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Barbara Alemanni and Shabnam Mousavi

Financial literacy programs and policies focus mainly on providing information on financial products to help people make better decisions. We argue that the same information, however accessible, can be interpreted—and therefore acted upon—quite differently. The source of such differences is the culture of a society. Financial education policies can benefit from incorporating measures of cultural aspects into their approach.

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Nadia Linciano

Traditional educational programs are predominantly focused on knowledge and much less on motivation, attitudes, and any other factor that may impact on the individual decision making and on behaviour. Recent advances in neurosciences and cognitive sciences confirm the insights of some strands of the pedagogical literature, by unveiling that effective learning is prompted by emotional and experiential involvement. This chapter elaborates on the potential of edutainment and gamification in financial education, by reviewing the role that experiential learning may play in the transformation of knowledge into action, also through the lenses of CONSOB first steps into gamification.

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Luca Maria Pesando, Francesco C. Billari, Carlo Favero and Francesco Saita

This chapter evaluates the effectiveness of the Financial Education and Life Planning (FELIP) project, an intervention aimed at promoting financial and demographic literacy among high-school students in Lombardy, Northern Italy. The project – implemented at the school-level following a randomised design and targeting both “academic” and “vocational” schools – consisted in administering students a set of three video-based lectures followed by a class-based discussion. We show that students’ financial and demographic literacy improved as a result of the intervention, albeit differently across school types and groups of students. While financial literacy improved for all students in academic schools, gains in vocational schools were concentrated among the most academically-apt. Conversely, demographic literacy improved for all students in both types of schools. Interestingly, FELIP improved students’ opinions and attitudes towards information-seeking in vocational schools only, mainly by shifting their propensity towards life-planning. Overall, we highlight that a cost-effective and rather scalable intervention like FELIP reached students across both types of schools, yet proper policies could be targeted towards vulnerable groups, such as less academically-apt students in vocational schools.

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Fabrizio Guelpa

Knowledge and awareness of financial themes is low among SMEs, as the return on investment in financial knowledge is considered insufficient when compared to investments in alternative knowledge tied to the core business of a company. However, this could change, as industrial risk is on the rise on the product market, calling for a reduction of financial risk, which means that return on investment in financial knowledge is increasing. Similar developments are being prompted by the changes under way on the financial markets as a result of evolving rules and regulations. Awareness of the changing market context must be enhanced, and offering incentives to train could help.

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Giovanna Paladino

The interest in financial education has grown over time and few now have doubts that knowing how to manage personal money, in a conscientious and forward-looking way, is important for both individual and collective wellbeing. As citizens, we are asked to make decisions on financially related matters despite having limited skills and knowledge. The lack of financial literacy affects almost everybody, nonetheless there are groups of people that are more in need than others. Not only do they have fewer interpretative tools, but they also face social, cultural and physical obstacles. Based on the experiences of the Museum of Saving, this paper addresses the issue of how to engage disadvantaged people in a highly complex subject characterised also by behavioural biases, and offers an array of insights about how to tailor the right approach to meet their needs.

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Rossella Locatelli and Alessandra Tanda

FinTech and digitalization in finance is rapidly growing in Italy and in Europe, and, in general, everywhere in the world. Fintech is a composite and complex world. It brings important benefits because it is simple, easy to use and especially ideated for (retail) customers/consumers. But it is also not always transparent, not always regulated, not always resilient. If the ease in the access of financial services faces a low level of financial education and if the user of the services is not put in the condition to understand the product or to have all the relevant information regarding the service it is about to use, risks for the investors and consumers increase. For these reasons financial education is needed now more than ever.

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Salvatore Rossi

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Anna Emilia Berti

This paper presents criticisms that have been addressed to the OECD definition of FE from two main points of view. One states that FE is bound to be ineffective, considering the gap between knowledge and skills possessed by common consumers and the skills necessary to make sound financial choices. The other critics its focus on personal finance, and proposes a Financial Economic Education, or an Economic education, intended to give citizens the knowledge needed to understand and participate in political discussion and decision-making on economic choices. Lastly, it provides some suggestions for a learning progression in economics.

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Riccardo Viale and Umberto Filotto

Real life problems are inside a complex environment. They are typically ill-defined problems; that is, the goals are not definite, we don’t know what counts as an alternative and how many alternatives there are, it’s unclear what the consequences might be and how to estimate their probabilities and utilities. Jim Savage dubbed this environment characterized by uncertainty as Large World. Small Worlds instead are in principle predictable and without surprises and they are characterized by the knowledge of all relevant variables, their consequences and probabilities. The conditions of Small World are the requirements of Neoclassical Rationality, as Herbert Simon stressed in his Nobel Lecture. In these worlds the problems may be well-defined but they can also be computationally intractable. As is well known, an example of a computational tractable problem is the dice game. Instead the well-defined problem of the chess game is computationally intractable. In any case the real world is most of the time large and these conditions of knowledge are rarely met. Since they are rarely met, the normative rational requirements of neoclassical economics are unjustified and the application of their theories can easily lead to a disaster. Is Finance an example of Large World? Or are there financial phenomena that may be considered examples of Small Worlds? And in this case may they be dealt with by rational tools such as probabilistic reasoning and utility maximization? And if this is the case, what is the role of financial literacy and education? Is financial literacy sufficient to empower the financial decision making of savers and investors or should it be strengthened by training them also in behavioural finance and “debiasing” techniques? And can financial literacy avoid including risk literacy, which is the technique used to reason easily about probability calculus and statistics?