'Striking weaknesses' in adult financial skills • Hacker News Board

Re: 'Striking weaknesses' in adult financial skills

#41

Post by JustSomeNobody » Thu, Mar 15, 2018, 10:47 AM UTC

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…

>...catastrophic consequences of spending $9 per month on dish soap when you could have spent $7.20 instead.

Indeed, for the poor, it doesn't take too many of these $1.80 differences to add up to catastrophe.

Re: 'Striking weaknesses' in adult financial skills

#42

Post by watwut » Thu, Mar 15, 2018, 10:47 AM UTC

gowld wrote: post #31

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…

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

Those are not all that much related.

Re: 'Striking weaknesses' in adult financial skills

#43

Post by noufalibrahim » Thu, Mar 15, 2018, 10:55 AM UTC

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…

While your point is literally true, having basic arithmetic proficiency does go some way in making sense of the world. Quick mental calculations to see when you'll reach a certain place, ability to compare things when they're in different units etc. It's not only the skills but the overall mental model that they help create. The world starts to become a little more rational and sensible when you can do this.

Re: 'Striking weaknesses' in adult financial skills

#44

Post by golergka » Thu, Mar 15, 2018, 10:55 AM UTC

skummetmaelk wrote: post #38

golergka wrote: post #29

Earlier quoted context omitted.

> 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.

Myself? Not particularly, no. I am not particularly young, regularly suffer from depression and don't have a lot of ambition anyway.

I would be, personally, far better off with socialist system. Which doesn't change the fact that it is based on immoral grounds which repulse me.

Re: 'Striking weaknesses' in adult financial skills

#45

Post by scarface74 » Thu, Mar 15, 2018, 10:59 AM UTC

sokoloff wrote: post #28

scarface74 wrote: post #24

Earlier quoted context omitted.

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

It's an exaggeration more than a myth, IMO. It's directionally correct, meaning no re good would be done by people considering it than ignoring it.

What instead of the "Latte Factor", they said...

- buy a house that is well below your means or even move some place where your cost of living compared to your money earning potential is favorable.

-Get a degree in something that can make money instead of a BS in Ancient Chinese Art History.

-Don't go into debt getting a degree from a prestigious college to be a high school teacher. Go to a cheap state school.

-Buy a car and keep it for longer.

My family spends money on a lot of little things that some people would think was frivolous but we also bought a house in the burbs that had a mortgage that was less than 20% of our monthly net income, we don't drive expensive cars, or try to keep up with the Joneses. My wife still brags about how much money she saves shopping at the thrift store and I'm always looking for a bargain because I don't care about the brand of clothes.

On the other hand, I'm very aggressive about my salary and told my (step) kids to pursue careers (or trades) that had income potential.

In other words, it's not the little decisions you make that make a difference it's the big ones.

You can only by definition, cut spending by so much, but you can make choices to make more money.

After we got married about six years ago, my wife and I by working together have increased our income by 33% by her taking a job that has good benefits but low pay (that she enjoys) that gave me the flexibility of aggressively changing jobs for higher salaries without worrying about benefits.

Re: 'Striking weaknesses' in adult financial skills

#46

Post by crdoconnor » Thu, Mar 15, 2018, 10:59 AM UTC

>Examples of the sorts of questions asked > >1. 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?

Put yourself in the mind of somebody taking this questionnaire. Do you actually care if the answer is correct? Will you lose money if you get the answer wrong? Are you in a hurry to finish the questionnaire and go and do something else?

Now put yourself in the mind of a lobbyist who represents utilities companies, financial services companies and HMOs. Your customers have all come under fire because they have needlessly complicated pricing structures designed to confuse people. This is a very profitable practice so they want to continue doing it, but they'd like to draw attention away from it. Regulators sometimes come under political pressure to do something about it (among others, Elizabeth Warren has put this kind of pressure on, and they hate her for it).

If, as a lobbyist, if you get others to reframe the issue as one of "lack of financial literacy" it helps take the heat off your customers. However, It's all very well saying "people just need to become more financially literate!" but that wouldn't sound very convincing coming from a lobbyist representing a company that has a financial stake in everybody believing it.

Therefore, it's better to be able to get your media contacts and politician friends say "studies say people need to become more financially literate". There is, as such, a demand for studies like this.

And, Aditi Bhutoria, John Jerrim and Anna Vignoles happily (although possibly unknowingly) filled this demand by giving a bunch of random, disinterested people a math quiz where it didn't matter if they got the answers wrong and calling it "science".

Re: 'Striking weaknesses' in adult financial skills

#47

Post by walshemj » Thu, Mar 15, 2018, 11:01 AM UTC

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…

Id agree it would be more useful to understand your jurisdictions tax system and basic things about the stock market works ie what is a p/e ratio - how the bond yield curve works etc.

Re: 'Striking weaknesses' in adult financial skills

#48

Post by walshemj » Thu, Mar 15, 2018, 11:02 AM UTC

fnord123 wrote: post #19

_ah wrote: post #11

Earlier quoted context omitted.

I've started noticing some sneaky math in my local supermarket. When comparing two items, both list the unit price, but they list the price in different units. Example: A 1.4-lb package lists the price per oz, while the 0.8-lb package lists the price per lb. In every case, the intent seems too be an attempt to induce math errors and cause someone to accidentally purchase the package with the higher true unit price.

Just multiply or divide by 10s or 100s or whatever. It's not hard. Oh.. oh yeah. ;)

That's not going to work with imperial units :-)

Re: 'Striking weaknesses' in adult financial skills

#49

Post by matthewmacleod » Thu, Mar 15, 2018, 11:03 AM UTC

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…

It's completely baffling to me that you could be so… short-sighted, I guess?

Capitalism revolves around the concept of private ownership, which in itself requires the rule of law to be effective – definitionally a "coercive human-elaborated system". Moreover, in order to be effective, capitalism requires efficient, well-informed, competitive, free markets. We can directly observe that competition requires state intervention too. Your mooted "wise capitalist" will be forced out of the market by the "disaster capitalist" who isn't interested in compassion for the weak, because their fate isn't tied to each other.

In reality, any of these arguments about Socialism or Capitalism or Mercantilism or Communism or Liberalism or any other purist capitalised word are bunkum. There is not a simplistic answer to the question of "how do we structure a global economy such that people are fairly rewarded for their contributions to the human condition while ensuring that people are not taken advantage of or mistreated because of systemic power or wealth imbalances". There is almost always a mix of principle and practicality required. Competing interests abound. Successful economies, by most metrics, embrace a mixture of free trade with state regulation, acknowledging that while the free market is an astonishing engine for growth and prosperity it can easily destroy itself if unchecked.

Re: 'Striking weaknesses' in adult financial skills

#50

Post by vkou » Thu, Mar 15, 2018, 11:03 AM UTC

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…

> Especially when you consider that most supermarket labels will also include the "price per unit weight" or "price per unit volume"

My local grocery does this.

Whenever it stocks multiple items, though, they are never in the same units of measurement. So, you get one brand of any given priced in $/ounce, and another priced in $/pound, or heaven help me, $/serving.

I have no doubt that they pull this bullshit on purpose, to make comparing prices more difficult.