Public Service Announcement - Financial Literacy Survey

Discussion in 'Random Ramblings' started by Nifty-Chicken, Mar 20, 2008.

  1. Nifty-Chicken

    Nifty-Chicken Administrator Staff Member

    I listen to a morning radio show sometimes and yesterday I was boggled to hear that 66% of adults over the age of 50 couldn't answer all three questions correctly: This is a financial literacy survey developed by economists at Dartmouth and Wharton... give it a try:

    1. Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After five years, how much do you think you would have in the account if you left the money to grow: More than $102, exactly $102, or less than $102?

    2. Imagine that the interest rate on your savings account was 1 percent per year and inflation was 2 percent per year. After one year, would you be able to buy more than, exactly the same as, or less than today with the money in the account?

    3. Do you think that the following statement is true or false?: "Buying a single-company stock usually provides a safer return than a stock mutual fund."


    Per the study:

    "Results from this survey module reveal an alarmingly low level of financial
    literacy among older individuals in the United States. The sample covers respondents
    who are 50 or older, with the average age being 65. Only 50 percent of respondents in the
    sample were able to correctly answer the first two questions, and only one-third of
    respondents were able to answer all three questions correctly. The question that was most difficult for respondents to answer was the one about risk diversification; more than one third of respondents reported they did not know the answer.7 This is not only an
    important finding but it also allows researchers to differentiate among different levels of
    financial sophistication even when using a limited number of questions to measure
    financial literacy."

    Okay, so the answers:
    1) More than
    2) Less than
    3) False

    If you're 18 years old, or older and didn't get them all right I STRONGLY suggest you take, at the least, a rudimentary finance class!

    Here is a link to the PDF: http://www.dartmouth.edu/~alusardi/Papers/Literacy_Tool.pdf
     
  2. silkiechicken

    silkiechicken Staff PhD Premium Member

    LOL

    My first question for the first question was "Are you figuring compound or simple interest?"

    Then I read it was a yes or no question...
     
  3. Nifty-Chicken

    Nifty-Chicken Administrator Staff Member

    Quote:Me too exactly!!!! While listening on the radio I was ready for "compounded quarterly, how much will you have?" I was shocked by the simplicity and 3 choices.
     
  4. Royicus

    Royicus Chillin' With My Peeps

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    Well, bank interest on a savings account is usually APY, so that is yearly.

    If interest < inflation, you losing money.

    And finally, the old saying, "don't put all your eggs in one basket" is very true.


    But folks not being able to answer these questions isn't that surprising. We live in a debt driven society.
     
  5. OHChick

    OHChick Chillin' With My Peeps

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    it is interesting, and shocking. but then they also say there are so many americans who can't find america on a map. makes one wonder. [​IMG]

    a funny story... when i was in college i took at job with AAA. i was given a blank map and had to fill in all the states. i got AZ and NM reversed. my boss was like 'how did you get those wrong' i said 'well i always mix them up'. she said 'didn't you look at the atlas?'. uh NO, i thought the whole point was to test your memory not if you could read! [​IMG]
     
  6. DuckLady

    DuckLady Administrator Staff Member

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    I don't have enough money to earn a lot of interest. I just add it in at the end of the year. [​IMG]
     
  7. d.k

    d.k red-headed stepchild

    * Yeah, financial edu., just like most of the rest really bites in this country. . . . Lowest common denominator & low self esteem my patutity. . . THEY WANT US BROKE & DUMBER THAN DIRT. . . Easier to lead by the nose that way. . . . . [​IMG][​IMG]:smack
     
  8. BJ

    BJ Chillin' With My Peeps

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    How about this:
    spend less than you make

    Doesn't take a rocket scientist to figure that one out.
     
  9. Hope0491

    Hope0491 Chillin' With My Peeps

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    HAHA.. I thought the same thing! Compound or Simple! hahaha!.. hilarious! Well, I got them right!

    Goodness, America is a sad nation sometimes, we need "education"... schooling isn't doing much good.

    ~Lacey
     
  10. dlhunicorn

    dlhunicorn Human Encyclopedia

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    Quote:[​IMG]
     

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