February 19, 2013

People Are Shockingly Bad at Simple Finance Math

The Economist has an article about financial education : Teacher, leave them kids alone

They start the article with this :

"HERE is a test. Suppose you had $100 in a savings account that paid an interest rate of 2% a year. If you leave the money in the account, how much would you have accumulated after five years: more than $102, exactly $102, or less than $102?
This test might seem a little simple for readers of The Economist. But a survey found that only half of Americans aged over 50 gave the correct answer. If so many people are mathematically challenged, it is hardly surprising that they struggle to deal with the small print of mortgage and insurance contracts."

Wow.  This is shocking to me. Can the results be accurate?    Are people really that bad at math or ignorant of basic finances?  


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