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Numeracy and wealth

Discussion in 'The Economy' started by Tropo, 2nd May, 2016.

  1. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
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    3,394
    Location:
    NSW
    Abstract

    Numeracy is defined as the ability to understand and use numerical information. We examined the relationship between numeracy and wealth using a cross-sectional and a longitudinal study.
    For a sample of approximately 1000 Dutch adults, we found a statistically significant correlation between numeracy and wealth, even after controlling for differences in education, risk preferences, beliefs about future income, financial knowledge, need for cognition or seeking financial advice.
    Conditional on socio-demographic characteristics, our estimates suggest that on average a one-point increase in the numeracy score (11-point scale) of the respondent is associated with 5 percent more personal wealth.
    Additionally, we find that numeracy is a key determinant of the wealth accumulation trajectories that people follow over time.
    Over a 5-year period, while participants with low numeracy decumulate wealth, participants with high numeracy maintain a constant positive level of wealth................
    Numeracy and wealth
     
  2. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,394
    Location:
    NSW
    A young man asked a financial advisor how he made his money.
    The financial advisor touched his collar and said, ?It was the financial crash of 2009. One of the worst bear markets I?ve ever seen.?
    ?People were scrambling for answers. At first, I billed clients 100 dollars an hour.?
    ?The next month, I raised my rates to 200 dollars an hour.?
    ?Then my wife?s father died and left us 12 million dollars.?