– According to a new study that tracked 1,000 Dutch adults for a period of 5 years and screened for differences in education, risk tolerance and financial knowledge, people with better math skills tend to become wealthier over time. Understanding of financial numbers like discounts, fees and interest rates are key to make smarter money moves, explained Catalina Estrada-Mejia, an assistant professor at Colombia’s University of the Andes, co-author of the study.
– For example, the bargain of “buy one, get one 50 percent off” seems much less interesting once you realize that it’s only a 25 percent discount on your total purchase. The 2014 OECD (Organization for Economic Cooperation and Development) had already shown the same relation between math abilities and financial literacy. “From the data, we see a very strong correlation,” stated Annamaria Lusardi, a professor of economics at George Washington University.
NASDAQ Stock Market Display in Time Square (Wikipedia)
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