Eastern Connecticut State University welcomed Stanford University’s Annamaria Lusardi as the first University Hour speaker of the spring semester on Feb. 3. In her presentation, “The Importance of Financial Literacy: Lessons from Many Years of Data,” Lusardi emphasized the importance of education in financial literacy among college students and underrepresented groups.

“If you are financially literate, what does it give you?” asked Lusardi, a finance professor at Stanford’s Graduate School of Business (GSB) and senior fellow at the Stanford Institute for Economic Policy Research (SIEPR). Her research found that those with education in the subject were better equipped to invest in the stock market, resulting in an estimated wealth gap of 30-45%. 

More than 20 years ago, Lusardi was one of the first researchers to implement financial literacy questions into a national survey after realizing there was little research on the subject. 

Lusardi is also the faculty director of the Initiative for Financial Decision Making, a collaboration between SIEPR, the GSB and the Economics Department at Stanford. The initiative provides various educational tools and resources to expand access to financial education. 

Low financial literacy rates: what can we do? 

One of Lusardi’s key research findings highlights low financial literacy rates both nationally and globally. “Even if you’re born in a country with a developed economy, nobody takes the time to explain the basics,” she said.  

To solve this problem, Lusardi advocates for a national personal finance curriculum in high school. In the United States, only 26 states have such mandates. However, she encouraged students and community members to speak with legislators about adding such requirements in curricula. In 2023, the Connecticut General Assembly passed legislation adding a financial literacy requirement for high school graduation. 

For college students, financial literacy is especially crucial. “You start your economic life carrying student loans,” Lusardi explained. “As soon as you get a job, you’re going to be asked to contribute to a retirement account. You’re going to get to decide about a credit card.”  

At Stanford, Lusardi teaches a personal finance course, which has grown to be one of the most popular economics courses at the university because of its applicability to many students. Students have gone as far as to create a personal finance lab, which acts as an educational resource for students who have not taken Lusardi’s course. 

Addressing gender disparities 

Another important issue highlighted in Lusardi’s research was a significant gender gap in financial literacy. On average, there is a 10% gap between men and women globally in their ability to answer basic finance questions. She cited that on average, women tend to be more aware of their lack of knowledge than men.  

“In my view, women are in the best position to make financial decisions,” she said, emphasizing that women tend to hold the majority in financial literacy courses. “Give financial literacy to a girl, and she is even stronger.” 

Lusardi left the stage with a powerful statement. “Financial literacy (in college students) is like the water in an ecosystem,” she said, stating education in the subject to be pivotal in an individual’s financial success. “We are our own CFO,” she continued.