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'Striking weaknesses' in adult financial skills

bbc.com

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Re: 'Striking weaknesses' in adult financial skills

#81

Post by Izkata »

nkrisc wrote: post #74
djhworld wrote: post #25

Earlier quoted context omitted.

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

Well I'm not that old so maybe it's different but as an American raised on imperial units I find metric absurdly easy to learn because it is just shuffling a decimal point around. Going from metric to imperial must be challenging.

I'm also American raised on imperial, and metric conversions often confuse me _because_ of the uniformity of the conversions. Each imperial conversion has a unique number, making it easy for me to associate the unit with the number, but metric tends to get jumbled up.

Re: 'Striking weaknesses' in adult financial skills

#82

Post by 0xfeba »

_ah wrote: post #11
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'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.

I've noticed a similar thing. I always assumed it was negligence, not malice.

Re: 'Striking weaknesses' in adult financial skills

#83

Post by 0xfeba »

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?

Yeah. I suck at arithmetic. For the soda example, I just round down to 3 and say: "about $1". Much faster than worrying about 5 cents.

But I also know how to solve for discount percentages, where most people would not, the article states.

Re: 'Striking weaknesses' in adult financial skills

#84

Post by java_script »

kartan wrote: post #5

If 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…

This is capitalism working. Not from the viewpoint of the academic justifiers of capitalism, but the from the viewpoint of people that have an actual vested interest in capitalism (aka the ones whose opinion actually matters and the ones who are the reason why we have this system in the first place).

Re: 'Striking weaknesses' in adult financial skills

#85

Post by walshemj »

throwawayts wrote: post #66
walshemj wrote: post #51

Earlier quoted context omitted.

STEM qualifications aren't considered very highly in the UK

The Times Higher Education rankings puts 3 UK universities in the top 10 worldwide for physical sciences and for engineering. Or do you just mean they aren't considered attractive careers to students and children?

I meant socially those in the stem professions are looked down on.

Re: 'Striking weaknesses' in adult financial skills

#86

Post by erikb »

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…

Yes and no. Yes certainly the skills you describe are more in the financial category and help more, if you need to choose. But one really should be able to do both monitoring and simple calculations in one's head, at least getting into the range of the actual result. If you pay your single chicken leg with a $50 note and don't expect "more than $40 change" in return, then this can be bad for your finances as well.

Re: 'Striking weaknesses' in adult financial skills

#87

Post by pge »

mbesto wrote: post #40
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…

I think the Time Value of Money is one of the most important concepts any lay person should understand but most don't. I came out of college (an Ivy league school) as a physics major with zero understanding of finance. At my first job, one of the first things my boss asked me was, "What would you pay me today in exchange for me paying you $100 in one year?" That, of course, led to a lesson on the time value of money. Not a difficult concept to grasp, but despite a great education, I had never had an occasion to think about it and understand it. Once you get that concept, everything else about finance and investing is pretty straightforward.

I wish every high schooler had a basic finance course that started with that same question. Then moved on to personal finance basics like understanding interest (credit cards, car loans, mortgages, etc) and net worth (assets) v. income.

Re: 'Striking weaknesses' in adult financial skills

#88

Post by smallnamespace »

MaulingMonkey wrote: post #18
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?

Not by counting pennies. Estimate, get a rough order of magnitude - things you can actually keep in your head and get an intuition for instead of math to maybe forget in a checkbook somewhere if you record the calculation at all. Check your balances. Savings going up is good, savings going down is bad. If you need to get detailed, or your estimates don't line up with what your savings account is actually doing, you c…

> If you need to get detailed, or your estimates don't line up with what your savings account is actually doing

I think the point is that the ability to count pennies when called upon is part of what keeps your rough intuitions properly calibrated.

If one literally cannot do exact arithmetic when necessary (whether mentally, manually, or with a calculator), then how does the gut learn what to pay attention to, and when it might be wrong?

Re: 'Striking weaknesses' in adult financial skills

#89

Post by arkryne »

apo wrote: post #79

Some will look and this and say, "big deal, people can't do math in their heads." There may be more to it. Consider the recent "riddle" in which a man buys a horse, sells it, and buys it back again, then sells it. The question is, how much money did the man make or lose: http://www.independent.co.uk/news/science/math-riddle-quiz-q... It was so simple to me that it seemed like it must be a trick question. It's not. I…

I had a really funny experience trying that problem. As I began reading it, I developed a strong desire to glean over it and 'just get done with it' and felt a distracting buzz in my mind. I enjoy studying maths and doing proofs myself but I got this basic questions wrong. I just went'ugh, started with 60 spent, ended up selling for 90' and I went wrong with it.

The point is, I felt a strong aversion to word problems and such, which I think remind me of riddles which always trump me. Therein lies the desire to 'just be done with it' and the underlying aversion to maths I think other people also have.

Re: 'Striking weaknesses' in adult financial skills

#90

Post by erikb »

juskrey wrote: post #12

Results show clearly that those skills are not necessary for prosperity

Which results? Some rich people stay rich by getting gifts from their daddies, by being mean and by having other people do the calculations for them. Doing it this way one might even become president. But I think you won't find anybody that got to prosperity without it. Even the meanest of exploiters need to calculate their money and check their balances.
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