Wealth

Numeracy and family wealth

Here’s proof that it’s important to have a handle on basic math skills. A study in The Economic Journal suggests that couples who score well on a test of numeracy appear to fare better financially by middle age than their counterparts who fail to make the grade.

Researchers explored the link between both spouses’ numerical ability and the family’s financial outcomes. They also examined who is typically responsible for making financial decisions in the household and why.

Researchers followed 11,000 people over the age of 50 and concluded that household wealth “increases sharply” as the numeracy score of either spouse rises, with vast differences amounting to hundreds of thousands of dollars in net worth between couples earning a perfect score compared to those who got zero.

What’s more, researchers found other cognitive skills including memory retrieval and intact mental status had far less influence on a household’s wealth than numerical ability.

The man was the financial decision-maker in 62 per cent of the households studied. The preference is particularly evident when men are older and more educated than their wives. And men who were college-educated made the financial decisions in 75 per cent of the cases no matter what the level of the wife’s education. Even when men scored zero on the test, there was still a 50-50 chance they would be the household’s financial decision-maker.

The researchers say the good news is this tendency is diminishing in younger couples.

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