As if we didn't have enough to be scared about with Oil Peak, Food Crisis, Greenhouse, hangover from Financial Institution excesses, here an article from Stephen J. Dubner (Freakonomics) that asks Are We a Nation of Financial Illiterates? and how we (the financially sound) will have to shoulder the burdens of the ...well... illiterates.
There is short three question quiz that anyone with any knowledge of algebra and finance could figure out. (Yes, I got them correct.)
Professor Annamaria Lusardi writes that among respondents age 50 and older, only half of them got the first two answers right and only one-third of them got all three answers right.
Professor Annamaria Lusardi and Olivia Mitchell's working paper,"Financial Literacy: An Essential Tool for Informed Consumer Choice?” disccusses this. Abstract HERE and Download HERE
Or is it the more probable answer is that most figure the Government will bail everyone out?
Which is an awfully depressing thought.
There is short three question quiz that anyone with any knowledge of algebra and finance could figure out. (Yes, I got them correct.)
Professor Annamaria Lusardi writes that among respondents age 50 and older, only half of them got the first two answers right and only one-third of them got all three answers right.
Professor Annamaria Lusardi and Olivia Mitchell's working paper,"Financial Literacy: An Essential Tool for Informed Consumer Choice?” disccusses this. Abstract HERE and Download HERE
Or is it the more probable answer is that most figure the Government will bail everyone out?
Which is an awfully depressing thought.
Tony - I could go on and on regarding this topic except I got all three questions wrong so I cannot speak with authority.
ReplyDeleteOkay I lied, I got them all correct.
I see two directions in terms of literacy: either we increase the educational level so we can make the right choices at the individual level or we eliminate choice from the system so people cannot give wrong answers. Right now, it seems our politics are taking us on the second path (ie, the gov't bailout option). But is it too little too late as our politicans and bureaucrats are just as ignorant (collectively) as the average citizen (assuming we're all taught the same about financial literacy)? That's my fear. Sigh.
David
It is a pretty scary world that we seem to be walking (blind) into.
ReplyDeleteBut when we see bailouts for the large (business-as-usual banks + "can't let the giants fall lest we all get dragged into the void") to small (the fiscally irresponsible or is just financially ignorant) folks stay in their homes that is way beyond their means), it just makes me want to be just as irresponsible as they are.
Tony