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>  News Releases >   2008 >   July

Dartmouth professor to examine financial capability in consultation with U.S. Treasury Department

Dartmouth College Office of Public Affairs • Press Release
Posted 07/23/08 • Media Contact: Genevieve Haas • (603) 646-3661

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Annamaria Lusardi
Annamaria Lusardi (photo by Joseph Mehling '69)

Dartmouth economics professor Annamaria Lusardi has been named to lead a research team that will devise a national baseline survey of financial capability and literacy among U.S. adults, in consultation with the U.S. Treasury Department. The survey will collect detailed data on how Americans fare in handling their finances. The study, funded by the FINRA Investor Education Foundation, will be the first of its kind to focus on adult consumers at both state and national levels.

The President's Advisory Council on Financial Literacy recommended that the Treasury Department's Office of Financial Education consult on the project during the Council's February 2008 meeting. Preliminary survey data is expected to be released to researchers and the general public in 2009.

"My research has shown that two thirds of older Americans don't clearly understand basic financial concepts, such as compound interest, the effects of inflation and risk diversification," said Lusardi. "Furthermore, this lack of financial literacy can be linked to a lack of preparedness for retirement. I hope my work will raise awareness and help address this national problem."

The FINRA Investor Education Foundation - the largest foundation dedicated to investor education - will design, fund and conduct the survey, with input from Treasury. Other partners include a team from Applied Research and Consulting, the Employee Benefit Research Institute and the American Institute of Certified Public Accountants.

Lusardi, whose research focuses on saving and consumption behavior, has published a number of findings on the subject of financial literacy and how it correlates to wealth and preparedness for retirement. In her paper with Wharton School professor Olivia Mitchell, "Baby Boomer retirement security: The roles of planning, financial literacy, and housing wealth," published in the Journal of Monetary Economics, Lusardi showed that financial planning is strongly correlated with financial literacy. Her research also found that planning is a strong predictor of wealth. She concluded that employees retirement seminars offered by employers and the 2006 Pension Protection Act can be helpful in jump-starting the retirement saving process. However, because different groups demonstrate different levels of financial literacy, education programs could be made more effective by targeting particular subgroups. Her book Overcoming the saving slump: How to increase the effectiveness of financial education and saving programs will be published by the University of Chicago Press at the end of the year.

Dartmouth has television (satellite uplink) and radio (ISDN) studios available for domestic and international live and taped interviews. For more information, call 603-646-3661 or see our Radio, Television capability webpage.

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