when we basically face the question. But how much do people know? Olivia and I were both working on savings. That's why I started with the saving model and also looking at kind of pensions, no decision about the future. And we saw that people who are very similar on many characteristics end up, as I mentioned in the model, with vastly different amount of wealth at retirement. So we thought, could that be that financial literacy play a role? But we couldn't answer these questions because there was no data that provided financial literacy measure and also linked that financial literacy to behavior. So we. We set up to measure financial literacy. The question is, what do you ask to measure financial literacy, right? Do you ask these people, know, the Black Scholes formula to price, you know, convertible bonds, right? Or, you know, what is it that you ask? So when, when we set up to do this, we were told we only had three questions, and we pushed back. He said, No, we cannot measure financial literacy with three questions. He says, you only have three questions, right? That's a module, right? You just design three as a result, we spent one year designing these three questions. And if you think, Oh, my God, why did you come up with this, basically, we consulted a lot of expert and also in survey methodology. And I hope it is clear from the type of question we designed that we went for the most basic concept. The first question is the simplest one, and it's try to assess whether people can do an interest rate calculation right in the context of a financial decision. So again, sometime people write to me and said, Did you mean more, one or two, or did you mean one, 110, we really meant one or two. It wasn't a mistake that we didn't look at this. You know, we spent a year designing these questions, and it's because we wanted to see whether people are numerate interest compounding is actually a very complex concept. And if we had asked the question differently, we would have got, we would have gotten a very low percentage of correct answer. Also know, these are multiple choices. We don't ask people to, you know, do the calculation and give us an answer. You know, we we asked to choose one, and we also have the do not know, and they refuse to answer, so that people are not forced to pick an answer. Okay, the second question is about knowledge of inflation, and it's a joint test, or whether people know what inflation is, so we don't explain inflation and doubts, right? So it's a joint test of knowledge of finance and of this concept of inflation, because in finance, most of the decisions are about transferring some of money over time, but over time, prices change, right? So this is, of course, a question that has become more relevant today, given that inflation has gone up in the past few years. But this is again, supposed to be a little harder, and also this joint knowledge. The third one is the most difficult question is meant to measure risk diversification, and again, knowledge of whether people know what a stock and a stock mutual fund is right. Is again, testing the knowledge of finance, because finance is so complex that it has its own knowledge, right, its own language. And so nobody is going to explain to you that language you have to learn the language of finance. And this is actually what I tell when I start my personal finance course. We are going to learn the language of finance together, right? I don't know if you think these are easy or or hard, but you know, these were the question that we designed to measure the APC of personal finance. So even though three was an accident, right, we were forced to only have three questions. It turned out to be a great opportunity, because actually there is room for three questions in every survey around the world. And so after we did the first survey, the results were so striking that everybody wanted to basically add this question. So we have been adding them in countries around the world, which is really great, because we have learned enormously from that, as I'm going to show in a moment. And more recently, we indeed another international comparison as a special issue of the inaugural Journal of Financial Literacy and well being, where we could get the data from the same country. So we can see, does financial literacy change over time? And also we have a lot more new countries, and so we can learn even more. Okay, so the result are really sobering, which is that, unfortunately, financial literacy, even when we measure the ABC, is strikingly low, right? So you cannot take financial literacy for guarantee, even in the US, which is a country with, of course, advanced financial market, you cannot take it for granted. Even in Finland, which is a country with a very strong education system, you cannot take it for granted in country in the g7 right? And, of course, it's very low in the developing economies. But in fact, the results are strikingly similar. What is also similar is the group which are particularly vulnerable are the same. They are the young women and those with low education and income, and I'm going to come back to some of these later on. And the result, which is unfortunately, very discouraging, is that across. Countries, we don't see any improvement in financial literacy in most of the countries, right? So financial literacy sort of stuck at this low level. So in 2016 we partnered with the TIA Institute. This is the pension fund for the education industry, and they are a non for profit. And so we designed a question, which we call the personal finance index, where we now have questions about all the decisions that people make. So we really want to have a comprehensive measure of personal finance, and we collect the data each year, in January and each year, by the way, we added. Also, kind of, even though the 28 question that we design are going to be kept the same, we can add information so we can pass different hypotheses and so on. And each year, also we have over sample a specific group, so we can look at the specific group in the population. And also, more recently, we have a look at other topics as well, like retirement, fluency and things like this. As I mentioned, we have 28 questions. We are now unrestricted, and we went for it, right? So, so we have three or four questions for each of these topic. What are the topic? Well, we have used the Council for Economic Education, national standard for financial literacy. And so these are the topic that we think people, in a sense, make decision of, and we ask questions about each of them, right? So to measure, again, their personal finance knowledge, what do we ask? Here is the example of a question, right? So what you'll see is that we are asking whether people have an understanding of this basic concept and whether they can apply it. Right? See that. So this is a question about, basically, interest compounding, right? Do people know that if you get the money and if you have money early on, right, this is more valuable that money later on, right? And so we don't ask people to make fancy calculation, right, but we ask whether they understand the in a sense, how interest compounding works, okay? And again, even though in the US, we ask people to plan for retirement, the finding is that only half of the population is able to answer this question. And one in for Americans who actually do not know that, if you have money early on, is basically more valuable and you will have more later on. Okay, this is actually very much the finding in the old population that overall, people can answer about half of these questions. And I'm pretty sure, by the way, if you you know are one of my student and you only answer half of my question in the test, you don't get a B minus or a C, you get an F, okay, you have to answer at least 70% of the question to have the quiz to be to have a passing grade, right? So this is not a passing grade. And we can also look at the distribution, right, that there is a good proportion of the population who cannot even answer seven of these 28 questions, even though, again, the question are question about everyday life financial decisions, right? We don't ask about whether you're able to price a convertible bond, right? But we ask whether you are able to understand this basic concept, and including in here are the big three.