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Annamaria Lusardi, Senior Fellow

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When Annamaria Lusardi greets students on the first day of her class on personal finance, she sets the record straight: She isn鈥檛 teaching them just how to save or invest.

鈥淭his is a happiness project,鈥 Lusardi says. 鈥淭his course is about learning how to make decisions that will set you up for success.鈥

It鈥檚 an unusual message in economics, a discipline known as the 鈥渄ismal science.鈥 But Lusardi, a SIEPR senior fellow and director of 成人大片鈥檚 Initiative for Financial Decision-Making, is used to diverging from the norm.

Through her work over the last 20 years, Lusardi has pioneered personal finance as a specialty within economics. Her 鈥溾 questions measuring financial literacy 鈥 now used in national household surveys in the U.S. and around the world 鈥 have consistently shed light on a big problem: Across the industrialized and developing world, most people don鈥檛 know how money works. And this suggests they don鈥檛 understand how financial systems work either.

鈥淭hat鈥檚 scary,鈥 says Lusardi, whose has linked mastery of basic finances to better decision-making.

Lusardi鈥檚 path to personal finance maven began when she was 19 and in her first year at Bocconi University in Milan, near her hometown. There, she says, she 鈥渇ell in love with the idea that economics gave me tools to understand the world around me and to discover answers to new questions.鈥

The question that became her life鈥檚 work came to her when she was a PhD student in economics at Princeton and working with Angus Deaton, who went on to win the Nobel Prize in economics. Poring over data on consumption and saving behavior, she was struck by an anomaly: People who looked so similar on paper 鈥 by age, education, income, and family structure 鈥 were accumulating vastly different amounts of wealth over their lifetimes. And the existing tools of economics couldn鈥檛 fully explain why.

Lusardi thought that mastery of the ABCs of personal finance, or the lack thereof, could be an important piece of the puzzle. But she couldn鈥檛 test her hunch because the necessary data on financial literacy rates didn鈥檛 exist.

Enter the Big Three 鈥 multiple-choice questions that test for a basic understanding of inflation, interest rates, and investment risks. In the two decades since Lusardi devised them with her longtime collaborator, Olivia Mitchell of the University of Pennsylvania, the simple assessment has become a leading international standard for measuring financial literacy.

Along the way, Lusardi, who taught at Dartmouth and The George Washington University before joining 成人大片 in the fall of 2023, has championed education as the way to build financial know-how. 鈥淔inancial literacy is as important as the ability to read and write,鈥 she says.

But Lusardi also knows that money matters make people anxious, and prone to forget what they learn as a result 鈥 hence her 鈥渉appiness鈥 pep talk on Day 1 of class.

鈥淚t puts everybody at ease,鈥 she says.

Story by Krysten Crawford. Photos by Ryan Zhang.