This article is old but still hilarious:
http://www.cnbc.com/id/100840057
Good news: that customer who stiffed you on the tip wasn't angry at your service or intentionally being cheap. They just didn't know "black magic."
The study does not offer additional insight into why math skills can predict mortgage trouble."
While the problem may be clear, the solution is not. There are already numerous financial literacy programs run by schools, non-profit organizations, and even banks. Research has shown these have so far been ineffective. It's unclear, for example, whether consumers should be taught about mortgages during high school math class or later in life, when they are about to take out a mortgage.
I don't think this is all that shocking.
... there likely is a correlation between bad math skills and socioeconomic status, that can help explain this.
Let's say you have $200 in a savings account. The account earns 10 percent interest per year. How much will you have in the account at the end of two years? |
I don't think this is all that shocking.
No way. You mean to tell me you weren't astounded that people who are bad at math are also more likely to default on their mortgage loan payments? Next, you'll be claiming that you weren't alarmed and startled by the follow-up research that shows that the same people are more likely to purchase lottery tickets than the general population.... there likely is a correlation between bad math skills and socioeconomic status, that can help explain this.
Even if we assume that correlation exists, it wouldn't necessarily "explain" mortgage loan defaults, because the causation could be in the other direction than the one you assume (i.e. it may be that bad math skills cause low "socioeconomic status" in adulthood, or at least contribute to maintaining it), or it may be that both variables are explained by other factors and have no causal relationship at all.
By the way, the fifth question is actually ambiguous. Here is the text of it:
Let's say you have $200 in a savings account. The account earns 10 percent interest per year. How much will you have in the account at the end of two years?
With most actual bank accounts, the answer would be about $244.08 (monthly compounding). Other possible answers include $244.28 (continuous compounding; used by Ally Bank, among others) and $240 (simple interest). The answer they probably intended is $242 (yearly compounding), but there's nothing in the question that tells you that is their intent.
Some of the other questions also require you to make assumptions to answer them, but for those other questions, there's only one reasonable set of assumptions, so I consider the other questions to be satisfactory.
This article is old but still hilarious:
http://www.cnbc.com/id/100840057
That's pretty pathetic. I would think a 5th grader could ace these five questions.
QuoteThe study does not offer additional insight into why math skills can predict mortgage trouble."
Seriously?
The questions, however, are posed in tricky ways. And when asked outloud and required to be done in the head it makes these questions more language questions than math questions. If a person answered "$600" to number one, I wouldn't consider that person "math challenged." Math wasn't the issue, it was that they misinterpreted the question/situation. Number 3 has a similar issue, one could easily get baited into answering $4000 and I wouldn't consider them "math challenged." And the 5th question I don't think an average 5th grader could get. I think it's a reasonably difficult question that I am not surprised at all that a lot of people got wrong.
Sadly, I don't think my wife could answer most of these. She is challenged by the tipping percentages. I find that simple math for most people I meet is a challenge.
The questions, however, are posed in tricky ways. And when asked outloud and required to be done in the head it makes these questions more language questions than math questions. If a person answered "$600" to number one, I wouldn't consider that person "math challenged." Math wasn't the issue, it was that they misinterpreted the question/situation. Number 3 has a similar issue, one could easily get baited into answering $4000 and I wouldn't consider them "math challenged." And the 5th question I don't think an average 5th grader could get. I think it's a reasonably difficult question that I am not surprised at all that a lot of people got wrong.
I honestly can't think of a way to phrase questions #1 and #3 more simply without making them confusing. :(
"A sofa that was $300 is now half-price. How much does it cost?" <-- You mean like that?
Ersh... If anyone had trouble with the phrasing, illiteracy is probably their major issue as well as innumeracy. ...And revolving doors. They'd probably get killed trying to use a revolving door. :(
That's why some restaurants have a line on the receipt showing what 20% or 15% is, to help people that can't do math.My wife needs those... actually, she still asks me what to give.
QuoteThe study does not offer additional insight into why math skills can predict mortgage trouble."
Seriously?
Hahaha!! I was just about to quote the same thing. Answer: Durrrr.....
They should have added: "The study also does not use simple logic to deduce cause-and-effect scenarios."
It's amazing that people are confounded by simple math.
Yesterday I was at JC Penny's and I had two coupons: One for $10 off a $25 purchase, and another for 15% off the total purchase. I wasn't surprised when the clerk told me I couldn't use both ... but she was surprised when I said, "Give me a moment to do the math and see which is the better deal." She actually said, "You can do that in your head?"