The new wave of STAR EMBA students has arrived on campus, and they started classes last Friday. I have written about this program in previous posts. This is an Executive Master in Business Administration (EMBA) at the George Washington University School of Business for Special Talent, Access and Responsibility (STAR) students, targeted to athletes, celebrities, and others. In addition to active and retired football players, the current class includes PGA golfers, Olympians, a TV personality, a music mogul manager, and a filmmaker. It is impossible not to spot them in the hallways of the business school, not only because on the first days they are wearing business suits and moving in groups, but also because of their “size,” in particular the football players.
As the School mentioned in the description of the program, “we continue to strive toward our mission of creating a powerful, informed and educated group of athletes and entertainers who are starting businesses, building media platforms, and getting recognized as national change makers and philanthropists.” It is exciting to have such a group of students, and I look forward to teaching them next week.
There are a few characteristics of this program and these students that are especially noteworthy. First, most of these individuals are very active in the community; they are involved in charitable organizations or have or plan to start their own foundations. The majority of these foundations are devoted to helping underprivileged children. Second, the program is open to spouses, as well. As with the first wave of students, in the second wave we have three spouses participating in the program. Finally, women are a growing group in this program. Let’s not forget, there are a lot of STAR women!
A group of faculty had dinner with this class last Friday both to welcome them to campus and to have them meet with Washington, DC-based students from the previous class. It was good to witness their enthusiasm for the program, passion for their work and activities, and curiosity to meet the other students. We had a guest speaker for dinner—an entrepreneur who spoke about his new firm, from how the idea originated to what it took to create and launch it. He spoke for a long time (and since dinner was not served until he finished, for me it felt very long), and so many hands went up after his talk that he kept answering questions for another hour (yep, and the dinner was delayed even further). I sat between two football players, one of whom was from the New York Giants. Of course we talked about the Super Bowl game but I refrained from asking him about the last five minutes of the game. Now that I know a lot more about football, I can have some good conversations with this group of students, and it is a lot of fun. Naturally, they are very conscious about their healthy eating. Since no one ate their bread, I could stuff myself with my and their bread while waiting for dinner to be served. The dinner—when it finally arrived—was very good, but the company was even better.
Monday, February 20, 2012
Wednesday, February 15, 2012
After the Super Bowl
I have watched most of the football games this season and now that the season is over, I wonder how I will spend my Sundays. Since I am new to this sport, I have sometimes watched the games while reading “Football for Dummies,” a book that turned out to be much better than I expected and does not deserve the smirks that my colleagues have offered (but perhaps they are smirking at the fact that I am such a football nerd). With football in mind, I want to discuss three topics in this post: fun, skill, and inspiration.
The games were very fun to watch and I enjoyed what comes with them as well. For Super Bowl, we had a pre-game party at my place, with all of my football fan friends. We ended up in an interesting discussion about strategies; I may have eaten too many nachos, but I did not understand the last five minutes of the Super Bowl game. We also enjoyed the commercials of course; I could not take my eyes off the TV screen.
Throughout the season, I saw great skill displayed on the field, the capacity to make critical decisions in a split second, the strenuous defense that some teams were able to put up, the ability to be so very precise, and the capacity to stay calm in a crisis. I have watched so many reversals of fortune just minutes before the end of a game that I have learned that one often cannot predict the winner until the second before a game is over. It is a tough game.
In addition to the games, I enjoy listening to player interviews. The players are articulate and succinct (a rare quality, believe me), and they are aware that many of their fans are watching. Like many, I like Tim Tebow a lot. He is unusual, but like other players, he is using his power and growing fame to make a difference in the lives of young people. Because of their enormous fame, football players have the capacity to influence so many people, to inspire them, to be role models.
And speaking of role models, when I talk about football players to young students, I point out that all of the players have college degrees and many of them from very good schools. I listened carefully to all of these schools at the Super Bowl when the players were running onto the field. Hey, Tom Brady is from the University of Michigan, and Eli Manning is from the University of Mississippi, and guess what, Eli majored in Business—how about that!
Another inspiring talent that players have is the capacity to inspire and motivate their team. I watched the video of Ray Lewis talking to his team after the loss against the Patriots. That was a very tough game and Ray offered both comfort and motivation to never give up and to do better the next time. The video ended with Ray greeting a very young fan and one of the players of the Ravens holding a little curly haired girl. Priceless! I, too, am a fan, and I can’t wait until next season.
The games were very fun to watch and I enjoyed what comes with them as well. For Super Bowl, we had a pre-game party at my place, with all of my football fan friends. We ended up in an interesting discussion about strategies; I may have eaten too many nachos, but I did not understand the last five minutes of the Super Bowl game. We also enjoyed the commercials of course; I could not take my eyes off the TV screen.
Throughout the season, I saw great skill displayed on the field, the capacity to make critical decisions in a split second, the strenuous defense that some teams were able to put up, the ability to be so very precise, and the capacity to stay calm in a crisis. I have watched so many reversals of fortune just minutes before the end of a game that I have learned that one often cannot predict the winner until the second before a game is over. It is a tough game.
In addition to the games, I enjoy listening to player interviews. The players are articulate and succinct (a rare quality, believe me), and they are aware that many of their fans are watching. Like many, I like Tim Tebow a lot. He is unusual, but like other players, he is using his power and growing fame to make a difference in the lives of young people. Because of their enormous fame, football players have the capacity to influence so many people, to inspire them, to be role models.
And speaking of role models, when I talk about football players to young students, I point out that all of the players have college degrees and many of them from very good schools. I listened carefully to all of these schools at the Super Bowl when the players were running onto the field. Hey, Tom Brady is from the University of Michigan, and Eli Manning is from the University of Mississippi, and guess what, Eli majored in Business—how about that!
Another inspiring talent that players have is the capacity to inspire and motivate their team. I watched the video of Ray Lewis talking to his team after the loss against the Patriots. That was a very tough game and Ray offered both comfort and motivation to never give up and to do better the next time. The video ended with Ray greeting a very young fan and one of the players of the Ravens holding a little curly haired girl. Priceless! I, too, am a fan, and I can’t wait until next season.
Tuesday, February 7, 2012
Financial Literacy Program Wins “Business Gives Back” Award
Last weekend I attended an event organized by George Washington School of Business (GWSB) called “Business Gives Back.” Funds raised from these events are given to student-selected organizations and initiatives. At this particular event, a student who led a high impact initiative in the DC or global community was going to be given an award.
I am very happy to report that Amir Abdallah, who founded the Financial Literacy Program at GWSB, won the award. Amir founded the GWSB Financial Literacy Program (FLP) last spring in response to the growing need for increased engagement in the community around the issue of financial literacy. The FLP is a student-run volunteer placement program that sources financial literacy volunteering opportunities in the DC area. It is open to all GW graduate students, faculty, and alumni, regardless of program or professional background, and equips volunteers with the training and support-base to learn and spread financial literacy throughout our community. The mission is to provide opportunities that are mutually beneficial, meaningful, and challenging and that utilize the talents of the GW community to spread financial empowerment on and off campus. As their website, which is listed at the end of this post, says: “As responsible professionals and recipients of higher education, we are particularly well positioned to serve as ambassadors of financial education.”
Amir emailed me last year asking if we could meet to discuss financial literacy. I hadn’t met him and was curious to hear about his interest in financial literacy. The person who came to my office that day was a very soft-spoken Global MBA student, who sat down with a notebook and took many notes while we talked. He told me about his program, the way it is organized, and what it aims to achieve. He spoke with simplicity but with the pragmatism of a person who understands that things need to get done and implemented. There was passion in his voice and in his words for this topic—something I am always paying attention to.
Perhaps because he is slim and so articulate, that day Amir reminded me of a young President Obama; a young person who has thought to use his knowledge and skills to lead initiatives that can benefit society. And on Saturday, we celebrated the Financial Literacy Program that, from its inception, has reached 340 individuals (many of whom are students in poor schools). Amir was there on center stage. He described the program yet again using the combination of passion and pragmatism he had displayed when we first talked. He was irresistible and won by a wide margin. This blog is to celebrate a young leader.
http://gwsb.campusgroups.com/flp/home/
You can see Amir’s big smile in the Washington Post article about the event: (http://www.washingtonpost.com/business/capitalbusiness/gwu-honors-grads-social-responsibility/2012/02/03/gIQAmc39rQ_story.html).
I am very happy to report that Amir Abdallah, who founded the Financial Literacy Program at GWSB, won the award. Amir founded the GWSB Financial Literacy Program (FLP) last spring in response to the growing need for increased engagement in the community around the issue of financial literacy. The FLP is a student-run volunteer placement program that sources financial literacy volunteering opportunities in the DC area. It is open to all GW graduate students, faculty, and alumni, regardless of program or professional background, and equips volunteers with the training and support-base to learn and spread financial literacy throughout our community. The mission is to provide opportunities that are mutually beneficial, meaningful, and challenging and that utilize the talents of the GW community to spread financial empowerment on and off campus. As their website, which is listed at the end of this post, says: “As responsible professionals and recipients of higher education, we are particularly well positioned to serve as ambassadors of financial education.”
Amir emailed me last year asking if we could meet to discuss financial literacy. I hadn’t met him and was curious to hear about his interest in financial literacy. The person who came to my office that day was a very soft-spoken Global MBA student, who sat down with a notebook and took many notes while we talked. He told me about his program, the way it is organized, and what it aims to achieve. He spoke with simplicity but with the pragmatism of a person who understands that things need to get done and implemented. There was passion in his voice and in his words for this topic—something I am always paying attention to.
Perhaps because he is slim and so articulate, that day Amir reminded me of a young President Obama; a young person who has thought to use his knowledge and skills to lead initiatives that can benefit society. And on Saturday, we celebrated the Financial Literacy Program that, from its inception, has reached 340 individuals (many of whom are students in poor schools). Amir was there on center stage. He described the program yet again using the combination of passion and pragmatism he had displayed when we first talked. He was irresistible and won by a wide margin. This blog is to celebrate a young leader.
http://gwsb.campusgroups.com/flp/home/
You can see Amir’s big smile in the Washington Post article about the event: (http://www.washingtonpost.com/business/capitalbusiness/gwu-honors-grads-social-responsibility/2012/02/03/gIQAmc39rQ_story.html).
Wednesday, January 25, 2012
An America built to last needs to invest in education
In his State of the Union address President Obama spoke of an America “built to last.” I am glad that the focus of policy is turning to the long run. One essential component of such a built-to-last idea must deal with education. In an increasingly global and complex economy, citizens need to have the skills to successfully participate in labor markets, not to earn low and stagnating wages but wages that allow them to be part of a solid middle class, to send their children to college, and to save for retirement.
The President did talk of education and the important role of education. But it is going to take more than education reform that allows schools to be creative in their curriculum and to reward good teachers. America needs to invest in education if it wants an economy built to last. While it is good to invite state and local governments to devote more of their budgets to higher education rather than slushing education expenses, it is important to recognize that the federal government has an important role to play to foster education. More funds to research and technology can contribute not only to support higher education but also to fuel innovation and ideas that form the basis of growth (and the growth of well-paying jobs). Good education and solid training are also at the base of innovative entrepreneurship. Access to finance has been mentioned, by the President, too, as one of the major impediments to entrepreneurship, but in my view (and according to my research), education is far more important, in particular if the entrepreneurs we aim to cultivate are innovators rather than self-employed individuals who are trying to make a living. It is also important to recognize that a good education is not built on good colleges or community colleges alone but on a strong educational system, from kindergarten to college and beyond.
President Obama mentioned that college education cannot be a luxury. But with the cost of college rising faster than inflation and faster than the growth in wages, in particular in the lower part of the wage distribution, we are headed in that direction as the purchasing power of workers is not keeping up with the cost of a college education. If we are planning for the future, it is important to find ways to make college affordable and within reach of the many families that aspire to send their children to college. As I have mentioned in many of my previous posts, a college education is often the most important investment that a person can make.
I want to end this post with a statement that President Obama made during his address and that can be summarized as follows: teachers matter. This does not require much comment as it speaks for itself. All of us can name a teacher who has been influential in our life and who has made a difference. For me, it was my high school literature teacher. Her name is Ada Pucci. Even after more than 30 years, I think often of her and of the encouragement she gave me; we have talked on the phone over the years and when I am in Italy, and I go and visit her. Teachers matter, and they matter to what students can do in the long run. They too should be part of the policy for an America built to last.
The President did talk of education and the important role of education. But it is going to take more than education reform that allows schools to be creative in their curriculum and to reward good teachers. America needs to invest in education if it wants an economy built to last. While it is good to invite state and local governments to devote more of their budgets to higher education rather than slushing education expenses, it is important to recognize that the federal government has an important role to play to foster education. More funds to research and technology can contribute not only to support higher education but also to fuel innovation and ideas that form the basis of growth (and the growth of well-paying jobs). Good education and solid training are also at the base of innovative entrepreneurship. Access to finance has been mentioned, by the President, too, as one of the major impediments to entrepreneurship, but in my view (and according to my research), education is far more important, in particular if the entrepreneurs we aim to cultivate are innovators rather than self-employed individuals who are trying to make a living. It is also important to recognize that a good education is not built on good colleges or community colleges alone but on a strong educational system, from kindergarten to college and beyond.
President Obama mentioned that college education cannot be a luxury. But with the cost of college rising faster than inflation and faster than the growth in wages, in particular in the lower part of the wage distribution, we are headed in that direction as the purchasing power of workers is not keeping up with the cost of a college education. If we are planning for the future, it is important to find ways to make college affordable and within reach of the many families that aspire to send their children to college. As I have mentioned in many of my previous posts, a college education is often the most important investment that a person can make.
I want to end this post with a statement that President Obama made during his address and that can be summarized as follows: teachers matter. This does not require much comment as it speaks for itself. All of us can name a teacher who has been influential in our life and who has made a difference. For me, it was my high school literature teacher. Her name is Ada Pucci. Even after more than 30 years, I think often of her and of the encouragement she gave me; we have talked on the phone over the years and when I am in Italy, and I go and visit her. Teachers matter, and they matter to what students can do in the long run. They too should be part of the policy for an America built to last.
Thursday, January 5, 2012
Wishes for the new year
As the new year starts, I have many wishes for financial literacy. I list the top three below:
Wish #1. I hope a leader to champion the cause of financial literacy will emerge and help give this topic the national and international attention it deserves. Michelle Obama has been the celebrity behind obesity and has helped not just raise attention around this important topic but also push for relevant programs in schools. There is a striking similarity between obesity and financial illiteracy. According to statistics, one third of the population is obese. Well, the same (and even worse) figures can be cited for financial illiteracy; about half of the population does not know the abc’s of finance and economics. There are severe costs associated with obesity, and there are equally severe costs of financial illiteracy (if in doubt, check the figures resulting from the financial crisis). A lot of initiatives have been undertaken at the national level to address obesity, from a revised food pyramid to limiting the amount of junk food available in cafeterias and vending machines. I may be one of five people in the country to know about the official web site offering financial information (do you want to guess which one it is?). Other celebrities have helped raise awareness of a variety of national and global problems. For example, Al Gore increased the attention on the environment and global warming. While I do not think the Artic will melt in the next few years (if I am wrong, please let me know), we are discussing or taking a lot of measures to address this long-term problem. On the other hand, the problem of financial illiteracy is urgent and pressing.
I do not have a strong preference about who this leader will be, but it would be good if he/she had a face (institutions are great, but it is hard to compete with Happy Feet). He/she should also be substantially liked by the public—a difficult objective in these days of falling financial geniuses, but there are many celebrities that people love. A sports celebrity would be great (Who does not like sports? Raise your hand!), in light of the similarity between success in sports and success with financial matters: it takes dedication, practice, and discipline!
Wish #2. I hope some BIG initiatives will emerge for financial literacy. As I have lamented in previous posts, a lot of the discussion about financial literacy has focused on its cost (as if we should or could offer it for free), and many initiatives to promote financial literacy are limited in scope and objectives. But this is a global problem that is becoming more and more pressing by the day (most of the political leaders in Europe have been ousted as a result of the sweeping financial crisis). This situation needs some big initiatives. How about a national campaign, or even a global initiative on financial literacy? How about a museum for financial literacy? We have declared April financial literacy month, so how about doing something concrete and big during that month (March or October are good for me too; I am not fussy about which month it occurs) that has lasting effects?
Wish #3. I hope the new year will see financial literacy in the schools; if not in the United States, then at least in a sizeable number of countries. Financial literacy is an essential tool for anyone who wants to be able to succeed in today’s society, make sound financial decisions, and—ultimately—be a good citizen. The financial crisis has put economic news on the front pages of newspapers almost daily, requiring individuals not just to be abreast of concepts such as deficit, national debt, and interest rate spread but also to evaluate the economic reforms that political leaders are proposing. Moreover, the cost of college education has been increasing at a rate faster than inflation, requiring students and their families to start planning for college as soon as possible, to be savvy about financial aid, and to manage student loans effectively. And young people are required to make one of the most important decisions of their lifetime—whether to invest in higher education—during high school, and they should make it in conjunction with a good understanding of the costs and benefits of that decision.
Perhaps I am only dreaming, but dreams are good. And my fourth wish is that all of you have a happy new year. Be in good financial health!
Wish #1. I hope a leader to champion the cause of financial literacy will emerge and help give this topic the national and international attention it deserves. Michelle Obama has been the celebrity behind obesity and has helped not just raise attention around this important topic but also push for relevant programs in schools. There is a striking similarity between obesity and financial illiteracy. According to statistics, one third of the population is obese. Well, the same (and even worse) figures can be cited for financial illiteracy; about half of the population does not know the abc’s of finance and economics. There are severe costs associated with obesity, and there are equally severe costs of financial illiteracy (if in doubt, check the figures resulting from the financial crisis). A lot of initiatives have been undertaken at the national level to address obesity, from a revised food pyramid to limiting the amount of junk food available in cafeterias and vending machines. I may be one of five people in the country to know about the official web site offering financial information (do you want to guess which one it is?). Other celebrities have helped raise awareness of a variety of national and global problems. For example, Al Gore increased the attention on the environment and global warming. While I do not think the Artic will melt in the next few years (if I am wrong, please let me know), we are discussing or taking a lot of measures to address this long-term problem. On the other hand, the problem of financial illiteracy is urgent and pressing.
I do not have a strong preference about who this leader will be, but it would be good if he/she had a face (institutions are great, but it is hard to compete with Happy Feet). He/she should also be substantially liked by the public—a difficult objective in these days of falling financial geniuses, but there are many celebrities that people love. A sports celebrity would be great (Who does not like sports? Raise your hand!), in light of the similarity between success in sports and success with financial matters: it takes dedication, practice, and discipline!
Wish #2. I hope some BIG initiatives will emerge for financial literacy. As I have lamented in previous posts, a lot of the discussion about financial literacy has focused on its cost (as if we should or could offer it for free), and many initiatives to promote financial literacy are limited in scope and objectives. But this is a global problem that is becoming more and more pressing by the day (most of the political leaders in Europe have been ousted as a result of the sweeping financial crisis). This situation needs some big initiatives. How about a national campaign, or even a global initiative on financial literacy? How about a museum for financial literacy? We have declared April financial literacy month, so how about doing something concrete and big during that month (March or October are good for me too; I am not fussy about which month it occurs) that has lasting effects?
Wish #3. I hope the new year will see financial literacy in the schools; if not in the United States, then at least in a sizeable number of countries. Financial literacy is an essential tool for anyone who wants to be able to succeed in today’s society, make sound financial decisions, and—ultimately—be a good citizen. The financial crisis has put economic news on the front pages of newspapers almost daily, requiring individuals not just to be abreast of concepts such as deficit, national debt, and interest rate spread but also to evaluate the economic reforms that political leaders are proposing. Moreover, the cost of college education has been increasing at a rate faster than inflation, requiring students and their families to start planning for college as soon as possible, to be savvy about financial aid, and to manage student loans effectively. And young people are required to make one of the most important decisions of their lifetime—whether to invest in higher education—during high school, and they should make it in conjunction with a good understanding of the costs and benefits of that decision.
Perhaps I am only dreaming, but dreams are good. And my fourth wish is that all of you have a happy new year. Be in good financial health!
Tuesday, December 27, 2011
The new financial literacy seminar series
As December comes to an end, I am thinking of some initiatives undertaken this year. One stands out, as it is rather recent and it is in the process of being evaluated to make it even better: our Financial Literacy Seminar Series. Started last October, this is a joint project between the George Washington University School of Business and the Federal Reserve Board (FRB) with the goal of hosting cutting edge research on financial literacy. We invited all individuals and institutions interested in financial literacy in the Washington, DC, area, and because presentations have been taped and posted on the web, everybody who is interested in financial literacy can watch the presentations or read the papers. They are posted on the seminar’s web page: http://business.gwu.edu/flss/.
We had a distinguished group of speakers in the fall term. Our inaugural seminar was given by Olivia Mitchell from the Wharton School, whose talk examined the link between financial literacy and wealth accumulation. Her talk was followed by a panel of policy experts, including Gail Hillebrand from the Consumer Financial Protection Bureau, Karen Dynan from Brookings, and Jason Fichtner from George Mason University (formerly the Deputy Commissioner of SSA). In subsequent seminars, Robert Clark from North Carolina State University presented his work on workplace financial education, a very important topic when looking at financial education for the adult population; Stephan Meier from Columbia Business School examined the link between financial literacy and subprime mortgages, showing that numerical ability is strongly associated with mortgage delinquency and default; Bilal Zia from the World Bank presented an evaluation of financial literacy programs in India; and Jonathan Zinman from Dartmouth College examined household debt and, in particular, credit card debt and the way it could be managed better. Our last speaker was Brigitte Madrian from Harvard University. She reported on some important features of default options, i.e., the fact that when employees are automatically enrolled into pensions, many of them stay enrolled at the default rate, even when that rate is a “bad” one and unlikely to correspond to a rate that the individual would have chosen had he/she made an active choice. Most importantly, the employees who tend to stick to the default are disproportionately those with low income, which is often a proxy for low financial literacy.
Different seminars in the series had different formats. While the majority of talks were given by academics, at times we had a discussant or, as mentioned above, a panel of policy experts. Even without a discussant, our audience had so many experts in this field that there always was a very lively discussion with many questions asked of the speaker. To continue the discussion in a less formal setting, we held a reception after the seminar so that participants could continue the discussion with either the presenter or other attendees (sometimes with the help of a glass of Italian wine). The Dean of the Business School would also stop by the reception to greet the speaker or meet the attendees and to hear how the School could continue to promote financial literacy.
One of the privileges of organizing the seminar series is that I get to meet with the seminar speakers, discuss their paper in depth, hear in more detail their views and their insights as well as learn about their future projects. Another equally important privilege was getting to know and work with a group of researchers from the Federal Reserve Board. They have been a great group to work with: they combine an interest in theoretical and empirical research with a focus on policy; they ask important questions and have very high standards for research. Together, we were unstoppable; we started to work on the series in August and in October we were ready to start.
And speaking of privileges, last June, I had the opportunity to meet with Chairman Bernanke. Sitting in his elegant office at the FRB, I told him about the projects that our teams at the Financial Literacy Center (FLC) were working on and what we were doing to promote financial literacy. He proposed more interaction between the researchers working on financial literacy and the researchers from the Federal Reserve Board and suggested organizing some joint activities. As a result, the Financial Literacy Seminar Series was born, and it benefits from the financial support of the Federal Reserve Board. Because the end of the year is a time for evaluation, I have to say I am very proud of our new Financial Literacy Seminar Series. And I am especially proud of being a student of Ben Bernanke.
We had a distinguished group of speakers in the fall term. Our inaugural seminar was given by Olivia Mitchell from the Wharton School, whose talk examined the link between financial literacy and wealth accumulation. Her talk was followed by a panel of policy experts, including Gail Hillebrand from the Consumer Financial Protection Bureau, Karen Dynan from Brookings, and Jason Fichtner from George Mason University (formerly the Deputy Commissioner of SSA). In subsequent seminars, Robert Clark from North Carolina State University presented his work on workplace financial education, a very important topic when looking at financial education for the adult population; Stephan Meier from Columbia Business School examined the link between financial literacy and subprime mortgages, showing that numerical ability is strongly associated with mortgage delinquency and default; Bilal Zia from the World Bank presented an evaluation of financial literacy programs in India; and Jonathan Zinman from Dartmouth College examined household debt and, in particular, credit card debt and the way it could be managed better. Our last speaker was Brigitte Madrian from Harvard University. She reported on some important features of default options, i.e., the fact that when employees are automatically enrolled into pensions, many of them stay enrolled at the default rate, even when that rate is a “bad” one and unlikely to correspond to a rate that the individual would have chosen had he/she made an active choice. Most importantly, the employees who tend to stick to the default are disproportionately those with low income, which is often a proxy for low financial literacy.
Different seminars in the series had different formats. While the majority of talks were given by academics, at times we had a discussant or, as mentioned above, a panel of policy experts. Even without a discussant, our audience had so many experts in this field that there always was a very lively discussion with many questions asked of the speaker. To continue the discussion in a less formal setting, we held a reception after the seminar so that participants could continue the discussion with either the presenter or other attendees (sometimes with the help of a glass of Italian wine). The Dean of the Business School would also stop by the reception to greet the speaker or meet the attendees and to hear how the School could continue to promote financial literacy.
One of the privileges of organizing the seminar series is that I get to meet with the seminar speakers, discuss their paper in depth, hear in more detail their views and their insights as well as learn about their future projects. Another equally important privilege was getting to know and work with a group of researchers from the Federal Reserve Board. They have been a great group to work with: they combine an interest in theoretical and empirical research with a focus on policy; they ask important questions and have very high standards for research. Together, we were unstoppable; we started to work on the series in August and in October we were ready to start.
And speaking of privileges, last June, I had the opportunity to meet with Chairman Bernanke. Sitting in his elegant office at the FRB, I told him about the projects that our teams at the Financial Literacy Center (FLC) were working on and what we were doing to promote financial literacy. He proposed more interaction between the researchers working on financial literacy and the researchers from the Federal Reserve Board and suggested organizing some joint activities. As a result, the Financial Literacy Seminar Series was born, and it benefits from the financial support of the Federal Reserve Board. Because the end of the year is a time for evaluation, I have to say I am very proud of our new Financial Literacy Seminar Series. And I am especially proud of being a student of Ben Bernanke.
Thursday, December 8, 2011
Learning from Elsa Fornero
The front page of the Wall Street Journal last Monday, December 5, had three pictures of a woman in tears. That woman is Elsa Fornero, the Welfare Minister in the new “technocratic” government of Italy. The fact that she was in tears was truly remarkable and it deserved to be on the front page of a major business newspaper. This is something new, and there is a lesson to be learned from it.
Elsa Fornero, a professor of Economics at the University of Turin, is an international expert on pensions. In charge of one of the most difficult reforms, i.e., changing the pension system in Italy, she has set out to implement a set of new and severe measures that nobody before her has been able to do, even though the current system is unsustainable.
Reforms might be right, but they are painful, and the fact that they are necessary does not alleviate any of the pain they inflict. Technocrats normally describe necessary reforms as the inevitable medicine that a country has to swallow to get better; the numbers are on their side, and no one had ever shed a tear when reform might mean that someone wouldn’t be able to pay their bills at the end of the month. But not Elsa Fornero. The woman who, for more than forty years, has done the calculations about the pension system in Italy; has shown in many scholarly papers that the Italian pension system is unfair, inefficient, and too expensive; has set up a center to study this topic in the most rigorous way, looking at data both in Italy and in other countries, was there at center stage to announce her reforms. The new Minister, who was appointed for her unique expertise, stopped speaking at the very moment she had to pronounce the word “sacrifice”—and cried.
This is not only a sign of humanity, a recognition that reforms often equal pain, but also an act of humility and of immense courage. It took a woman to attack reform of one of the most difficult and stubborn pension systems. She had one week to do it. She knew what to do and what was necessary. And when she described it, she told it as it is, and she cried.
I hope this is the start of a new phase both for politics and for women. Politicians need to have the skills and good judgment to set countries on sustainable paths and (financially literate) citizens should hold them accountable. And I hope we are done with the “iron lady” and similar clichés about women in command. I highly recommend that other Italian politicians be so bold in their actions as the Fornero reforms, as well as show that they care about the well-being of their fellow citizens. We all can learn from Elsa Fornero to be ourselves; in her case, a woman who cares. When I grow up, I want to be Elsa Fornero.
Elsa Fornero, a professor of Economics at the University of Turin, is an international expert on pensions. In charge of one of the most difficult reforms, i.e., changing the pension system in Italy, she has set out to implement a set of new and severe measures that nobody before her has been able to do, even though the current system is unsustainable.
Reforms might be right, but they are painful, and the fact that they are necessary does not alleviate any of the pain they inflict. Technocrats normally describe necessary reforms as the inevitable medicine that a country has to swallow to get better; the numbers are on their side, and no one had ever shed a tear when reform might mean that someone wouldn’t be able to pay their bills at the end of the month. But not Elsa Fornero. The woman who, for more than forty years, has done the calculations about the pension system in Italy; has shown in many scholarly papers that the Italian pension system is unfair, inefficient, and too expensive; has set up a center to study this topic in the most rigorous way, looking at data both in Italy and in other countries, was there at center stage to announce her reforms. The new Minister, who was appointed for her unique expertise, stopped speaking at the very moment she had to pronounce the word “sacrifice”—and cried.
This is not only a sign of humanity, a recognition that reforms often equal pain, but also an act of humility and of immense courage. It took a woman to attack reform of one of the most difficult and stubborn pension systems. She had one week to do it. She knew what to do and what was necessary. And when she described it, she told it as it is, and she cried.
I hope this is the start of a new phase both for politics and for women. Politicians need to have the skills and good judgment to set countries on sustainable paths and (financially literate) citizens should hold them accountable. And I hope we are done with the “iron lady” and similar clichés about women in command. I highly recommend that other Italian politicians be so bold in their actions as the Fornero reforms, as well as show that they care about the well-being of their fellow citizens. We all can learn from Elsa Fornero to be ourselves; in her case, a woman who cares. When I grow up, I want to be Elsa Fornero.
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