this post was submitted on 27 Apr 2024

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How financially literate are Europeans? Not very - but who knows most? (www.euronews.com)

submitted 6 months ago* (last edited 6 months ago) by [email protected] to c/[email protected]

38 comments fedilink hide all child comments

EU citizens are not doing well when it comes to financial literacy. Nearly half lack an understanding of basic financial concepts, including inflation.

A third of Europeans do not understand how inflation works, according to a survey by Eurobarometer. The same survey revealed only 18% of EU citizens were able to show a high level of financial literary.

According to the survey, 65% of EU citizens are aware that, in times of positive inflation, the purchasing power of their money decreases, meaning they can buy less than they could before with the same amount of money.

Lack of knowledge about inflation could be seen as concerning

In October 2022, the annual inflation in the EU reached levels not seen before in the previous four decades at 11.5%. While the rising cost of living was the most pressing worry for 93% of Europeans at that time, apparently a third of EU citizens do not know how inflation affects their lives.

…

The best performers were the Netherlands (43%), Denmark (40%), Finland (40%) and Estonia (39%) where about four in 10 respondents display a high level of financial knowledge.

Romania and Portugal reported the worst scores in high levels of financial knowledge at 13% and 16%, respectively.

top 38 comments

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[–] [email protected] 21 points 6 months ago (2 children)

The questions weren't about esoteric financial instruments that allow the rich to get away with murder, they were home ec style questions:

Stuff like

Imagine that someone puts €100 into a savings account with a guaranteed interest rate of 2% per year. They don’t make any further payments into this account and they don’t withdraw any money. How much would be in the account at the end of five years, once the interest payment is made?

Now imagine the following situation. You are going to be given a gift of [€1,000] in one year and, over that year, inflation stays at 2%. In one year’s time, with the [€1,000], will you be able to buy: [more, less, or the same]

Which of the following is true? An investment with a higher return is likely to be: [more risky, less risky]

Maybe part of the reason governments keep bailing out bad financial moves by private companies is because the electorate has decided investing is black magic and ignores it.

[–] [email protected] 9 points 6 months ago (1 children)

Thank you for starting a sensible comment thread. Unless we plan to go back to bartering, basic financial literacy is important. It doesn't make you an evil exploiter to understand that we use money as a go-between for trading goods and services and what the consequences of that can be for someone trying to build a life or business.

[–] [email protected] 5 points 6 months ago

Unless we plan to go back to bartering, basic financial literacy is important. It doesn't make you an evil exploiter to understand that we use money

Pretty much this. If people have a better understanding of how our system is supposed to work, they'll get angry when the ~~rich~~ bad people take advantage of it.

[–] [email protected] 5 points 6 months ago* (last edited 6 months ago) (2 children)

€100 into a savings account with a guaranteed interest rate of 2% per year. How much would be in the account at the end of five years, once the interest payment is made?

That's an insanely hard problem to know the equation and do it in your head. Because the interest compounds (current year plus interest adds to last year's total).

The equation is P( (1+r/n)^t*n -1)

[–] [email protected] 9 points 6 months ago

Check the article. It's pretty easy to choose the right option.

[–] [email protected] 2 points 6 months ago

If someone asked me to calculate it in the street I would be blue screening but here it was a multiple choice with the options set in a way that you don't really have to calculate compound interest at all, you just had to know it exists (over 110€).

[–] [email protected] 9 points 6 months ago

Fascinating how Finland has one of the best literacy scores and worst behaviour scores. Apparently Finns understand how to be financially responsible and simply do not care for it

[–] [email protected] 2 points 6 months ago (2 children)

How can anyone expect to be financially literate when the rules of capitalism keep changing and economists never agree with each other on anything?

[–] [email protected] 22 points 6 months ago (1 children)

Inflation is not exactly a new concept, and not that difficult to understand. I

[+] [email protected] -6 points 6 months ago (3 children)

Ask 10 economists if inflation is beneficial or detrimental to an economy and see how many answers you get.

Sure, it's good to know that "you likely can't afford as much in periods of inflation" but that really doesn't tell you much. It certainly tells you nothing that you really need to know like what you can do about it.

[–] [email protected] 18 points 6 months ago (1 children)

What a straw man. The question is: what is inflation? Not: is inflation beneficial or detrimental.? The latter is indeed a more subtle question, but that’s

[+] [email protected] -7 points 6 months ago (1 children)

No, the question was how financially literate are Europeans. Hence the headline: How financially literate are Europeans? Not very - but who knows most?

And my answer is still- it's basically impossible for most people, if anyone, to be financially literate in 2024.

[–] [email protected] -5 points 6 months ago (2 children)

That isn’t true. I’m literate as well as all my friends.

Lemmy is just an echo chamber of financial illiteracy. It’s mind boggling how few basic concepts are understood here.

The questions are in the article I see there missed all the time here.

[–] [email protected] 3 points 6 months ago* (last edited 6 months ago)

Lemmy is just an echo chamber of financial illiteracy.

I mean, maybe that's true -- I've seen no poll on here.

But I think that the article's point stands, and it's talking about a Eurobarometer poll of Europe as a whole and Europe not doing so well. That's not just a tiny pocket somewhere.

[–] [email protected] 0 points 6 months ago (1 children)

Are you literate or do you think you're literate? Have you and your friends taken any evaluations to back that up? If so, who designed the evaluations?

Because I bet could I find an economist who would tell you that all sorts of things you think you know about how economies were are entirely wrong. And then a second one to tell you that everything that the first economist says is wrong.

[+] [email protected] -6 points 6 months ago* (last edited 6 months ago) (1 children)

I just the evaluation listed in the article. I got 100%. It’s only 5 questions.

You are confusing with economics with financial literacy. Not exactly the same things

Americans generically are horrible at financial literacy. It’s something that should be taught in school. It was when they went to high school. Hence why I can answer the questions easily.

[–] [email protected] -3 points 6 months ago (1 children)

Americans genetically are horrible at financial literacy.

Uh...

It’s something that should be taught in school.

If Americans are genetically horrible at it, you can't teach it to them.

[+] [email protected] -7 points 6 months ago (1 children)

Generically. Auto correct.

[–] [email protected] -1 points 6 months ago (1 children)

Okay, well anyway, I think the test is confusing economics with financial literacy because not knowing the connection between bond prices and inflation doesn't show you're financially illiterate. Not knowing details about bond investment is not a sign of financial illiteracy. If it was, almost everyone would be financially illiterate because most people aren't doing a lot of trading in the bond markets.

[+] [email protected] -7 points 6 months ago (1 children)

Financially literate people are. I trade in stocks and bonds. Everyone I know does. It’a most likely part of your 401k which most people don’t understand. The test was designed to see you understood basic concepts like what inflation does to money. That’s a basic financial literacy question. Do you understand compound interest, etc.

[–] [email protected] 5 points 6 months ago (1 children)

Everyone I know does.

You move in small circles. First of all Europe doesn't have 401ks. Secondly, only 34% of Americans have 401ks.

https://www.census.gov/library/stories/2022/08/who-has-retirement-accounts.html

Maybe get off the yacht and talk to a poor person once in a while. Be sure to lecture them on how it's their fault for being poor because they lack financial literacy when you do though.

[+] [email protected] -8 points 6 months ago (1 children)

I am aware Europeans don’t but I specially said Americans. Most likely that’s why they are poor. If you don’t understand how money works, you’re doomed to fail.

They could use an Ira if they do not have a 401k. Tax deductible and same concept.

[–] [email protected] 5 points 6 months ago (1 children)

I knew you'd blame poor people for being poor because they weren't financially literate.

Although your type usually blames them for not pulling themselves up by their bootstraps and starting a small business. I guess that's gone out of fashion for conservatives these days.

[+] [email protected] -8 points 6 months ago (1 children)

Well how are they going to start a business if they are not financially literate? They’d fail.

I grew up poor. Most my Friends were dirt poor. None of us are poor now.

Now I have plenty of poor family but they are financially illiterate.

It’s a skill everyone should be taught in school.

[–] [email protected] 5 points 6 months ago (1 children)

Ah yes, the "I was poor once and now I'm rich so anyone poor person who is poor isn't trying hard enough" chestnut. Haven't heard that one from a conservative in a week or so. It usually isn't even true.

But sure, you and "most of your friends" both grew up "dirt poor" and are now all well off. That's very believable and I'm sure no one would doubt that story.

Do go on though, tell me about the time you had to live in a tent in the woods with your dad for a couple of years while you went to high school since you were "dirt poor" like the definitely dirt poor girl at the library where my wife works. We bought her a tent so she could have some privacy. I'm guessing that would be giving her an undeserved handout in your book.

[+] [email protected] -8 points 6 months ago (1 children)

Weird how you turned this into a discussion about an article into an attack on me. Since you have once again resorted to person attacks, I’ll end the conversation here.

[–] [email protected] 5 points 6 months ago (1 children)

Sorry, but me saying your claims are not believable is not a personal attack.

[+] [email protected] -8 points 6 months ago (1 children)

It’s your MO. You started attacking my political beliefs even though I never brought it up and it had nothing to do with the topic. You just wanted to make a personal attack. You can’t talk about issues, you always talk about people. It’s sad. This is the second time in two days you have went out of your way to talk about me instead of the topic.

Do better.

[–] [email protected] 6 points 6 months ago (1 children)

Please quote the personal attack you claim I have made. You won't be able to since I didn't make one, but let's see if you'll even try.

[–] [email protected] 4 points 6 months ago* (last edited 6 months ago)

Because that's an opinion question. Very different to 'what is inflation?'

[–] [email protected] 2 points 6 months ago

This isn't even true though. The vast majority will agree that a little bit of inflation is good, deflation is very bad, and hyperinflation is essentially cataclysmic.

[–] [email protected] 6 points 6 months ago (1 children)

The questions are basically "what is inflation?" and "what did they teach you in high school about investing in stocks?"

They're pretty trivial.

I agree that the rich are able to get away with weird financial fuckery because they own regulators. But that may be because the average voter doesn't understand how investments are supposed to work.

[–] [email protected] 3 points 6 months ago (1 children)

I think some of the questions there are trivial. I don't think all of them are. Take the third question. I don't think it's a trivial question and I don't think that not knowing that bond prices drop when inflation rises is something that shows financial illiteracy. It's not really something most people have to worry about in the first place in terms of something within their control.

[–] [email protected] 3 points 6 months ago

Yeah, the bond question doesn't seem relevant to most people (unless they're building a trading portfolio), but the questions on inflation and buying power shrinking over time are extremely important.

[–] [email protected] 1 points 6 months ago

This is the best summary I could come up with:

The best performers were the Netherlands (43%), Denmark (40%), Finland (40%) and Estonia (39%) where about four in 10 respondents display a high level of financial knowledge.

While the scores of France and Italy were slightly below the EU average, this figure was noticeably low in Spain at 19%.

Proportion answering this question correctly ("Less than you could buy today") was below 60% in Cyprus, Portugal, Greece, Romania, and Italy whereas Finland and Estonia had the highest share at 84%.

The proportion with a high score varied between from 11% in Portugal and Latvia to 27% in Denmark, Slovenia and Sweden, and 28% in the Netherlands.

To illustrate, when participants were asked whether they keep track and monitor their expenses, only 16% in Finland replied, "completely agree".

The EU is working to ensure that its citizens have the knowledge and skills they need to make good financial decisions.

The original article contains 872 words, the summary contains 148 words. Saved 83%. I'm a bot and I'm open source!

[–] [email protected] 1 points 6 months ago

lol romania