selected, and the Korean version of the FFFL-HS
tests was administered to a sample of 1478 students from 40 high schools.
The mean scores for Korean students fell between those for U.S. students with and without FFFL,
which can be explained by the fact that Korean students were not exposed to any form of the FFFL
curriculum, but were much closer to those with FFFL. The 40 items were then classified into several
content categories according to the FFFL curriculum. The test results showed that Korean students
tended to be stronger in contents such as ‘‘earning income.’’ In addition, a comparison of financial
literacy based on Bloom’s cognitive levels indicated that Korean students’ financial literacy was
relatively stronger at the cognitive level of knowledge, but relatively weaker at higher cognitive levels
of comprehension and application.
As in the case of any comparison of student performance between two countries based on
individual items, some differences may arise from educational backgrounds and cultural differences.
High scores of Korean students do not necessarily imply that they are well educated in personal
finance at school, but rather that they acquire related knowledge through social experience as well as
other subjects, for example ethics and practical arts.
In order to accurately conduct international comparisons of the financial literacy or level of
economic understanding, translation biases that can arise in the process of translating the testing tool
have to be resolved. Although we administered only 40 items from the FFFL-HS test excluding 10 items
subject to the country-specific attributes such as financial institutions and intermediaries, and the
policy difference in the insurance markets of Korea and the U.S., there is no absolute certainty that all
translation biases were removed. We therefore acknowledge the probability of a bias in the
comparison of the financial literacy between Korean and U.S. students as much as the probability of a
translation bias.
Despite such limitations international comparative studies have, there is still the need to continue
research on comparing the financial literacy in different countries. This is because we can figure out
the relative strengths and weaknesses in certain areas and also the people’s current level of financial
literacy in different countries via international comparative studies. Furthermore, such international
comparative studies will help enhance the effects of financial education. This can be attained through
implementing an education program that can help resolve each country’s respective weak points or
establishing initiative educational directions, etc. Accordingly, there is a need to develop a new
assessment tool that is not linked to a specific education curriculum, and continuously promote
international comparative studies that utilize such tools.
36 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38

Last but not least, financial literacy measurements have to take note of the relationship with
effective decision-making skills. Efforts not only to measure financial literacy but also to reinforce
financial education are based on the premise that an increased level of financial literacy helps facilitate
effective decision-making skills. Unfortunately, however, such evidence is not sufficient. Hence, in
order to further the development of financial education, there is also a need for studies that aim to
reveal which field’s financial literacy contributes to one’s decision-making skills.

Appendix

See Tables A1 and A2

Table A1
Percentiles for FFFL-HS test scores.

Raw scores Themes 1–5 (40 items) Themes 1–4 (37 items) Themes 1–3 (28 items)

Korea With FFFL w/o FFFL Korea With FFFL w/o FFFL Korea With FFFL w/o FFFL

40
39 100.0
38 99.6
37 100.0 99.2
36 99.9 98.5 100.0
35 99.9 97.1 99.4
34 99.3 96.0 100.0 100.0 98.9
33 98.6 94.3 100.0 99.9 98.1
32 97.8 91.2 100.0 99.6 96.2
31 96.3 88.5 99.7 98.9 95.4 100.0
30 93.0 86.5 99.7 98.2 92.4 100.0
29 89.3 83.6 99.4 96.9 89.3 100.0
28 84.7 79.0 98.5 94.1 86.6 99.7 100.0
27 80.8 74.6 96.1 90.3 83.2 99.4 99.6
26 75.5 70.0 93.7 85.8 79.6 98.5 100.0 98.5
25 69.9 65.1 93.1 80.4 73.7 97.0 99.8 98.3
24 63.9 59.7 89.0 74.9 69.3 94.0 99.2 96.2 100.0
23 58.3 55.9 84.8 68.6 64.7 91.3 98.4 94.1 100.0
22 52.9 49.8 81.8 62.3 58.0 89.0 96.7 90.8 99.7
21 48.1 44.8 74.6 55.4 51.7 84.8 93.6 86.3 99.1
20 44.4 40.5 68.1 50.0 46.8 78.8 87.4 81.1 98.5
19 39.8 36.3 60.3 45.4 41.8 71.0 81.1 74.0 96.7
18 34.9 31.7 52.5 40.6 38.0 63.9 72.8 67.9 93.1
17 30.9 27.5 42.4 34.8 33.2 53.7 64.0 60.7 87.8
16 26.7 24.2 37.0 30.6 27.5 45.7 55.5 54.0 81.2
15 23.0 18.3 30.7 26.6 23.7 38.2 47.6 48.1 74.0
14 19.3 14.5 28.7 22.2 19.7 31.9 39.3 39.5 63.0
13 15.1 9.5 23.0 18.6 13.7 27.5 33.6 31.5 47.5
12 11.9 7.8 17.3 15.1 9.7 21.8 27.3 26.3 38.8
11 8.6 5.9 14.6 11.3 8.0 17.3 21.6 19.1 31.6
10 5.9 2.9 8.7 7.6 5.3 12.5 16.9 14.1 23.3
9 3.6 1.9 5.7 5.4 2.5 8.1 13.2 9.5 18.8
8 2.2 1.1 3.3 3.3 1.5 5.4 9.0 5.0 13.4
7 1.2 0.6 2.4 1.9 0.8 3.3 5.7 3.2 9.6
6 0.5 0.2 1.2 0.7 0.6 1.8 3.2 1.7 5.7
5 0.3 0.3 0.5 0.2 0.9 1.6 1.3 3.3
4 0.1 0.3 0.7 0.4 2.4
3 0.1 0.3 0.3
2 0.1
1 0.1

Note: Scores are the number of correctly answered items.

 K. Jang et al. / International Review of Economics Education 16 (2014) 22–38 37

Table A2
FFFL-HS test scores by lessons for the FFFL guide.

Lessons Korea U.S. (with FFFL) U.S. (w/o FFFL)

The Economic way of thinking 59.0 (20.2) 63.8 (20.1) 53.3 (17.4)
1. How to really be a millionaire 46.1 (31.5) 75.9 (29.1) 52.4 (25.6)
2. The economic way of thinking 57.4 (25.6) 63.3 (22.7) 57.3 (21.2)
3. Decision making 70.3 (29.8) 56.6 (32.5) 47.4 (31.4)
Earning income 66.0 (24.1) 64.8 (22.7) 53.2 (21.4)
4. Job application process 76.6 (32.4) 70.4 (34.3) 57.0 (38.3)
5. Making your own job 64.9 (47.7) 85.5 (35.2) 76.1 (42.7)
6. Why some jobs pay more than others 63.9 (35.7) 55.1 (36.2) 45.4 (36.3)
7. Uncle Sam takes a bite 60.6 (32.7) 60.7 (31.1) 48.3 (29.8)
Saving 41.4 (18.1) 44.2 (20.2) 35.4 (16.1)
8. What’s the cost of spending and saving 39.9 (26.2) 35.6 (26.9) 25.7 (21.0)
9. There is no free lunch in investing 42.3 (21.0) 49.9 (24.0) 41.8 (22.6)
10. Investment bingo – – –
Spending and using credit 49.8 (24.1) 54.7 (24.6) 39.2 (19.0)
11. What is credit? 51.5 (38.6) 69.0 (35.1) 55.8 (37.2)
12. Making credit choices – – –
13. Applying for credit 67.3 (46.9) 33.6 (47.3) 16.4 (37.1)
14. All about interest 41.4 (30.4) 54.2 (32.5) 45.5 (31.6)
15. Shopping for a credit card – – –
16. Shopping for a mortgage – – –
17. Shopping for an auto loan – – –
18. Consumer credit protection 41.3 (49.3) 47.5 (50.0) 15.5 (36.3)
19. Scams and schemes 56.2 (38.4) 55.2 (38.9) 36.3 (32.7)
Money management 47.9 (31.8) 51.0 (31.7) 43.1 (30.9)
20. Managing your money 43.8 (36.7) 41.8 (37.2) 35.4 (35.8)
21. Banking basics 56.0 (49.7) 69.3 (46.2) 58.5 (49.3)
22. Managing risk: the good news about insurance – – –
Total 53.1 (16.5) 56.1 (17.4) 44.9 (13.3)

Notes: (1) Scores are reported on a 100-point scale. (2) Numbers in parentheses denote standard deviations of scores.

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