Three questions about money, and only 19% of Spaniards get all three

The Bank of Spain’s Financial Competences Survey (ECF), run with Spain’s national statistics office and, in its first 2016 edition, with the securities regulator, asks three simple questions. They are not Spanish questions. The survey is part of an international project coordinated by the OECD’s International Network on Financial Education, built from a questionnaire drawn up by governments and central banks of some thirty countries, and its stated purpose is to measure financial competence “in an internationally comparable way”. That is what makes these numbers worth reading from outside Spain: your own country almost certainly asks the same three. Spaniards get the inflation one right 65% of the time, compound interest only 41%, and risk diversification 52%. All three together, 19%.

Between 2016 and 2021, inflation is understood a little better (from 58% to 65%) and diversification also rises slightly (from 49% to 52%). But compound interest, the idea that money, or debt, grows on itself over time, falls from 46% to 41%. And the fall can be read at face value: the 2021 report itself says the questionnaire “maintains comparability with the first wave of the ECF2016” and that its results “are comparable with those obtained in the 2016 survey”. It is the only one of the three that does not improve, and it is still the worst of the three by a wide margin.

Under-18s do no better: in PISA 2022, Spain scores 486 against an OECD average of 498, and only 5% of pupils reach the top level in financial literacy, against an average of 11%. Among adults, the most recent international measurement, the OECD/INFE survey published in 2023 with data collected mostly in 2022, puts Spain at 64 out of 100, slightly above the OECD average of 63. But only 39% reach a high level.

One consequence of all this rarely gets seen. Spaniards keep their money, above all, in one thing: housing. Some 73% of Spanish households own the home they live in (Eurosystem Household Finance and Consumption Survey, 2021), the highest of the four big euro-area economies after Italy on 77%: France drops to 58% and Germany to 44%. It is worth not stretching that to “Europe”, because the comparison covers four countries. In the full table of the same survey, Spain is eleventh of twenty-two, with ten countries ahead of it, from Lithuania on 94% to Czechia on 75.7%. And one qualification, so as not to overstate it: in riqueza terms, almost the whole euro area holds the bulk of it in real assets, around 80% of gross household wealth, so what sets Spain apart is not how much property weighs on the balance sheet but how many people got to buy. The contrast with the United States is about shares: there, around 58% of families own stock counting direct and indirect holdings such as pension plans and funds; in Spain, 12.1% of households hold listed shares directly (EFF 2024). They are not identical measures, but the gap is real.

There is nothing wrong with buying a home, and this is not a criticism of anyone who does. But the comparison leaves a reasonable hypothesis: that a flat being, for so many people, the only form of saving they consider is not just culture, it is also a lack of known alternatives. If more people understood compound interest and how the stock market works, some of the saving that today goes into buying flats to rent out might look elsewhere, which would incidentally take some pressure off house prices. It is a hypothesis, not a prescription, but it fits the data.

The good news is that the three questions can be explained in a minute. The bad news is that nobody has, for years.