Here's a quick financial-literacy quiz for you savers and investors out there, courtesy of Wharton professor Olivia S. Mitchell:

1. Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After 5 years, how much do you think you would have in the account if you left the money to grow?

a. More than $102

b. Exactly $102

c. Less than $102

2. Imagine that the interest rate on your savings account was 1 percent per year and inflation was 2 percent per year. After 1 year, how much would you be able to buy with the money in this account?

a. More than today

b. Exactly the same

c. Less than today

3. Please tell me whether this statement is true or false: "Buying a single company's stock usually provides a safer return than a stock mutual fund."

I'm going to take a flier on this newspaper's readers, and guess that all of you know that the answer to Question 1 is "More than $102." Truth to tell, I'd make nearly the same bet if the choice had been "more or less than $110," since I trust you understand what we in the platitude business like to call "the magic of compounding."

I'm confident, too, that Inquirer readers know what can happen - and has happened lately - when inflation is very low but rates offered for savings are even lower. And I'd bet most of you know that a mutual fund, while hardly immune from risk, is safer than buying a single stock. If not, just ask someone who invested a decade ago in General Electric.

Here's one last bet: You'll also be as astonished as Mitchell by how poorly a sample of Americans over 50 fared when asked those same three questions, which Mitchell and her coresearcher, Annamaria Lusardi of George Washington University, call "the Big Three" of financial literacy. Little more than half could answer both the first two correctly, and only a third could answer all three.

Financial illiteracy and innumeracy don't just trouble Mitchell because she believes people ought to know more. As a professor of risk management and director of Wharton's Pension Research Council, she spends a lot of time worrying that Americans are ill-prepared for retirement, especially with Social Security's long-term fiscal health dependent on politicians' willingness to do something that's lately seemed a distant memory: Cross partisan lines to solve problems.

I wrote last month about President Obama's proposal to address one piece of the retirement puzzle: the conflicts of interest that lead some advisers to benefit themselves more than clients - a problem estimated to shortchange retirees by $17 billion a year. To fix that, Obama wants to impose a fiduciary duty - a legal responsibility to act and advise in a client's best interests - on all such professionals, rather than only on some, such as registered "investment advisers."

Mitchell's focus is on another piece of the same puzzle: finding the gaps in financial knowledge, to help people better manage assets before and in retirement. It's a huge challenge, as the response to the Big Three shows.

"If people can't understand compound interest or even simple interest," she asks, "how are they possibly going to understand mortgages, or credit cards, or payday loans, or the question of whether to lease or buy a car?"

Mitchell sees financial education as an investment in human capital that can pay off broadly in the long run, since financially knowledgeable people tend to make wiser choices. And she says financial education in high school and the workplace can move the needle significantly.

How much does it matter? Mitchell and Lusardi have estimated that "more than one-third of U.S. wealth inequality could be accounted for by differences in financial knowledge." That, too, is an astonishing figure, especially in light of the 2008 financial crisis - which showed, among other things, that even sophisticated investors didn't always understand the complex financial instruments they were buying.

This much is clear: Financial literacy can't solve every problem, but it protects people across all ages and incomes. It's scary that we do it so poorly. Mitchell's findings should challenge us all to improve.

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