Numeracy Skills and Wealth
It seems as though virtually everyone wants to make more money. Have you ever wondered if your future wealth be dictated to some extent by your household's numeracy skills? It could be that these specific brain skills can make a significant difference in your family's wealth.
Better Numeracy Skills for Greater WealthResearchers recently have learned that couples who obtained a high score on a relatively simplistic exam of numeracy ability are wealthier by their middle-aged years. This wealth is in comparison to those who obtained a poor score on the same test. The study was carried out in the United States, and is the first of its kind to investigate married couples and numeracy skills in relation to wealth.
What is Numeracy?Numeracy refers to a set of skills that is typically learned during the school years. It is a person’s skills for reasoning in relation to numbers. It also refers to their ability to reason with a number of other concepts in the area of mathematics.
Family Wealth and Test ResultsOverall, the researchers found that if both spouses answered three of the questions correctly, the wealth of their family averaged just over one and a half million dollars. In comparison, the couples where none of the two participants answered any questions accurately had an average wealth of two hundred thousand dollars.
Financial Decision-MakersAnother interesting finding was that if the husband was chosen as the person to make financial decisions, his numeracy ability was more important in this role than the woman in terms of wealth. In sixty-two percent of the cases studied, the man was the one who made financial decisions.
This was seen more often in cases where the man was older than the woman and also more educated. Also seen was that as the numeracy skills went up, the household showed more of its portfolio in stocks.
Cognitive Skills and Financial OutcomesThe study also looked at some other skills that can impact a family’s wealth. It investigated cognitive skills such as memory and mental state, and how these might affect wealth. The study showed that these kinds of brain skills had significantly less of an impact on household wealth compared to numeracy skills.
Making the Right Financial DecisionsResearchers think this test is one way to make predictions about which family will overall make better financial decisions. The results highlight that making sound investment choices becomes increasingly important as the couple ages and has to contend with critical choices around wealth and pensions.
In particular, having the family member with the higher test result for numeracy skills could make a significant difference in the wealth of the family long-term. This relates to another finding in the study regarding scores and decision-making. Researchers found that the family wealth suffered if the spouse with the lower numeracy skill acted as the key decision-maker for the family finances.