Effects of family, socioeconomic and academic achievement variables on the financial competence of Peruvian students in PISA 2018

Abstract

According to research on financial behavior, people with financial limitations will make irrational decisions that harm themselves and their environment, especially in times of high market volatility. Using multilevel modeling and structural regression, this work analyzes the variables (family possession and household resources, socioeconomic and educational index (ESCS), experience and financial literacy, and academic achievement) that best predict the financial literacy of Peruvian students in PISA 2018. Multilevel models show that financial education in school lessons and the mean economic, social, and cultural status index (MESCS) are strong predictors of achievement in finance, after the achievement in mathematics and reading. The results of this study confirm the main effect of cognitive competencies to explain financial literacy performance, followed by the socioeconomic index and financial education.