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Well, economists seem to have a poor grasp of economics as well...

... so I guess this is only proper. From the New York Times via A blog doesn't need a clever name:

Survey Finds Many Have Poor Grasp of Basic 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.


Young people - those the current Social Security proposals are intended to help the most - performed more poorly on the survey's questions than adults. Barely half of the high school students polled could correctly state the role of the stock market in the economy, with a few choosing the option that it makes stock prices rise.

Fewer than half the students could accurately define the term "budget deficit." And there was confusion about the purpose of mutual funds, with some students stating that they provided higher returns than individual stocks, and others stating that they guaranteed a steadier income. Only 15 percent of students understood that the purpose of mutual funds was to provide diversification.

(Something tells me those 15% are just lucky guessers.)

Mr. Krueger, who contributes a column for the business section of The New York Times, said these findings were disturbing, given the big increase in the number of households that hold stocks and mutual funds.

"Many Americans are potentially open to scams because they don't understand the purpose of the financial markets," he said yesterday.

This is obvious, but ... you mean like Bush's Social Security privatization plan?

Other analysts said they thought that the findings added to a growing body of evidence that the typical American is poorly equipped to take advantage of what proponents call the ownership society: a future in which individuals are free to invest their own retirement money, rather than having to accept the returns offered by the Social Security program or a group retirement program at work, like a pension plan. Many surveys have shown the public has doubts about the Social Security program, with young people, in particular, confident that they could do better by investing on their own.


"It is abundantly clear that there are a large number of Americans who are completely unprepared to make these decisions," said Steve Blakely, the institute's editor and communications director.

If this keeps up, regular people will eventually be just as clueless as professional economists are.

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