Friday, April 29, 2005

Everyday economics, poorly understood...

"God must have liked the common man -- He made so many of them." Lincoln

Most people don't grasp the basic notions of economics.

With Washington considering whether to strengthen Social Security by giving Americans more responsibility for their own retirements, a survey released yesterday suggested that the typical American does not know enough about economics to prosper in such a system.

The survey, conducted by Harris Interactive, found, for example, that about half of American adults did not know that if they kept their money at home, in cash, they were at greater risk of losing ground to inflation than if they invested it elsewhere.

"Given recent signs that inflation might be increasing, this is quite a frightening finding," said Alan B. Krueger, an economics professor at Princeton University who served as chief economist for the National Council on Economic Education, a business group that commissioned the survey.

The survey of 3,512 adults and 2,242 high school students also suggested that the intense attention Americans have paid to the pronouncements of the Federal Reserve chairman, Alan Greenspan, in the last few years had done little to help people grasp the role of interest rates. One-third of adults were unable to explain how falling interest rates would affect business.

LINK (NY Times Business Section, April 27)
Thanks, Josh.

Maybe if we let 'em go hungry, declare bankruptcy and die out we will have a better informed public. Those who survive will have learned a lesson. Hmmm?

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