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CHAPTER 3
TAIWANESE FINANCIAL LITERACY, WOMEN, GENERATIONAL TRANSMISSION OF KNOWLEDGE
3.1 Introduction
There is a strong relationship between women and financial literacy. Even among the most developed and economically competitive nations, gender inequality in the economic sector is apparent, with women workers making, on average, less per U.S.
dollar than that of their male counterparts. Widely discussed within the field of development, this grave setback in the interconnected terms of economic productivity and human rights can begin to be alleviated through the progress afforded to communities with a financially literate base. Furthermore, financial literacy programs that are aimed at women, many of whom are already key figures within Taiwan’s business, consumer, and financial services sectors, would strengthen Taiwan’s economy as well as its image in the international community, generating a compelling
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Already, the concepts of ‘empowerment,’ ‘confidence,’ ‘education,’ and
‘access to credit’ are often mentioned in academic literature as key concepts for human development and are necessary to not only reduce extreme poverty but also to strengthen developing economic regions. Pearson (2005) affirms this by stating:
Not only has gender equity and women’s empowerment earned a high place on the list of internationally recognized development objectives but, as the World Bank (2003) argues, there are strong linkages between gender equality and all the Millennium Development Goals. Gender equality, it is argued, is central to cutting extreme poverty because it requires investment in the human capital of women and in education and health services to raise labour productivity. (as cited in Kothari, 2005, p. 168)
As economic regions develop and extreme poverty becomes less of an imminent issue, the same methodology used for examining and addressing these past cases of extreme poverty can also be utilized to address concerns for the lack of financial literacy in regions of the world which are quickly strengthening their financial sectors. Thus women, and then by extension of the familial unit, also children, are prime candidates for implementing educational tools in the effort to enhance financial literacy. Financial literacy is paramount in transforming regions that are attempting to continue their progression towards being highly developed and competitive economic forces even after surpassing the levels of extreme poverty. Furthermore, gains in financial literacy lead to success in providing individuals with self-efficacy, empowerment, and the capability to more directly make choices that will affect their lives.
Most women are already making financial decisions, ranging from smaller decisions relating to part-time employment and the spending of wages or allowance, to larger decisions regarding purchases of vehicles and insurance as well as seeking higher educational opportunities. As Taiwanese women are maturing in age, the financial sector is becoming increasingly more complex to understand. Young women entering the workforce are facing options and financial risks never encountered by their parents.
Given the context, they are being required to make informed decisions without knowledgeable parental guidance or much in the way of educational priming. This
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chapter explores the unique channels surrounding women in Taiwanese society as they navigate financial and educational arenas with their parents, spouses, and children. By understanding and targeting the linchpin component of these familial units seen when women become the focus, researchers and policymakers can achieve a deeper analysis as to the range of financial literacy found within Taiwan and develop effective financial literacy programs to succinctly reach sub-populations.
3.2 Family Structure
Chinese, and by extension also Taiwanese, culture is especially grounded in the concept of filial piety. Confucius teaches upon the ‘five relationships:’ ruler to subject, father to son, husband to wife, elder to younger and friend to friend (Huang & Gove, 2012, p.
11). Three out of the five relationships (known as bonds) are directly related to the family. While many cultures historically have known grown children to remain in or close to the areas in which they grew up, Taiwanese society centers around the concept of a living arrangement in which multiple generations of a single-family unit will house under a single roof.10 This filial piety system has been encouraged and implemented into Taiwanese society for the cultural values it espouses. According to Taiwan’s Criminal Code, pertaining to Articles 294 and 295, the government of Taiwan has advocated for three-generations cohabitation using tax exemptions and subsidies.
Moreover, it takes a harsh stance on abandoning ones’ parents, citing criminalized behavior. In Articles 294 and 295, if a person abandons his or her blood relative, a sentence of six months to eight years may be enforced.11
The media also adheres to the principles of filial piety “by portraying happy three-generation households in Taiwan in contrast to the lonely, sad, and abandoned elderly in Western societies” (Hu, as cited in Gu, 2017, p. 25). The perception of
10 “The three-generation family (san-dai-tong-tang) has been the traditional, typical, and prevalent form of Chinese family” (Levy, 1971, as cited by Jou, 2013, p. 69).
11 Republic of China Ministry of Justice, 2013, Criminal Code of the Republic of China (amended date:
2013. 6.11) Laws & Regulations Database of the Republic of China (Taipei, Taiwan: Ministry of
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generation households goes beyond societial structure and is deeply rooted in the high regard many feel towards the values and virtues presented in Confucianism (Gu, 2017, p. 25).
Demographic studies and official statistics maintain that since the 1970s, stem or extended family living arrangements account for nearly a third of all Taiwanese households, with this ratio remaining steady (Yi & Chang, 1996, as cited in Yi, Pan, Chang, & Chan, 2006, p. 1043). Compared to those typical in Western society, a majority of elderly will continue to live with their adult children. While other parts of Asia are beginning to abandon this style of living arrangements in favor of others, studies show that Taiwan continues to uphold this style and, in fact, has seen a proportional increase in the number of non-senior adults living in these extended households (Mason & Lee, 2004, p. 198). Upon greater reflection on this Taiwanese context, it appears that parents are already ideally situated to impart knowledge onto rising generations. Thus, it can be determined that parents’ financial literacy is just as important as the financial literacy of the next generation who will become financial contributors. This complex structure of family living arrangements, especially in regards to three-generation households, offers a distinctive environment for socialization to occur between children and their parents (Yi et al., 2006, p. 1043).
Financial socialization within a family examines the patterns of interaction among various family members. Financial socialization accounts for “financial attitude development, knowledge transfer, and financial capability development even when financial socialization is implicit” (Gudmunson & Danes, 2011, p. 649), which requires a more thorough assessment into understanding these connections with regard to financial decision-making, financial education, and financial literacy proficiency.
In 2007, the Institute of Sociology, Academia Sinica, developed and assessed a survey entitled “Taiwan Social Change Survey” in which various dimensions of Taiwanese society were examined. While Academia Sinica has held multiple rounds of the questionnaire in various forms and with varying survey topics from 1984 to present, the fifth round in its third year focused on the topic of social stratification. Financial decision-making was integrated into some of the survey questions. Since then, other questions concerning financial literacy concepts have been woven into several sections of the following surveys and a closer look into these surveys present an interesting portrayal of the Taiwanese financial context. Using the 2007 fifth round (third year) survey as an introduction to the questionnaires, there are direct questions that address
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issues of financial decision-making and financial status within the family. However, the survey conducted did not go into much depth within the realm of financial literacy to concentrate on the level of need for financial literacy programs for Taiwan. The question that was most indicative of financial literacy needs relates to survey question H19, which reads: “From whom do you (or does your spouse) get advice or suggestions when you make (or your spouse makes) decisions about investments and finances?”
(Taiwan Social Change Survey [TSCS], 2007, Phase 5, Year 3 Questionnaire, p. 32).
Choosing all that apply, the answer choice possibilities were given as: family members or relatives; friends; colleagues; classmates; neighbors; paid professional financial advisors or investment consultants; accountants, lawyers, or paralegals; bank clerks, stock brokers, or insurance agents; magazine; newspaper; television or radio; internet;
or not applicable. Results showed that 32.5 percent of respondents sought advice from family members or relatives when it pertains to decisions on their investments and finances, while only 1.2 percent sought paid professional financial advisors or investment consultants. Other notable percentages were 16.1 percent from friends; 12.4 from bank clerks, stock brokers, or insurance agents; 10.0 from newspapers; 8.7 from the internet; 8.5 from television or radio; 7.9 from a magazine; 7.2 from colleagues.
(TSCS Results, 2007, p. 251)
From this Taiwanese study, it is evident that the largest financial decision-making aides are found within the familial unit. The next section explores how women, and their multiple roles within a family and with regards to filial piety, do directly influence the financial decision-making process in a family and can, with encouragement, transfer their own financial knowledge to other members of the family.
3.3 Women as Key Components
There is an influential demographic, largely ignored, that can have a profound impact within Taiwan’s economic sector and financial literacy education should be focused towards improving the knowledge and skills of this group: women are key components of the financial stability equation and already make important individual financial choices. Beyond their own financial choices, women are also considerable components
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in the decision-making process of the family. It is not uncommon in Taiwan to find relatively young women responsible for the care of three generations in a single household or to find elderly generations of women providing child-raising services for their own children’s children or children of other family members called to the workforce. Most of the burden of familial caretaking is not a part-time job, but rather one that extends Monday through Friday, until other relatives can take turns on weekends or come together after the work week ends. Thus, targeting women for financial literacy programs can significantly and swiftly affect financial decision-making practices in a society given the access and control women exert over various branches of their families throughout their lifetimes.
Women also spend more time with children. This affects the child’s upbringing not only through the choices in upbringing but also in a child’s sense of the ‘real world’
through their observance of parental guidance, action, and even conversational language pattern. As Taiwan’s divorce rates begin to rise (Taiwan News, 2017), more women will be the primary influence on childhood development in education and worldly perspectives. Financial literacy, or the lack thereof, will also be conferred upon children by these same means.
Further, more women are joining the workplace and contributing to their family’s economic stability. Basic ‘money sense’ and fundamental knowledge of savings, spending, and taxes are all necessary to make informed and successful decisions within employment opportunities. Women entering into workplace contracts and leaving behind traditional family roles must have the basic skills to effectively analyze the costs and benefits of their actions. No family context is the same and each contributing member of the family must understand the unique complexities and needs of their family’s monetary expenditures in order to make the most appropriate decisions. Given the traditional roles that women play within the family unit, women have a higher risk of being thrown into situations in which their financial well-being is worse off. (DeVaney et al. 1996; Hopley 2003; Malone et al. 2009; Tamborini et al.
2011) In examining just one instance of this, “women outlive men, but earn less, save less, drop in and out of employment, and [yet] suffer more financially from divorce than men” (DeVaney et al., 1996; Schmidt & Sevak, 2006; Tamborini et al., 2011).12
12 As cited in Postmus et al., 2012, p. 275.
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Women, whether it be through the choice to stay at home or join the workforce, must make informed, calculated, and intentional choices that provide the best possible stability for the family both in the short- and long-terms. The merits of financial education are that individuals are given the tools to understand and analyze their short- and long-term goals, needs, and potential monetary risks, and then to have the capability to examine their options as it relates to their individual context. Women must be included in this goal and are often overlooked because of their lack of involvement in the workplace in the past. But whether in the workplace or at home, women must be actively educated in financial matters to ensure that family financial stability can be obtained and can aid in the transferring of financial literacy onto future generations.
3.4 Generational Transmission of Knowledge
Intergenerational transmission is often brought up when discussing the impact that women have on the economy: as women are the primary caretakers of children, and now more often single parents, their limited knowledge of financial concepts may hinder the next generation of consumers as their intergenerational transmission of financial literacy is limited at best.
Younger generations are not only likely to face ever-increasing complexity in financial products, services and markets, but they are more likely to have to bear more financial risks in adulthood that their parents. In particular, they are likely to bear more responsibility for the planning of their own retirement savings and investments, and the coverage of their healthcare needs; and they will have to deal with more sophisticated and diverse financial products…Because of the changes in the marketplace and social welfare systems…current generations are unlikely to be able to learn from past generations. They will have to rely on their own knowledge… (OECD PISA, 2012, p. 9)
While parents are the major vehicles for transferring family values to children, grandparents and extended kin also play an important socialization role (Chu, 1974, as
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regardless of economic status (Freedman, 1970; Lee, 1953; Queen & Habentein, 1967;as cited in Yi et al., 2006, p. 1043), Taiwanese children have an increased chance at being exposed to family experiences, values, behaviors, and other socialization transference between family members distinct to different generations (Yi et al., 2006, p. 1043).
According to Lee (2004), “The family offers an efficient institution for producing, consuming, and redistributing resources among family members and across generations” (as cited in Mason & Lee, 2004, p 201). Further, the three-generation household makes the family “a strong source of financial and emotional support for family members and connects grandparents and grandchildren in a unique bond”
(Hagestad, 2006, as cited in Tsai, Ho, & Tseng, 2011, p. 277). Just by interacting with other family members, all members of the family encounter financial socialization. This daily socialization can provide children with a basis for understanding the values their families place on specific material objects, help acquire financial behavior that is demonstrated as a norm for the family, and aid in the development for potential financial roles that they might inhabit in the family’s future. (Gudmunson & Danes, 2011, p. 649)
The OECD believes that it is never too early to introduce financial concepts as financial literacy requires time and practice to conceptualize. As the OECD’s
“Recommendation on Principles and Good Practices for Financial Education and Awareness” (2005) argues in Section 1, Article 7, “Financial education should be regarded as a life-time, on-going and continuous process, in particular in order to take account of the increased complexity of markets, varying needs at different life stages, and increasingly complex information.” Later, it specifies that “financial education should start at school. People should be educated about financial matters as early as possible in their lives” (Section II, Article 9). Current high school students will soon be entering their communities recognized as adults. There is an immediate need to better prepare these soon-to-be adults for the financial decisions they might be required to make, be it through both traditional educational models as well as nontraditional outlets aimed at improving future parents’ financial literacy skill sets. Furthermore, new mothers who are financially literate are more likely to insist that their own children also observe, learn, and practice good financial choices throughout life. As John (1999) observed, ‘‘family influences on socialization seem to proceed more through subtle
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social interaction than purposive educational efforts by parents[;] parents appear to have few educational goals in mind and make limited attempts to teach consumer skills’’ (as cited in Gudmunson & Danes, 2011, p. 649). Rather, children begin their financial education as soon as they are able to begin observing their parents shop and manage resources, a learning environment that occurs even before children learn to speak. Parents do not need to be actively attempting to teach their children in order to be passing on family norms. (Danes, 1994) Bowen (2002) attests that financial concepts that are abstract, such as investing, still need formal education in order to be understood because observational learning cannot ellicit enough knowledge to allow participation.
Webley and Nyhus (2006) determined that adult children were better off if their parents were conscious about money and made financial decisions with the future in mind.
However, financial socialization does not occur in only one direction, parent to child, but can also result as a child influencing their families. This is seen when children who grew up in a household with strong financial decision-making abilities are able to use these modeled adult strategies to successfully persuade their parents (Palan and Wilkes, 1997).13
Research pertaining to financial socialization and families is rare as more focus is given to the marketplace, but financial socialization is about gaining and enriching concepts found in financial literacy and directly contribute to financial well-being of the individual (Danes, 1994, p.128). Financial socialization involves the five concept areas of earning, spending, savings, borrowing, and sharing (Danes & Dunrud, 1993;
Schuchardt, Danes, Swanson & Westbrook, 1991, p.131). While financial literacy skills are often accessed through traditional educational outlets, purposive training, parents play a huge role in transferring knowledge nonpurposively to their children (Danes, 1994, p. 144). As more studies emerge about the ways in which children become young financial learners, Kuhlmann (1983) indicates “that children acquire knowledge, attitudes, and motives about their consumer role before coming to the classroom. It is also vital in the financial education of young children to take a family approach” (as cited in Danes, 1994, p. 144). Further, financial literacy initiatives need to equip parents who are becoming more aware to their own influence over their family, especially with
13 Danes (1994), Bowen (2002), Webley and Nyhus (2006), and Palan and Wilkes (1997) are cited in
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regard to the transference of financial attitudes, behaviors, and values (Danes, 1993;
Danes & Dunrud, 1993).14
The introduction of financial literacy education is necessary to ensure that financial literacy programs do not become overly-burdened with the task of rapidly prepping for financial responsibilities and decision-making too late in life. By targeting women at various life stages, Taiwan’s economic sector will experience several new developmental benefits as well as establish lines of stability and support as individuals move through various life stages, including the roles they fulfill within Taiwanese familial units.
3.5 The Buxiban Context
With roughly 18,000 cram schools in Taiwan15 (referred to as buxibans16), the business of after school and supplementary learning is an industry in Taiwan that might be rather unfamiliar in the United States and nations of the Western world as most Western
With roughly 18,000 cram schools in Taiwan15 (referred to as buxibans16), the business of after school and supplementary learning is an industry in Taiwan that might be rather unfamiliar in the United States and nations of the Western world as most Western