‘We believe that we are training the future leaders of Israel,” says Prof. Orly Sade, dean of the Hebrew University Business School. “Talking about financial literacy can provide added value, no matter what one plans on doing in life.”
Sade, the first woman to hold a senior finance professorship at Hebrew University, is widely known for her research on behavioral and experimental finance and the design of financial markets. Her work has appeared in prestigious journals, such as The Journal of Financial Economics, The Review of Financial Studies, and The Journal of Business. Sade’s expertise has guided Israeli and international financial institutions and government committees, and she serves on the board of Clal Insurance.
One of her main areas of research centers on the psychology of finance, exploring how people make financial decisions throughout their lives and how they deal with the obstacles that arise. “One obstacle is the lack of knowledge,” she explains. “The overall aspect of financial literacy is quite important.” A second type of obstacle, she says, is a psychological bias. “People may be familiar with financial terminology and may have the capacity and the knowledge of many things that are related to finance, and yet they may have behavioral biases that can affect their ability to operate in different circumstances.”
One practical example of a psychological bias that can affect financial decision-making is the “ostrich effect,” named after the legend that ostriches bury their heads in the sand to avoid reality. Sade, together with Hebrew University Prof. Dan Galai, wrote a paper explaining that people tend to ignore specific financial information when it is negative or during times of uncertainty, and may, for example, avoid checking their bank balance when it is dangerously low.
To remedy this, Sade recommends creating a scenario that enables people to overcome such behavior. “If you know that you may be prone to ostrich-type behavior, and you may not check your balances when they aren’t as high as they should, you can create a calendar and say to yourself, ‘I’m going to check it every Sunday, the second Sunday of the month, or whenever.’ Create a particular well-known pattern of things that are repeated, and then you can mitigate against some of the bias.”
Another aspect of this behavior was revealed in a recent academic paper co-authored by Sade and Prof. Daniel Ben-David of Tel Aviv University, in conjunction with Intuit, that examined people’s responses to notices from their bank indicating they were about to enter a negative balance.
“The algorithm was sending notifications with a warning to individuals. One would think that those in a difficult financial position, for whom an additional fee would be consequential, would be more likely to open those notifications. However, they were less likely to open it. Instead, people with a higher net worth were the ones who actually opened the notification and acted upon it.”
Sade believes that people need to learn basic financial principles from a young age. Several years ago, she co-authored the popular children’s book How Ella Grew an Electric Guitar, which tells the story of an 11-year-old girl, Ella, who wants to buy an electric guitar and asks her parents to buy it for her. They tell her that if she wants a guitar, she must finance it herself. The book is about Ella’s journey to learn basic business skills so she can raise the money to purchase it.
Returning to the subject of the Hebrew University Business School, Sade notes the school’s slogan, “Global Academic Excellence with an Israeli Heart,” and explains the practical steps it has taken to embody this concept. “Like so many others, we woke up on Oct. 7 and asked ourselves, ‘This is a really challenging situation. What should we do right now?’ We decided to act and react to the situation, to use our unique knowledge and know-how, and to go out and improve our surroundings.”
Hebrew University Business School students went to Nofei Habesor, a regional high school in the Eshkol Regional Council near the Gaza border. On Oct. 7, multiple students and staff from the school had been killed or taken hostage. “We designed special programs for different types of victims of the war. We provided the students with introductory courses in business in order to give them hope and to remind them that there are other things besides what’s going on around us.”
Sade mentions another important initiative – The Sagi Project, named in memory of Sagi Golan, a student of hers killed on Oct. 7. Understanding the transitional nature of self-confidence during wartime, the program offers MBA foundation modules in an environment guided by personalized practical solutions that address the trauma of both physical injury and psychological shock these students have endured.
Another project that Sade mentions was carried out in conjunction with Clal Insurance, which awarded scholarships to female students impacted by the war, in memory of women who lost their lives as a result of the war.
As the first woman to hold a senior finance professorship at Hebrew University, Sade acknowledges that it is never easy to enter a new field as a member of a minority. “It requires determination, and it requires the ability to challenge some assumptions. If it’s interesting, if it’s worth doing, then I’m in favor of challenging assumptions. I’m in favor of providing evidence that it can be done.”
Today, 50% of the PhD students Sade advises are women, and she believes this trend will continue, benefiting the university and its students. “I genuinely believe that diversity of opinion contributes to the conversation. As a result, if you check the leadership of the Hebrew University Business School, many leading positions are held by female professors nowadays,” she notes, adding that “above and beyond gender, there are additional different voices, different opinions, and different points of view that characterize our school. I’m very proud that we can actually make a difference and continue to operate.”
Sade is the great-granddaghter of Rabbi Ben-Zion Meir Hai Uziel (1880-1953), the Sephardi chief rabbi of Mandatory Palestine from 1939 to 1948, and of Israel from 1948 until his death in 1953. Uziel was known for his progressive opinions in Jewish law. Sade says, “To some extent, I would say some of his vision and his way of thinking are still with me. Even if we didn’t know the person, they still do influence us in some way.”
Sade says Hebrew University continues to address the challenges facing its students amid the current realities of life in Israel. “We have just created a new preparatory program [mechina] for our accounting program for those who were wounded or otherwise affected by the war. Some may have been unable to take the psychometric exams because of the disruption. They can attend our preparatory program for three months, and then join the accounting program. We don’t want them to miss another year.
“We are trying to think outside the box and to deal with the current challenges that we are facing, but we are looking ahead. Hebrew University is marking 100 years. We are thinking about how to address the challenges of the next 100 years and our ability to convey, through our students, our point of view to the world.”
This article was written in cooperation with Canadian Friends of Hebrew University.