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'Striking weaknesses' in adult financial skills

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Re: 'Striking weaknesses' in adult financial skills

#31

Post by gowld »

Kuiper wrote: post #8
volgo wrote: post #3

Some 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 dolla…

You think someone who can't solve arithmetic problems is going to understand the consequences of compound interest and the TCO of revolving debt?

Re: 'Striking weaknesses' in adult financial skills

#32

Post by gowld »

golergka wrote: post #29
ZeroGravitas wrote: post #27

Earlier quoted context omitted.

The theoretical support for why capitalism is a good system, assumes people aren't stupid and only make trades and decisions that are rational and good for them though. Arguing that you're going to take advantage of the weak, the old, the distracted, the powerless and the terrified may be a refreshingly open take on capitalism, but it's not what it's sold on.

> Arguing that you're going to take advantage of the weak, the old, the distracted, the powerless and the terrified may be a refreshingly open take on capitalism, but it's not what it's sold on. The fact that your strength, youth, concentration and wit will give you an advantage over others is exactly why capitalism is fair and awesome.

Talk like that is how communist revolutions are triggered.

Re: 'Striking weaknesses' in adult financial skills

#33

Post by vixen99 »

djhworld wrote: post #25
Kuiper wrote: post #8

Earlier quoted context omitted.

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 dolla…

I guess the problem for the older generation, especially here in the UK, is they were raised on imperial units and have never really gotten used to metric. Not saying that excuses it, but it could explain part of the reason why some people don't fully grasp the £-per-X calculations

If you could/can work out the change from a pound on a 4s-6½ (four shillings and six and a halfpence) packet of fags (circa 1050s), you'd hardly be likely to have much problem with metric.

[As was: 1 pound = 240 pence = 20 shillings i.e. 1 shilling = 12 pence]

Re: 'Striking weaknesses' in adult financial skills

#34

Post by sambe »

Kuiper wrote: post #10
hammock wrote: post #7

Earlier quoted context omitted.

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 l…

If you can't make basic calculations with ratio and percentages, it seems unlikely that you can compare different costs per unit weight/volume or do the maths to figure out how much food you need without waste.

Yes, you can look at a chicken and say "that's enough for 3 people". Yes - in the UK - it's quite likely (legally required?) that all products are labelled per 100g or per kg (although I'd contest people failing these tests are likely not to be understand or care for that labelling). It's a tough argument to make that these skills have no impact on on budgeting at all.

Re: 'Striking weaknesses' in adult financial skills

#35

Post by grondilu »

volgo wrote: post #3

Some 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…

> I mean.. people can't do math in their head. Who cares?

I kind of agree. I guess I can answer to the first question :

"If you bought four packs of tea: chamomile ($4.60), green ($4.15), black ($3.35) and lemon ($1.80) with a $20 note, how much change would you get?"

but to be honest, it would take me an embarrassing long time to do it, and in the end I could very well have made a mistake.

Don't get me wrong : mental calculus is an awesome skill and it so happens that I have lately been trying to improve in this regard. But the fact that not everybody masters this art should not be a surprise.

Re: 'Striking weaknesses' in adult financial skills

#36

Post by vixen99 »

ZeroGravitas wrote: post #27
golergka wrote: post #26

Earlier quoted context omitted.

> If you want capitalism to work, you need some kind of "homo economicus" that is able to look for their own selfinterest. Capitalism works just fine. There're plenty of mechanics that punish people for their own stupidity.

The theoretical support for why capitalism is a good system, assumes people aren't stupid and only make trades and decisions that are rational and good for them though. Arguing that you're going to take advantage of the weak, the old, the distracted, the powerless and the terrified may be a refreshingly open take on capitalism, but it's not what it's sold on.

Does that mean that socialism (a necessarily coercive human-elaborated system) assumes people are stupid and make trades and decisions that are irrational and bad for them? Perhaps it does in denial of the evidence from the history of the 20th century.

People don't have to be sold on capitalism. It comes naturally because it's not a scheme devised by some right-wing Marx though people have elaborated on it. People trade with each other because it comes naturally as it does to every single living entity on the planet which trades with its neighbours and its environment. Wise capitalists see that it's in all our interests to take compassionate regard for the weak, old, distracted etc,. given that that's the fate (in some measure) for all of us ultimately. That's trading.

Re: 'Striking weaknesses' in adult financial skills

#37

Post by golergka »

vixen99 wrote: post #36
ZeroGravitas wrote: post #27

Earlier quoted context omitted.

The theoretical support for why capitalism is a good system, assumes people aren't stupid and only make trades and decisions that are rational and good for them though. Arguing that you're going to take advantage of the weak, the old, the distracted, the powerless and the terrified may be a refreshingly open take on capitalism, but it's not what it's sold on.

Does that mean that socialism (a necessarily coercive human-elaborated system) assumes people are stupid and make trades and decisions that are irrational and bad for them? Perhaps it does in denial of the evidence from the history of the 20th century. People don't have to be sold on capitalism. It comes naturally because it's not a scheme devised by some right-wing Marx though people have elaborated on it. People tr…

> Does that mean that socialism (a necessarily coercive human-elaborated system) assumes people are stupid and make trades and decisions that are irrational and bad for them?

Yes, that's the whole premise of collectivism: I can't take care of myself, so someone else has to.

Re: 'Striking weaknesses' in adult financial skills

#38

Post by skummetmaelk »

golergka wrote: post #29
ZeroGravitas wrote: post #27

Earlier quoted context omitted.

The theoretical support for why capitalism is a good system, assumes people aren't stupid and only make trades and decisions that are rational and good for them though. Arguing that you're going to take advantage of the weak, the old, the distracted, the powerless and the terrified may be a refreshingly open take on capitalism, but it's not what it's sold on.

> Arguing that you're going to take advantage of the weak, the old, the distracted, the powerless and the terrified may be a refreshingly open take on capitalism, but it's not what it's sold on. The fact that your strength, youth, concentration and wit will give you an advantage over others is exactly why capitalism is fair and awesome.

Well aren't you just full of yourself.

Re: 'Striking weaknesses' in adult financial skills

#39

Post by hodl »

scarface74 wrote: post #24
hammock wrote: post #7

Earlier quoted context omitted.

How are you supposed to monitor your spending if you cannot figure out how much you paid for chicken?

This reminds me of the myth of the "Latte Factor". http://www.slate.com/articles/business/the_united_states_of_...

Yes the amount of smashed avacados you need to eat to be equivalent to a house deposit is more than the lethal dose.

Re: 'Striking weaknesses' in adult financial skills

#40

Post by mbesto »

volgo wrote: post #3

Some 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…

> 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.

IMHO this all starts with the fact that many people I've encountered simply do not understand the difference between income and assets. In fact, I run into this all of the time on HN with people here who say "I can't believe that's a billion dollar business".

I would love for them to do this experiment and ask the common person what the Time Value of Money is. I bet the results are way worse.

I'm convinced that there are serious externalities to all of the financial innovation that has happened in the last 40 years that we simply choose to ignore and it hurts the common man.

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