It’s a silvery grey day in Manhattan, and most media eyeballs are fixed firmly on the protests in London in the lead-up to the G-20 meeting tomorrow. But here in America, there’s a certain banker-bashing fatigue creeping in. (Perhaps that’s because we’ve moved on to bashing auto-company executives instead.)
Amidst all the bashing, there’s more prosaic news to be had. For example, March 31 marks the start in America of the largely-unsung Economic Literacy Month.
There’s good reasons Economic Literacy Month goes unheralded: few topics are more boring. But according to a new surveyby the Washington, D.C.-based Center For Economic Literacy, boring just got interesting. It turns out most Americans are essentially clueless when it comes to matters of personal and national finance.
The national survey, conducted last week from a coast-to-coast sample of 500 men and 502 women 18 years of age and older, discovered, for example, that 53% of Americans do not know what the Dow Jones Industrial Averageis. Another 45% do not realize their FICO score is the most important factor weighed when receiving a loan. And fully 76% don’t realize that when in need of short term cash, it’s cheaper to arrange a short-term payday loan than allow a check to bounce.
“Considering the wall-to-wall coverage of the financial crisis, it is startling to see how few Americans have a grasp on the most basic economic facts,” said James Bowers, the Center’s managing director.
Smug Canadians inclined to view this as a confirmation of our innate superiority to Homo Americanusmight want to check out the results of a similar survey conducted by the Canadian Foundation for Economic Education last fall. And of course, we’re no better.
That survey asked nine questions to gauge economic and financial knowledge. Sample questions ranged from the average rate of interest charged on unpaid credit card balances (20% to 30%) to the highest rate of interest a lender can legally charge (60% of a debt per annum).
Of these nine questions, 43% of Canadian respondents got only two right, and only 7% of respondents answered more than four correctly. Fully 19% could not even name oneCanadian-owned firm. (Cue more handwringing about the hollowing-out of Corporate Canada.) And just under half didn’t even bother hazarding a guess as to the total size of our national debt. (For the record, it’s CAD$458 billion and rising, according to a handy debt clockset up by the Canadian Taxpayers Foundation.)
Clearly, when it comes to making sense out of dollars, there’s work to be done. Or maybe the economic-literacy crowd just need a catchy new slogan. I propose The Change in Change.
Back to that bashing. Right now, it’s the done thing to bash companies for their nefarious misdeeds. And no wonder. Fund fraudsters like Bernard Madoffand insurance system-gamers such as A.I.G.‘s financial products division (2005 to 2008 vintage) have cost civilians and taxpayers in America billions of dollars.
But while we’re getting worked up, we might take a moment to think about why the Madoffs and financial-product-wizards were able to get away with so much for so long. Regulators may have been asleepbut our collective ignorance of the basics of money could also have something to do with it.