Numeracy and Wealth

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matjen
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Numeracy and Wealth

Post by matjen » Sun May 01, 2016 9:56 am

Well I'm not very good with numbers (compared to science and math types) but I took very quickly at a young age to the power of compounding. I am thankful to the late Richard Russell for writing a powerful article on the topic which my father gave to me at a young age.

http://www.sciencedirect.com/science/ar ... 7016000234
Numeracy is defined as the ability to understand and use numerical information.
Highlights
• We find a robust and significant correlation between numeracy and wealth.
• Our results are not explained by differences in preferences, constraints, or beliefs.
• Numeracy is a key determinant of the wealth accumulation trajectory (5-year period).
• The low numerate (but not the high numerate) participants decumulate wealth.
A man is rich in proportion to the number of things he can afford to let alone.

vitpx
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Re: Numeracy and Wealth

Post by vitpx » Sun May 01, 2016 10:11 am

A favorite book on this topic: Innumeracy by Paulos. Highly recommended.

letsgobobby
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Re: Numeracy and Wealth

Post by letsgobobby » Sun May 01, 2016 10:43 am

I liked "innumeracy", but it also left me very sad.

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k66
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Re: Numeracy and Wealth

Post by k66 » Sun May 01, 2016 12:02 pm

Here's a numeracy test:

https://www.kent.ac.uk/careers/tests/mathstest.htm

in case you wanted to self-evaluate.
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Goldfinger
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Re: Numeracy and Wealth

Post by Goldfinger » Sun May 01, 2016 1:39 pm

I loved Innumeracy by Paulos. I have a natural ability to think along statistical / probability lines. I am not an engineering type, though. Calculus was something I really had to work at. Stats / Finite math were the exact opposite. Strange dichotomy.

I'm sort of OCD when it comes to numbers. I find my mind just wandering - and numbers dance through my head without any real conscious effort. I'm sort of an outcast at work when I think out loud and do quick calculations in front of my peers (teachers).
"At cocktail parties lovely ladies would corner me and ask my opinion of the market, but alas, when they learned I was a bond man, they would quietly drift away." -- Sidney Homer/Salomon Bros

nps
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Re: Numeracy and Wealth

Post by nps » Mon May 02, 2016 8:52 pm

vitpx wrote:A favorite book on this topic: Innumeracy by Paulos. Highly recommended.
Great book and good advice when striving to plan decades into the future:

"The moral, again, is that some unlikely event is likely to occur, whereas it's much less likely that a particular one will."

Leesbro63
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Re: Numeracy and Wealth

Post by Leesbro63 » Mon May 02, 2016 10:02 pm

Why can almost anyone with an education read, but many with an education cannot do math?

afan
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Re: Numeracy and Wealth

Post by afan » Tue May 03, 2016 6:53 am

I think they can, it is just not given high priority in US education. Look at math attainment around the world and you find most people can handle a lot more than what we expect here. But why the US got into this math-light approach to education I don't know.
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Re: Numeracy and Wealth

Post by autolycus » Tue May 03, 2016 8:02 am

Leesbro63 wrote:Why can almost anyone with an education read, but many with an education cannot do math?
There's a huge cultural aversion to math in the US. It's "hard", even the stuff that isn't really. I know quite a few people whose eyes glaze over at the very first mention of numbers. They're often quite intelligent people with successful careers. I'm sure they can handle basic algebra, but alas, their brain has been trained to think that math is something only accountants, engineers, scientists, and mathematicians use, so their brains just disengage. I can actually see it in their eyes and body language.

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Re: Numeracy and Wealth

Post by Leesbro63 » Tue May 03, 2016 8:06 am

autolycus wrote:
Leesbro63 wrote:Why can almost anyone with an education read, but many with an education cannot do math?
There's a huge cultural aversion to math in the US. It's "hard", even the stuff that isn't really. I know quite a few people whose eyes glaze over at the very first mention of numbers. They're often quite intelligent people with successful careers. I'm sure they can handle basic algebra, but alas, their brain has been trained to think that math is something only accountants, engineers, scientists, and mathematicians use, so their brains just disengage. I can actually see it in their eyes and body language.
Exactly. I see that too. But why?

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Re: Numeracy and Wealth

Post by autolycus » Tue May 03, 2016 8:51 am

Leesbro63 wrote:
autolycus wrote:
Leesbro63 wrote:Why can almost anyone with an education read, but many with an education cannot do math?
There's a huge cultural aversion to math in the US. It's "hard", even the stuff that isn't really. I know quite a few people whose eyes glaze over at the very first mention of numbers. They're often quite intelligent people with successful careers. I'm sure they can handle basic algebra, but alas, their brain has been trained to think that math is something only accountants, engineers, scientists, and mathematicians use, so their brains just disengage. I can actually see it in their eyes and body language.
Exactly. I see that too. But why?
The "easy" answer is long-standing cultural norms amongst school-aged Americans and their parents. It's a vicious cycle: Pat doesn't learn how to effectively use math while in school. Pat doesn't use math "in the real world". Pat has kids. Pat cannot help the kids with homework. Pat tells the kids that math is hard and that nobody uses it in the real world anyway. Kids do not place high priority on learning math in school. Kids repeat cycle.

Of course, what Pat has missed is that there are TONS of uses for math in the real world. Those could make Pat's life much easier and better, most obviously when it comes to personal finance. But Pat seems to survive ok, so clearly math wasn't really necessary, right?

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Re: Numeracy and Wealth

Post by livesoft » Tue May 03, 2016 8:57 am

Wait a minute!

I hope some folks who identify with "Pat" come to this thread and make some comments. Does anxiety with math and numbers really affect outcomes? Or is this just more conventional wisdom to be debunked?
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autolycus
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Re: Numeracy and Wealth

Post by autolycus » Tue May 03, 2016 9:49 am

livesoft wrote:Wait a minute!

I hope some folks who identify with "Pat" come to this thread and make some comments. Does anxiety with math and numbers really affect outcomes? Or is this just more conventional wisdom to be debunked?
First, isn't the conventional wisdom in the US that we don't really need math unless we have a job that specifically requires it (e.g. accountant, actuary, engineer, scientist, etc.)?

Second, the link in the OP attempts to demonstrate that wealth accumulation is linked to numeracy. I'm sure it's a fluid relationship depending on the individual. I was just trying to provide one possible explanation for wide-scale innumeracy in the US. I am certain that there is anecdata about innumerate people who are wealthy and/or who try desperately to instill the importance of numeracy in their children. I imagine lots of best-selling authors, movie stars, all-star athletes, and politicians are innumerate--I'm sure lots of them are numerate, as well--so it's surely not the case that all wealthy people are numerate and all numerate people are wealthy.





*I should also note that I do know someone named Pat. Pat is at least moderately numerate, so the Pat I know is not the hypothetical Pat. I chose the name because it is not obviously someone of a particular sex/gender, hoping to avoid the side questions about the role gender norms may play in levels of numeracy. "It's Pat", ya know?

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Re: Numeracy and Wealth

Post by Boglegrappler » Tue May 03, 2016 10:50 am

Part of the problem is the shift in math education in elementary school to math appreciation.

Its what you'd get if you tried to teach someone how to throw and catch by explaining it to them and having them explain it back, rather than just throwing and catching repetitively.

The dismissiveness towards learning by "rote" is a big part of this.

If you'd like a revelation, find some 5th or 6th graders with non-threatening parents and ask them a few "whats 8 times 6" or "9 times 3" type questions and see how long it takes to get an answer. It will be informative.

In any case, I recommend flash cards and drill for your children as a supplement to whatever goes on in the classroom.

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Re: Numeracy and Wealth

Post by livesoft » Tue May 03, 2016 11:15 am

Boglegrappler wrote:If you'd like a revelation, find some 5th or 6th graders ....
While waiting for a cycling mate near a school with my bike, some kids asked me how fast I was going to ride my bike. I said that I average 20 mph. Then they asked how miles I was going to ride. I said, "About 20 miles." Then they asked me how long that would take me. :)
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autolycus
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Re: Numeracy and Wealth

Post by autolycus » Tue May 03, 2016 11:50 am

livesoft wrote:
Boglegrappler wrote:If you'd like a revelation, find some 5th or 6th graders ....
While waiting for a cycling mate near a school with my bike, some kids asked me how fast I was going to ride my bike. I said that I average 20 mph. Then they asked how miles I was going to ride. I said, "About 20 miles." Then they asked me how long that would take me. :)
LOL... see, math are hard.

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Re: Numeracy and Wealth

Post by Bmac » Tue May 03, 2016 12:13 pm

That is pretty funny. But to be fair, it seems that reading, like language, is a much more innate human skill/ability than math. Virtually everyone on the planet easily becomes fluent in at least one language without any specific instruction. And reading (and writing, too) seems like much of a direct extension of spoken language skills. Many children are already reading by kindergarten but few have developed math skills much beyond simple counting. I'm not suggesting that it does not take hard work to become a skilled writer, but it does seem that learning math, especially beyond basic arithmetic, is truly more difficult than other school subjects. Similarly, for many people, while reading and writing are an integral part of waking life, how often is there a need to apply calculus on a daily basis?

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Re: Numeracy and Wealth

Post by autolycus » Tue May 03, 2016 1:04 pm

Bmac wrote:That is pretty funny. But to be fair, it seems that reading, like language, is a much more innate human skill/ability than math. Virtually everyone on the planet easily becomes fluent in at least one language without any specific instruction. And reading (and writing, too) seems like much of a direct extension of spoken language skills. Many children are already reading by kindergarten but few have developed math skills much beyond simple counting. I'm not suggesting that it does not take hard work to become a skilled writer, but it does seem that learning math, especially beyond basic arithmetic, is truly more difficult than other school subjects. Similarly, for many people, while reading and writing are an integral part of waking life, how often is there a need to apply calculus on a daily basis?
Very valid points, but I think the part I bolded is important to this discussion. It highlights exactly the cycle I was trying to describe. We, as a society, immediately jump to calculus or some other high-level math as the exemplar of how hard (and useless) it is. But the bigger problem in the US is not that we're not all proficient in calculus. It's that we're not generally proficient at even the most basic math problems like figuring out how long it will take us to ride a bike 20 miles while averaging 20 mph.

Think about it this way: When discussing language proficiency, do we ever think to ourselves, "but how often is there a need to write beautiful verse in iambic pentameter?" or "but how often do we need to explain the motif of Fabliaux in The Canterbury Tales?" I'm sure the answer is that we NEVER think that. So why is it that we think about math so differently than language, such that we instinctively think only of advanced mathematics when evaluating its relative difficulty to other skills?

ETA: In case my conclusion isn't clear, it's that we think about math differently because we've trained ourselves to think about math differently. That training is because of long-standing cultural norms that are a vicious and hard-to-defeat cycle.

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Re: Numeracy and Wealth

Post by Lars_2013 » Tue May 03, 2016 1:12 pm

Boglegrappler wrote:Part of the problem is the shift in math education in elementary school to math appreciation.

Its what you'd get if you tried to teach someone how to throw and catch by explaining it to them and having them explain it back, rather than just throwing and catching repetitively.

The dismissiveness towards learning by "rote" is a big part of this.

If you'd like a revelation, find some 5th or 6th graders with non-threatening parents and ask them a few "whats 8 times 6" or "9 times 3" type questions and see how long it takes to get an answer. It will be informative.

In any case, I recommend flash cards and drill for your children as a supplement to whatever goes on in the classroom.
Eh, I was never drilled in math facts (both my school and my parents had a very deliberate emphasis on math understanding rather than rote memorization) and I managed to get "above average" on that numeracy test despite having to struggle a bit in my head with the simple multiplication and division aspects of it. If you have a conceptual understanding of numbers then you can get to pretty much any "math fact" that could be required. For example, I don't ever remember what 6x7 is, but I know that 6x6 is 36, and that 6x7 is 6 more than 6x6, so after a second I can get to 6x7=42. And in the "real world" where calculators exist, math understanding has served me much better than having memorized a set of facts.

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Re: Numeracy and Wealth

Post by Leesbro63 » Tue May 03, 2016 3:10 pm

I knew someone with a small business who used to weed out job applicants by asking one simple question: what's 80% of 100. Many would just say "oh, I'm not good at math" and withdraw. A smaller group would answer "20".

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Re: Numeracy and Wealth

Post by Elsebet » Tue May 03, 2016 3:33 pm

autolycus wrote: Think about it this way: When discussing language proficiency, do we ever think to ourselves, "but how often is there a need to write beautiful verse in iambic pentameter?" or "but how often do we need to explain the motif of Fabliaux in The Canterbury Tales?" I'm sure the answer is that we NEVER think that. So why is it that we think about math so differently than language, such that we instinctively think only of advanced mathematics when evaluating its relative difficulty to other skills?
This is so true. I catch myself saying that to people when they talk about taking advanced courses like Trig, Calc, etc. I never took any of those courses. I struggled to get through Algebra I and II and barely passed Geometry. When I was in high school none of it made any sense. Algebra makes sense to me more as an adult as I experience use cases for it. Geometry made more sense to me when I started designing levels in the Unreal 3D level editor. If I were shown practical uses for math in high school I might have understood it, instead it was just constant piles of homework and proofs to which I could not personally relate.

What I did understand and excel in was practical math (accounting, business math, etc) because it was solving tangible problems. Even some aspects of algebra I understood better than others, like the basic x + 5 = 10 makes sense to me because you are simply finding what is missing. That is useful in a practical sense (how many inches of fabric do I need, how many feet of wood do I need kind of math problems). However that kind of math was looked down upon and considered for the "dumb" kids, which is a shame.
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MathWizard
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Re: Numeracy and Wealth

Post by MathWizard » Tue May 03, 2016 4:05 pm

Lars_2013 wrote:
Boglegrappler wrote:Part of the problem is the shift in math education in elementary school to math appreciation.

Its what you'd get if you tried to teach someone how to throw and catch by explaining it to them and having them explain it back, rather than just throwing and catching repetitively.

The dismissiveness towards learning by "rote" is a big part of this.

If you'd like a revelation, find some 5th or 6th graders with non-threatening parents and ask them a few "whats 8 times 6" or "9 times 3" type questions and see how long it takes to get an answer. It will be informative.

In any case, I recommend flash cards and drill for your children as a supplement to whatever goes on in the classroom.
Eh, I was never drilled in math facts (both my school and my parents had a very deliberate emphasis on math understanding rather than rote memorization) and I managed to get "above average" on that numeracy test despite having to struggle a bit in my head with the simple multiplication and division aspects of it. If you have a conceptual understanding of numbers then you can get to pretty much any "math fact" that could be required. For example, I don't ever remember what 6x7 is, but I know that 6x6 is 36, and that 6x7 is 6 more than 6x6, so after a second I can get to 6x7=42. And in the "real world" where calculators exist, math understanding has served me much better than having memorized a set of facts.
Your example shows that you in fact know math much better than rote. You understood what was behind the numbers,
and could use it. You clearly had to know some root, but you could fill in the blanks. This also used deductive logic,
something that seems to be sadly missing from schoolwork these days.

I did the same thing in elementary school, and was teaching myself algebra by the 4th grade.

Three big issues are at play:

1) cultural, as has been discussed. Many people seem to think being bad at math is a badge of honor. (I guess that means they are not "nerdy".) How many people would take pride in to not being able to read?

2) Logic. We seem to be deficient in logic in the US. Perhaps that is what is missing in the schools rather than math.
Once you have deductive logic down, math becomes fairly easy.

3) Math has definite answers. You are either right or wrong. Many other subjects allow you to be nearly right.
Perhaps because people don't like to be told they are wrong, they shy away from math. Maybe teaching calculations
which get you close to an answer quickly & easily, and then refine the answer would help in this regard.
If you ask me to divide a large number by 978 in my head, I'm going to divide by 1000 and adjust from there.
I may not generate an exact answer, but I have a good approximation at any step in the procedure.

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Re: Numeracy and Wealth

Post by livesoft » Tue May 03, 2016 4:14 pm

Leesbro63 wrote:I knew someone with a small business who used to weed out job applicants by asking one simple question: what's 80% of 100. Many would just say "oh, I'm not good at math" and withdraw. A smaller group would answer "20".
I hired lab technicians. I would ask, "If I had a 5 M stock solution of NaCl and wanted a 100 ml of a 1 M NaCl solution, how much would I have to dilute the stock solution?" I never ever got the right answer because folks were too nervous in the interview. Needless to say, I hired many people who did not give the correct answer.
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Re: Numeracy and Wealth

Post by Heir-A-Parent » Tue May 03, 2016 4:44 pm

I don't think numeracy itself leads to greater wealth. I think numeracy is a more cognitively demanding skill than literacy and numerate people are generally smarter than people who are literate but not numerate. So numeracy is a better mark of general intelligence, and general intelligence leads to greater wealth.

As to those asking why we learn abstract math in school, I'll say that there is definitely a psychometric aspect to education. They are seeing what you are capable of.

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Re: Numeracy and Wealth

Post by trueblueky » Tue May 03, 2016 5:05 pm

I tutor adults in GED math (if you know high school algebra and geometry, you can pass; otherwise, not). Some don't know they know the math facts they do know.

Example: Ask them to divide 200 by 25. Much struggling.
Ask how many quarters are in two dollars? Easy, although it's the same problem.

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Re: Numeracy and Wealth

Post by trueblueky » Tue May 03, 2016 5:16 pm

Heir-A-Parent wrote:I think numeracy is a more cognitively demanding skill than literacy.
I don't know where numeracy starts. It's easier to measure where literacy starts (with the invention of writing). Our ancestors counted 50,000 years ago, but didn't read and write until 6,000 years ago.

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Re: Numeracy and Wealth

Post by blueblock » Tue May 03, 2016 5:35 pm

I think numeracy as it relates to investing may be as much about psychology as math. I know management people who are perfectly comfortable working with departmental budgets, for example, but who will say they need a financial advisor, because they "don't know anything" about investing. They know what they're worth, and they know it's important to save, but they believe that investing is running a gamut that will pummel them with arcane rules, mysterious volatility and bad surprises nobody saw coming. So they hire an "expert" to take care of it for them.

In this sense, deducing that one cannot manage one's own investments is perfectly logical.

That said, I don't know why these folks can't pick up an investing book or three to discover that it's not that hard.

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Re: Numeracy and Wealth

Post by Hawaiishrimp » Tue May 03, 2016 6:08 pm

I thank Thomas J. Stanley for writing "Millionaire Next Door". Without it, I wouldn't be where I'm financially today.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.

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Re: Numeracy and Wealth

Post by grabiner » Thu May 05, 2016 10:04 pm

trueblueky wrote:I tutor adults in GED math (if you know high school algebra and geometry, you can pass; otherwise, not). Some don't know they know the math facts they do know.

Example: Ask them to divide 200 by 25. Much struggling.
Ask how many quarters are in two dollars? Easy, although it's the same problem.
From my experience teaching mathematics, I more often see the opposite problem, translating English into mathematics when the mathematics itself isn't hard. And this contributes to the correlation between numeracy and wealth.

What is 1/12 of 18% of 1000? With these numbers, the arithmetic is simple as long as you remember what % means.
If you carry a balance of $1000 on a credit card at an 18% interest rate, how much interest will you owe each month?

Solve for x: (1-.2)(1+x)=1. Simple algebra.
If your investments lose 20%, what gain do you need in order to break even? It's a lot harder to see 25% here.

If x*(1+y)^10=1000, solve for x when y=.05 and y=.06. You'll need a calculator, but the algebra isn't hard: x=1000/(1+y)^10.
What happens to the price of a 10-year zero-coupon bond if its yield rises from 5% to 6%? This is the number bond investors need to know, as it explains how risky the bond is; in this case, it loses 9% of its value. (And there have been many posts on Bogleheads about investors overestimating the risk; if rates rise 1% in the next year, Total Bond Market will lose about 3%, not a crash.)

At other times, the problem is a failure to try the mathematics, or to recognize that there is mathematics to try.

What is (300,000*1.01-10,000)/1.02? What is (300,000*1.03-10,000)/1.04? These are almost equal.
If you have $300,000 in the bank, need to withdraw $10,000 this year, and earn 3% interest when inflation is 4%, do you need to change to a more aggressive investment if you earn 1% interest when inflation is 2%? The money illusion has caused many investors to go chasing yields.

What is .99 to the 30th power? Easy with a calculator.
If you pay 1% fees on an investment, and hold it for 30 years, what fraction of the potential investment value have you lost to fees? Few people work out the math; getting either the correct 26%, or a reasonable estimate of 30%, is a good reason to avoid such investments.
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Re: Numeracy and Wealth

Post by SpecialK22 » Fri May 06, 2016 4:26 am

Since the language of money is math, it seems intuitive that numeracy would play a large role in determining those best at accumulating it. Personally, I'm around average when it comes to mathematical concepts (I have the standardized test scores to back it up). That's why I like indexing so much, it's mathematically very easy to understand compared to, say, financial engineering.

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Re: Numeracy and Wealth

Post by GoldenFinch » Fri May 06, 2016 5:44 am

If I was writing a formula for wealth building I would think numeracy was important and I would think that social skill level (emotional intelligence) was important. I would predict you could have more of one and less of the other and be successful at building wealth. There would be other factors like creativity, energy level etc. It would be fun to do and then test out the formula for predictive ability. It has probably been done.

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Re: Numeracy and Wealth

Post by tarheel » Fri May 06, 2016 5:44 am

I don't know if they do this anymore, but before I started as a freshman at Harvard in the late nineties we had to take and pass a test on some simple concepts in statistics - basic stuff like the normal distribution, standard deviation, etc....they gave us a short book to read over the summer before we took the test. I always thought it was so random. Nowadays, other than my academic field of chemistry, I think it might have been the most useful learning I did there.

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Re: Numeracy and Wealth

Post by jhfenton » Fri May 06, 2016 7:49 am

tarheel wrote:I don't know if they do this anymore, but before I started as a freshman at Harvard in the late nineties we had to take and pass a test on some simple concepts in statistics - basic stuff like the normal distribution, standard deviation, etc....they gave us a short book to read over the summer before we took the test. I always thought it was so random. Nowadays, other than my academic field of chemistry, I think it might have been the most useful learning I did there.
:beer Harvard '92 here. (North/Pforzheimer House.)

I agree. I never took the Quantitative Reasoning test, because I was signed up for Math 21a (Multivariable Calculus) anyway, which met the QR requirement, but the subject matter in that booklet is the math that most people would find useful in their daily lives. I think there should be more of an emphasis in high schools on statistics. I know some schools around here now have an AP statistics class as an alternative to the more traditional AP calculus that I had long ago.

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Re: Numeracy and Wealth

Post by investingholder » Fri May 06, 2016 8:15 am

Jo Boaler, a Stanford professor, has done a lot of research into numeracy and American culture.

Her research--supported by lots of others--shows that math is not a "gift" and numeracy can be taught.

I'm summarizing but she also says many girls like explanations of why things are useful verses just being taught math.

She is not against "rote" learning but explains why learning numeracy skills and how math works in various ways helps so many children.

Here is a starting point - she has lots of books, youTube videos, articles, etc.
https://www.youcubed.org/

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Re: Numeracy and Wealth

Post by le_sacre » Fri May 06, 2016 3:40 pm

Boglegrappler wrote:If you'd like a revelation, find some 5th or 6th graders with non-threatening parents and ask them a few "whats 8 times 6" or "9 times 3" type questions and see how long it takes to get an answer. It will be informative.
As I think others have pointed out, I find it much more informative when a 5th grader who is slow to respond to 8x6 or 9x3 nonetheless provides the correct answer *and* can explain *why* it's the correct answer.

As people encounter more real-world math (problems that must be *understood* rather than merely *recognized*), those who excelled only at the rote aspect of arithmetic are liable to avoid it, give up, or just put the given numbers through haphazard operations until they get an answer that's within an order of magnitude of the range they intuitively expected (especially problematic if that range of expectation is far too wide).

Some rote facility and heuristic "tricks" are very valuable for quick mental math/estimation, but only if the underlying foundation of mathematical understanding is strong. Whereas if you have that understanding but not the speed, you can get a lot further in life coming up with the correct answers slowly than you can coming up with the wrong answers fast.

Heir-A-Parent
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Re: Numeracy and Wealth

Post by Heir-A-Parent » Fri May 06, 2016 3:54 pm

investingholder wrote:Jo Boaler, a Stanford professor, has done a lot of research into numeracy and American culture.

Her research--supported by lots of others--shows that math is not a "gift" and numeracy can be taught.
Algorithms can be taught, but to perform them quickly and easily requires some amount of talent. Color me skeptical.

I am always skeptical when educators say more education is the answer. Cui bono?

dbr
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Re: Numeracy and Wealth

Post by dbr » Fri May 06, 2016 7:56 pm

trueblueky wrote: Example: Ask them to divide 200 by 25. Much struggling.
Ask how many quarters are in two dollars? Easy, although it's the same problem.
Knowing that it is the same problem is an example of numeracy. Being able to calculate the answer to either of those two problems is not numeracy.

dbr
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Re: Numeracy and Wealth

Post by dbr » Fri May 06, 2016 8:08 pm

Relative to speaking, then reading, then writing a language the need for and use of math in any form is practically negligible for most people most of the time. Beyond deciding roughly intuitively whether or not to buy something at a price, the use of math is totally negligible for almost everyone almost all the time. You don't even have to count the knives, forks, and spoons at the table if you know there is a chair for every person and a knife, fork, and spoon for every chair. However, doing the problem that way involves numeracy of an unsuspected degree of sophistication not often credited.

Oh, I should have thought of telling time and being on a schedule. That might be the one example that almost everyone does exercise almost all the time. How many people are innumerate at time keeping skills?

Teague
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Re: Numeracy and Wealth

Post by Teague » Fri May 06, 2016 10:29 pm

Warren Buffet once said (approximately) " There are really only three kinds of people in the world, those who can count, and those who can't."
Semper Augustus

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grabiner
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Re: Numeracy and Wealth

Post by grabiner » Sat May 07, 2016 3:45 pm

Here's another example, directly related to investing, of an attempt to exploit the unwillingness to do the math.

When I deposited a lot of money in a bank. the bank gave me a free consultation with a financial advisor. The advisor discussed general investment principles (60% US stock, 20% foreign stock, 20% bonds, which is a common reccommendation for a 29-year old saving for retirement). He then recommended his preferred international fund, showed me the prospectus, and recommended that I buy the C shares of the fund.

This had the opposite of the effect he intended, because I did the math. The C shares have a 1% annual 12b(1) fee. The A shares have a 5.75% load up front, and a 0.25% 12b(1) fee. After eight years or longer, the A shares are guaranteed to outperform the C shares. And he recommended the fund for a long-term investment; it wasn't suitable for short-term investing, and my own time horizon was far more than eight years. Therefore, because I was willing to do the math, I could see that he had recommended an investment which was guaranteed to underperform an alternative; at that point, he lost all credibility. (This recommendation would have presumably been a violation by a fiduciary; this advisor was not a fiduciary.)
Wiki David Grabiner

livesoft
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Re: Numeracy and Wealth

Post by livesoft » Sat May 07, 2016 3:49 pm

Here is a cute story in today's Washington Post about how watching someone do math made someone else sick:
https://www.washingtonpost.com/news/ram ... es-flight/

Math clearly is not everyone's cup of tea.
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FreeAtLast
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Re: Numeracy and Wealth

Post by FreeAtLast » Sat May 07, 2016 7:31 pm

k66 wrote:Here's a numeracy test:

https://www.kent.ac.uk/careers/tests/mathstest.htm

in case you wanted to self-evaluate.
I got more than halfway through the test doing fine and then the questions started talking about "pounds and pence". I had a major panic attack and just shut my browser down. Now, to my utter chagrin, I have learned that one modern British pound simply equals 100 pence. When my blood pressure subsides, I will try again.
Illegitimi non carborundum.

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nedsaid
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Re: Numeracy and Wealth

Post by nedsaid » Sun May 08, 2016 10:34 am

Boglegrappler wrote:Part of the problem is the shift in math education in elementary school to math appreciation.

Its what you'd get if you tried to teach someone how to throw and catch by explaining it to them and having them explain it back, rather than just throwing and catching repetitively.

The dismissiveness towards learning by "rote" is a big part of this.

If you'd like a revelation, find some 5th or 6th graders with non-threatening parents and ask them a few "whats 8 times 6" or "9 times 3" type questions and see how long it takes to get an answer. It will be informative.

In any case, I recommend flash cards and drill for your children as a supplement to whatever goes on in the classroom.
When I was in eighth grade, I tutored a fifth grader. He was having trouble with multiplication. I used the flash cards and they worked wonders. Yes, there is a lot of opinion against "rote" learning but it is very effective. There gets to be a point where you actually have to know things.
A fool and his money are good for business.

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Riprap
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Re: Numeracy and Wealth

Post by Riprap » Sun May 08, 2016 10:58 am

grabiner wrote:Here's another example, directly related to investing, of an attempt to exploit the unwillingness to do the math.

When I deposited a lot of money in a bank. the bank gave me a free consultation with a financial advisor. The advisor discussed general investment principles (60% US stock, 20% foreign stock, 20% bonds, which is a common reccommendation for a 29-year old saving for retirement). He then recommended his preferred international fund, showed me the prospectus, and recommended that I buy the C shares of the fund.

This had the opposite of the effect he intended, because I did the math. The C shares have a 1% annual 12b(1) fee. The A shares have a 5.75% load up front, and a 0.25% 12b(1) fee. After eight years or longer, the A shares are guaranteed to outperform the C shares. And he recommended the fund for a long-term investment; it wasn't suitable for short-term investing, and my own time horizon was far more than eight years. Therefore, because I was willing to do the math, I could see that he had recommended an investment which was guaranteed to underperform an alternative; at that point, he lost all credibility. (This recommendation would have presumably been a violation by a fiduciary; this advisor was not a fiduciary.)
Nice story. Hopefully you let him know in your most understated manner that he was either a) self-dealing or b) clueless himself.

dbr
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Re: Numeracy and Wealth

Post by dbr » Sun May 08, 2016 12:12 pm

I do not believe lack of numeracy has any particular dependence on trends and fads in education. The issue has persistently and stubbornly remained over decades of education systems coming and going. Also rote mastery of addition and multiplication has almost nothing to do with actual numeracy. Of course, in saying that people will blame me as being some kind of 1960's "new math" advocate and that might even be partly true, though the total failure of those initiatives to gain any benefit has to be taken as serious information about what the problem might be.

Personally I think the number one cause is obvious and it is the fact that numeracy is not needed by most people most of the time -- end of discussion. It is probably true that facility in playing a musical instrument exceeds the incidence of facility at math though the incidence is most likely no more than 10% of the population (taking piano lessons at age 8 doesn't count), and almost everyone likes music. Music for listening is ubiquitous, however.

Note also, that to successfully analyze the situation Grabiner mentioned takes facility in math that would be lacking in probably 95% of the population under any scenario.

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