Introduction

Abstract

This first book in the Great Minds in Finance series begins by establishing a framework upon which all the subsequent discussions rest. We describe how individuals make financial decisions over time and why these decisions change as we age and our circumstances change. The early financial theorists, including Irving Fisher, Frank Ramsey, John Maynard Keynes, Franco Modigliani, Milton Friedman, and others, recognized that the static time-independent models of classical economics were ill-equipped to describe how households balance the present and the future. It is this expansion of traditional economic models to such intertemporal decision-making that defined the development of personal finance.