Why Italians' financial literacy still falls short

The study provides insights into the level of financial literacy among Italians. While the Edufin Index ties into institutional surveys conducted by CONSOB and the Bank of Italy, it stands out by extending its scope beyond the financial sector to include the insurance sector. What’s more, our index delves more deeply into measuring behavioral aspects.

In fact, the Edufin Index is based on two pillars, each contributing equally to the final score: an Awareness Index, which measures knowledge, and a Behavioral Index, which measures what we call behavioral composure—Italians' ability to make informed and responsible financial decisions.

Both components showed slight declines compared to the previous year. The Awareness Index scored 53.6, revealing insufficient knowledge of basic financial and insurance concepts among much of the population. This reflects not only an educational deficit but also Italians’ difficulty in recognizing and adequately assessing their financial skills.

The Behavioral Index, which measures the actual ability to act consciously in the financial field, dropped to 57.5. Specifically, Italians’ financial choices are influenced by an uncertain macroeconomic context and often incorrect risk perception, as evidenced by low scores in the “risk perception” sub-indicator. This aspect is crucial because poor risk perception can lead to unsound decisions with negative consequences, both in personal and economic terms.

The survey was conducted through a questionnaire designed by SDA Bocconi and administered by DOXA to about 3,500 individuals. To ensure more reliable comparisons, about half of the sample overlapped with the previous year’s sample.

The gap between northern and southern Italy is also evident in financial literacy. Residents of the Northeast achieved the highest scores, averaging 57.6, while people living in the South and on the islands lagged behind at 53, a difference of over four points. This reflects not only economic disparities but also unequal access to educational opportunities and financial advice.

Income also plays a decisive role. Higher earners (€80,000+ per year) averaged 64.8 on the index, well above the threshold, while respondents with incomes below €20,000 scored 50.3, signaling a high risk of financial exclusion.

Particularly concerning is the fact that 12% of the population averaged less than 40. This group includes socially vulnerable individuals who have no access to financial services. Among them, young people and women are overrepresented—two categories with specific challenges that deserve further analysis in the coming weeks.

The report divides the population into five distinct clusters based on financial literacy levels and associated behaviors:

• Fragile and uninterested (23%)
  • Average Edufin Index: 41
  • These individuals are high risk for financial fragility, with strong risk aversion and limited numeracy skills. They are disconnected from the financial world, uninterested and uninformed. Their predominant attitude toward financial matters is indifference, stemming from low expectations and limited experience.
• Insecure but trusting (21%)
  • Average Edufin Index: 53
  • Primarily women, they are highly risk-averse but express significant interest in financial questions and insurance-related topics. However, fear of fraud and making mistakes inhibits their involvement. Their prevailing sentiment is disorientation, caused by insecurity and negative expectations.
• Careless DIY (18.5%)
  • Average Edufin Index: 55
  • Predominantly young people, they are skeptical of financial intermediaries and inclined to act independently. While they show little interest in financial topics, they frequently seek information, mainly online. Their dominant sentiment is distrust, based on negative expectations and lack of experience.
• Optimistic and Fearless (25%)
  • Average Edufin Index: 65
  • Mostly men, they are financially stable and hands-on as far as family financial decisions. They are well-informed, but say they don’t have the time to stay updated. Their prevailing sentiment is surprise, reflecting low expectations but positive experiences.
• Educated and Composed (13%)
  • Average Edufin Index: 69
  • This top-performing cluster is composed of men and women aged 35–64 with higher education and middle to upper-middle incomes. They trust financial intermediaries and express satisfaction that comes from positive expectations and experiences.

The general results suggest that Italians’ low financial literacy can be explained by a combination of factors:

• Lack of formal education: The absence of structured programs in schools leaves citizens unprepared to tackle complex economic issues.
• Limited trust in institutions: Many Italians are discouraged by the perceived opacity and complexity of financial products, which dampens their interest in the sector.
• Unfavorable economic and geopolitical context: Instability in recent years has made long-term financial planning more challenging.
• Unequal access to resources: Income and geographic disparities limit access to adequate financial advice and education.

The SDA Bocconi faculty members involved in the creation of the EDUFIN INDEX 3° EDIZIONE Consapevolezza e comportamenti finanziari e assicurativi degli italiani (EDUFIN INDEX 3rd EDITION Financial and Insurance Literacy of Italians: Awareness and Behavior) report include Barbara Alemanni, Paola Castelli, Umberto Filotto, Gennaro De Novellis and Alessandro Recla.