Finance: How much do the French really know?
To mark Financial Literacy Week, the Banque de France released the results of its 2024 survey on the French public’s level of financial literacy. Division, interest rates, inflation, and investment principles are among the topics covered in the questionnaire, which was designed to assess respondents’ understanding and mastery of basic concepts. The results show a gradual improvement in the French public’s level of financial literacy.
Mastering Division
When asked the division problem (“If 5 friends split a €1,000 donation equally, how much will each friend receive?”), more than 70% of French people gave the correct answer. This rate remains stable compared to previous years and tends to increase with age and educational level. In fact, 80% of those over 65 answered correctly, compared to only 60% of the younger generations (ages 18–35). The percentage of correct answers also varies by level of education, ranging from 53% among those without a degree to 91% among graduates of prestigious universities.
Understanding the inflation rate
Although the majority of French people are unable to estimate the current inflation rate, nearly 30% of them were able to do so. Knowledge of this figure increases with age (about 35% among those over 55) and educational attainment (48% among graduates of prestigious universities). Men are better informed than women (33% versus 21%).
While most French people are unaware of the inflation rate, they have a better understanding of its consequences. When asked, “If these friends have to wait a year to receive their share of the €1,000 and the inflation rate is 5%, will they be able to buy more, the same amount, or less than they can today?” 65% gave the correct answer. This result is up 9 points from last year, likely due to the current inflationary environment.
Familiarity with the concept of interest rates
The French seem relatively comfortable with the concept of interest rates, particularly when it comes to loans. In fact, 78% of them correctly answered the following question: “You lend a friend €25 one evening, and he pays you back €25 the next day. How much interest did he pay on that loan?” Younger generations are less comfortable with this concept, with about 60% giving the correct answer.
The French also have a better understanding of the interest rate on the Livret A savings account, as 42% are able to give the correct answer—an increase of 11 percentage points. This is likely due to the fact that the rate recently rose from 0.50% to 3.00%.
Only half of French people are proficient at simple interest rate calculations. In fact, when asked, “If you deposit €100 into a no-fee savings account offering a guaranteed interest rate of 2% per year, how much will be in the account at the end of the first year, after interest has been credited?”, 52% were able to give the correct answer. The percentage of correct answers drops when the calculation is extended to 5 years: only 40% chose the correct answer (“more than €110”).
Understanding the Principles of Investing
The French, even the youngest among them, seem to have a good understanding of the basic principles of investing. For example, more than 80% of them know that a high-return investment is generally associated with high risk (71% among those under 25). They also have a good grasp of the principles of diversification: 70% know that it is generally possible to reduce the risk of stock market investments by diversifying across stocks and securities, and that it is less likely to lose all one’s money if it is invested in multiple places.
