Economics Knowledge ... kinda

Here's a terrific column that criticizes a terrible poll designed to -- it says -- measure knowledge about economics.  Apparently this poll has been used elsewhere as support for various arguments, despite its flaws.

So I started The Ascent of Money by Niall Ferguson last night, my reading group's latest selection, and I come across on page 13 reference to what people know (or rather, what they don't know) about economics and finance.  Below are some quick survey factoids he uncovered:

• One in five Brits didn't know what effect on purchasing power would result from an inflation rate of 5 percent and an interest rate on their money of 3 percent.
• Nearly a third do not know what the interest rate on their credit card was.
• Almost a third claimed it was below 10 percent at a time when almost no card offered that low a rate.
• Two thirds of Americans did not understand how compound interest worked.
• A typical high school group scored a 52 on a test of basic personal finance questions.

I'm just getting into the book (17 pages in) and I've already found blogging material.  Can't argue with that. By the way, first chapter -- excellent.  Have high hopes for the rest of the book.

People Know Economic Stuff

A new report by the Pew Research Center finds that Americans are "reasonably well-informed about a number of basic facts" on the economic mess. Over eight-out-of-ten know the government bailed out banks and others, and seven-in-ten correctly identified China as the country holding most of the U.S. debt.

I guess those billion or so stories on Issue #1 by the TV folks made a difference. Or maybe this burst of economic knowledge can be traced to the Jon Stewart-Jim Cramer dust-up.

Or -- and this is most likely -- people know more about this because it matters to their lives. Political knowledge is often abstract or at least it doesn't matter all that much in our day-to-day lives. Yeah, it's cool if you can name every member of Congress, but how useful is that? When jobs are being lost, when retirement looks damn near impossible, that's the stuff that matters, so it's no surprise people did well on this.

You can take the test too, though I gave you a couple of answers already. Give the quiz a try.