Financial Literacy

July 21, 2008

Are We a Nation of Financial Illiterates? – Freakonomics

I am all in favor of a well-rounded education, but seriously: what good is it if high-school students learn about Flaubert, biology, and trigonometry if they don’t learn how to take care of their money?

There’s a quiz at the beginning, so that’s exciting. Experts promoting education in their field tend to come up with a long list of what makes basic proficiency. In that vein, this list of topics might be a little broad:

  1. Basics of how markets work. Things like: it is the law of demand and supply that determines prices in competitive markets, and the interest rate is the price of money.
  2. Time value of money and the working of interest compounding: Because so many payments in finance happen at different points in time, one needs to know how to compare payments. Discounting is at the basis of asset pricing. What is the price of bonds? It is the present value of its payments. Interest compounding is a fundamental concept and it requires a little bit of math. It is critically important to understand interest compounding to be able to fully appreciate the importance of starting to save young and how to borrow and handle debt.
  3. The concept of risk and the working of risk diversification and insurance: A lot of the decisions about saving and investing have to do with how to handle risk.
  4. Basic accounting: To know the net values one needs to subtract assets and liabilities, and that it makes a big difference between whether we choose market prices versus book prices.
  5. Rights and responsibilities of consumers and institutions. People need to know there is a Federal Deposit Insurance Corporation, bank deposits are safe (up to $100,000), and there is no need to line up to withdraw deposits; they should know who does and does not have fiduciary duties and what it means to use a financial advisor (you cannot sue them if the stock market plummets).

Finally a cruel shot at gym teachers:

Having the gym teacher do financial literacy education defies the purpose of having financial education in schools.

Change Indeed

July 21, 2008

Does the Republican party need to go into the opposition party repair shop? They need something. Many of the messages are too important to be wasted. If there’s anything we’ve learned in the past 8 years, it’s that discourse is good, and domination is bad. Here’s more from the Economist

And many of the folks who’d like to do the overhauling [of the Republican Party] seem to think that the shock therapy of a clear defeat, and the space for introspection and reinvention that a few years out of power would provide, are needed to make it happen.

Radiohead House of Cards Laser Music Video

July 19, 2008

If you haven’t seen it yet, you should.

Apparently, they used lasers to map out a grid and then manipulated the points. I don’t know what existential means, but this makes me think of it.

Feng Shui of Database

July 18, 2008

From a recent stackoverflow podcast Jeff Attwood used the line,

it’s not because I feel like it’s better Feng Shui of having a database

to say why you need numbers on your database query. It made me laugh, so I thought I’d share.

The Big Picture

July 17, 2008

A cool website from that takes a story from the day, and illustrates it with a dozen or so images. I liked this one from a day about volcano eruptions.

Recent Volcanic Activity – The Big Picture –

Here’s the main site.