Cooking takes the field alongside financial education. It does it with us at Il Bollettino, every week on the website and on social media with our column The financial recipe book, with an ad hoc glossary. And he does it here, with this book. Compared to the rest of the OECD countries, Italy still suffers from a significant gap in terms of economic and financial knowledge, but important steps forward have been made in recent years. In 2020, our country occupied the penultimate place in this area. However, in the following three years the situation improved slightly. Indeed, in 2023 the level of financial literacy of adults increased (from 10.2 in 2020 to 10.6 in 2023, on a scale of 0 to 20), according to the Financial Literacy and Digital Finance Skills Surveys conducted of the Bank of Italy.

An improvement driven by the increase in virtuous behaviors and attitudes in the financial field. The behaviors concern the management of financial resources in the short and long term. Attitudes, on the other hand, refer to individuals’ orientation towards saving and being careful when using money. Two dimensions of financial literacy are particularly important for participation in financial markets: resilience in the face of difficulties and financial well-being, according to the Bank of Italy. It also increases knowledge of the concept of inflation and its consequences on the purchasing power of families.

A trend favored by the strong rise in inflation that has characterized the last two years, with a consequent increase that has led to intense information and financial education activities by the Bank of Italy on this topic. But there is still a long way to go in terms of economic and financial education. «The leitmotif is always the same. The data is linked to surveys that see Italy having to fill a gap with OECD countries. The good news is that things appear to be starting to move.

Great help came from the Capital Law Decree, which imposed financial education in primary schools. Consequently, economic and financial education will begin to be taught in civic education class. The topic is becoming of public importance. We must continue to work in this direction”, explains Luciano Canova, Professor of Behavioral Economics at the Enrico Mattei School and author of the book A pinch of economics, co-written with Giovanna Paladino, published by Mondadori Electa.

What is opportunity cost?

«It is a key concept in the economic field, the first that is taught during the microeconomics course. I always tell students that economics is a discipline that helps us decide what we say no to. We have to weigh the different options. The opportunity cost measures the value of the alternative that we do not choose. It allows, for example, to understand how a person can best spend an hour of time. Sometimes we tend to underestimate the importance of this analysis, we are not good at weighing the alternatives.”

Why do we need to pay attention to the relationship between risk and return in investments and how to do it?

«Every time we make decisions we can take a path that gives maximum performance or satisfaction. The safer route leads to a lower return. Sticking to the cooking metaphor, it’s like talking about two recipes in which one is complicated but gives great satisfaction. Zero-risk recipes, on the other hand, give little satisfaction when they are made. To give an example, in the first case it is like investing in Apple when it was still a startup. In the second, however, we talk for example about government bonds, which are certainly safer than traditional shares, but which ensure a lower return”.

Speaking of investments, a product that is enjoying considerable success in Italy are BTPs (Multi-Year Treasury Bonds), especially in the latest issues. For what reason?

«Multi-year Treasury Bonds are highly publicized and have met with a lot of demand this year. Undoubtedly they are a rather safe way of investing your savings. After that, there is a big sponsorship business that pays. Probably also for this reason the demand was high. Plus, lately they’ve been paying a higher yield than the standard.”

Speaking of cuisine, can we imagine the recipe for the country’s growth?

«In economics the image of the cake is often used. There are few factors pushing up growth. These include the land, the physical resources available to a country and the population. A key factor, which has a positive correlation with growth. If you have a lot of land you have a lot of space to allocate production. Added to this is capital, and we are not talking about money itself, but about the physical assets that allow us to produce: machinery, plants, factories. The most important ingredient is technology, which means putting production factors together to make them perform as efficiently as possible. These are the key elements to grow the country in a healthy way. Italy, especially in the last 30 years, has a productivity problem, that is, how much cake is produced with the same amount of time and ingredients.”

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What are the consequences?

«This translates into fewer resources to invest in salaries, for example. It represents a nice worm. For this reason, we should try to increase the productivity of the system. An objective that is achieved by simplifying bureaucratic processes, making the timing of cases certain to encourage investments, but also by changing the structure of work to make it more flexible.

It is not done because it is a system connected with party policies: from right to left there was no desire to talk about the topic. The Italian cake is the same as it was 30 years ago. In Germany an agreement was recently signed which provides for an increase in wages and a decrease in work. If in an hour of work there you produce 67 euros and in Italy 50, you have 16 euros more that you can use to increase wages and reduce working hours because you can combine the two things. In Italy working hours are comparable to the European average, but what matters is quality.”

In recent times, Italians’ interest in financial markets and investments has grown. How do you explain this circumstance?

«It should be a priority for people to have a basic understanding of economics and finance. Being informed about macroeconomic trends is useful for allocating money more efficiently. We welcome the fact that this trend exists and continues, because it is by being informed that people can make more informed decisions. What are the factors that determine the economic impacts? What is happening in geopolitics? In an interconnected global market, staying informed about trends is crucial for making timely and informed decisions.”

Which generations are most attentive to saving?

«Generations The issue is not to lose the older groups along the way, who risk being cut off by the most innovative tools. They are the ones who need the most attention, since they represent the hard core. The younger generations, on the other hand, were born in a context in which we are used to being informed and having assets to invest. As a result, it is not uncommon for them to consult a financial advisor to find out where to best direct their resources.”

The book also talks about the gender gap: why can pocket money help?

«We must increasingly fight gender stereotypes. My co-author did a study on the fact that there are cultural legacies why girls tend to have less pocket money. Having pocket money available or not is the first step in making economic and financial decisions from an early age. It is important to give sums of money to girls too and teach them to plan. The reason is that the sooner decisions are made, the sooner the principles are internalized. We need to train the little ones to make choices to prepare them for when there will be the most important ones in life, for example the mortgage to buy a house.” ©