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Numeracy and the subprime crisis

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  • Numeracy and the subprime crisis

    Numeracy and the subprime crisis
    Numbers game

    Many defaulting subprime borrowers flunked a simple numeracy test. Dare to try it?

    May 13th 2010 | From The Economist online

    IN AMERICA'S subprime-mortgage meltdown, why did some borrowers manage to struggle on, keeping up with their payments, while others defaulted? Subprime borrowers were all, by definition, people with poor credit histories, prone to financial problems, yet their ability to repay differed widely. A study from the Federal Reserve Bank of Atlanta has found that what makes the difference is the borrower's basic numeracy. They gave a simple quiz to a group of subprime borrowers who had similar personal circumstances and had taken out the same type of loan. They found that those who flunked the test were much more prone to defaulting than the numerate, who were much more likely to manage to keep paying.
    The numeracy quiz that the study's authors gave to their sample of borrowers was hardly rocket science. Click here for our quick version of it: take it yourself, and see how you would have fared.

    Many defaulting subprime borrowers flunked a simple numeracy test. Dare to try it?
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  • #2
    Well I passed the test ... must be why my bank keeps letting me have interest only
    The Son of Glenn

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    • #3
      How can anyone fail this?

      Yes, I too passed this rather stringent test.

      Tho' strangely enough I haven't heard back re my application for the finance director's job. Perhaps I was "over-qualified"....after all, I got an unbelievable 100% correct!

      Just had a thought.........am I the only one who suspects that the "titians of finance", who seem to be responsible for the current economic mess the world finds itself, might also be strangely lacking in basic numeracy skills?

      Mmmmmmm

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