'Striking weaknesses' in adult financial skills
1–10 of 140 posts
Re: 'Striking weaknesses' in adult financial skills
#2Initially I figured this isn't testing the sort of financial skills that are really useful for adults. But, then I now guess that the skills that are important are probably more complex, so this is a pretty good proxy. Doesn't paint a good picture.
Re: 'Striking weaknesses' in adult financial skills
#3Some of the skills tested in the study seem more like arithmetics rather than financial skills:
- "About a quarter could not work out how much change they should receive from a shop..."
- "About one in three adults struggled to work out the price they had to pay.. per litre or per kilo"
- "About half could not read a simple financial line graph"
- "Most struggled to calculate discounts involving more complex calculations"
I mean.. people can't do math in their head. Who cares? In my opinion, the most important financial skills are simple things like monitoring your credit, your spending, creating a budget, pay off credit card in full, pay down high interest debt ASAP, avoid pay day loans, don't spend money on stupid things, invest in high quality index funds, etc.
These skills are mostly psychological and will help your financial health WAY more than calculate price of chicken per pound in your head.
Re: 'Striking weaknesses' in adult financial skills
#4These aren't even "financial" skills but a lack of basic arithmetic ability. It is a failure of the education system.
I expect if we tested for actual financial skills the results would be even worse, as that requires some domain knowledge beyond basic arithmetic. I'm not sure this is easily fixable; most people I know have a very limited interest in understanding financial maths.
Re: 'Striking weaknesses' in adult financial skills
#5If you want capitalism to work, you need some kind of "homo economicus" that is able to look for their own selfinterest.
If what you have is companies powered by complex financial systems and artificial intelligence help while consumers are not able to get a discount right, you are going to end with all money in one side of the table with the other empty handed.
This is another reason to improve our education systems. We need to function in an increasing complex society and that requires an incresing education quality with more resources, better methologies and more time dedicated to build knowledge and less to build national identity. (To memorize the list of presidents is not as an useful skill as it used to be, I guess).
Re: 'Striking weaknesses' in adult financial skills
#6This study does not mention whether the participants where asked to do the arithmetic in their head : https://johnjerrim.files.wordpress.com/2018/03/piaac_working...
Re: 'Striking weaknesses' in adult financial skills
#7Some of the skills tested in the study seem more like arithmetics rather than financial skills: - "About a quarter could not work out how much change they should receive from a shop..." - "About one in three adults struggled to work out the price they had to pay.. per litre or per kilo" - "About half could not read a simple financial line graph" - "Most struggled to calculate discounts involving more complex calculat…
How are you supposed to monitor your spending if you cannot figure out how much you paid for chicken?
Re: 'Striking weaknesses' in adult financial skills
#8Some of the skills tested in the study seem more like arithmetics rather than financial skills: - "About a quarter could not work out how much change they should receive from a shop..." - "About one in three adults struggled to work out the price they had to pay.. per litre or per kilo" - "About half could not read a simple financial line graph" - "Most struggled to calculate discounts involving more complex calculat…
Especially when you consider that most supermarket labels will also include the "price per unit weight" or "price per unit volume" on the shelf with a smaller font, it becomes trivially easy to compare which bottle of soap is going to get you the most for your money. Or maybe you neglect to do this (simply opting for the container that looks the most appealing rather than optimizing for the amount of liquid per dollar you'll receive) and as a result you have to suffer the catastrophic consequences of spending $9 per month on dish soap when you could have spent $7.20 instead.
The funny thing is that some of the asked are all arithmetic are constructed in such a way that you will get a "wrong" answer if you treat them as practical financial questions as opposed to purely arithmetic ones. For example, one of the sample questions in the article is "If a litre of cola costs $3.15, how much will you pay for a third of a litre?" This seems to be asking you to take $3.15 and divide it by three, but as a practical matter, it would be folly for me to take the price of a 20 oz soda bottle and then assume that I could calculate the cost of a 12 oz can simply by multiplying by 0.6. This question isn't a test of practical or financial literacy; it's purely arithmetic.
Re: 'Striking weaknesses' in adult financial skills
#9They don't control for age, so their study is worthless. Many of the countries mentioned as "the worst" have ageing populations and lots of emigrants.
Re: 'Striking weaknesses' in adult financial skills
#10Some of the skills tested in the study seem more like arithmetics rather than financial skills: - "About a quarter could not work out how much change they should receive from a shop..." - "About one in three adults struggled to work out the price they had to pay.. per litre or per kilo" - "About half could not read a simple financial line graph" - "Most struggled to calculate discounts involving more complex calculat…
How are you supposed to monitor your spending if you cannot figure out how much you paid for chicken?
You don't need to "figure out" how much you paid for chicken; it's printed on the receipt. The only thing to "figure out" is "what's the cost per pound if I paid $7 for a 2.3 pound chicken" and maybe you want to do that arithmetic, but for a lot of people, "this chicken cost $7 and I estimate that it will feed me and my partner for maybe 2-3 meals" is the only 'calculation' that needs to happen.
Larger calculations like "how much did I spend last month on groceries" are easily assessed simply by looking at a credit card statement. Being financially responsible does not necessarily entail knowing the exact dollar-to-calorie or dollar-to-weight ratio of every item in your shopping cart.