Sociological perspective on financial literacy: A critical examination of three assumptions underlying financial literacy programmes

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.