ILLITERACY

* The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.

Alvin Toffler

IT'S NO WONDER: The U.S. population grew to around 250 million in 1991. But over 10%- 25+ million- cannot read or write at all. Another 45 million are functionally illiterate. That's around 28% that are out to lunch. 44% of the American adults do not read a book in a year. A publishing industry study showed that from April 1990 to March 1991, 6 out of 10 households did not buy a single book. It's no wonder the country is falling further and further behind in skills and competency. The Japanese statement that many of the U.S. workers are lazy and illiterate may be reasonably accurate. While the aspect of being lazy is subjective, a illiterate person working hard probably isn't worth that much anyway.

PEOPLE THAT DON'T READ, DON'T KNOW AND WILL NEVER FIND OUT!

MADE IN THE U.S: More than 10 million workers in small businesses (about 40%) have trouble doing their jobs because their basic skills in reading, writing and math skills are so low. 23% of manufacturing workers and 11% of management are functionally illiterate. Other estimates put the illiteracy rate at 20% of working adults overall.

LITERACY: Bob Green's great article on literacy in Sundays 2/2 /92 SF Chronicle provides some interesting comments about former President Nixon and "serious reading". `Like Nixon or not, he has written his ninth major book. He accepted as an article of faith, as did the contemporaries of his time, that reading- heavy, at times difficult reading- is the best way to learn about the world. It never occurred to them that they could be leaders and not be diligent readers. Nixon's belief is that the way Americans (should) absorb information and learn important things is by reading thoughtful books.'

In my field, the only way to keep abreast of the everchanging financial field is through intensive research- reading. But most people don't read. That is borne out in a 1992 study by the American Booksellers Association. Not only did they find that "60% of households did not buy a book last year, but that the largest group that did buy were over 65 years of age. It appears that it is only that generation who still believe that reading is a lifelong way to learn. "

"Unfortunately, reading may therefore someday be engaged in by a small minority of people who are regarded as eccentrics by their fellow citizens." Lastly, Green's book stated, "think of him as you will. But add to the poignant things about Nixon's life the fact that he's a man who clings to the belief of reaching his countrymen through considered words on the printed page- in a land where the majority of citizens apparently feel it is a waste of time."

DOWNHILL: Want to see some statistics on why the U.S. is going downhill? From the Wall Street Journal:

Daily TV Viewing SAT scores

1960 5.06 hours 975

1965 5.29 969

1970 5.56 948

1975 6.07 910

1980 6.36 890

1985 7.07 906

1990 6.55 900

1992 7.04 899

Notice a trend in TV versus brains of our children??

ILLITERATE: 1993 A recent study by the Department of Education stated that 90 million Americans possess only rudimentary literacy skills. 47 percent of America adult population perform only the simplest reading skills. As many as 40 million of the nation's 191 million adults have only the lowest level of skills- meaning they can add the total on a bank slip or identify a piece of specific information in a brief news article.

Another 50 million can calculate a total purchase, determine the difference in price between two items and locate a specific point on a map. 61 million can decipher info from long or dense texts of documents and the remaining 34 to 40 million can complete the most challenging tasks. But what was not identified in this article- which I have expressed previously- is that the people that can read DON'T. And that's worse. Outside of good health, the ability AND willingness to read is the most precious commodity that any individual possesses. Knowledge makes you a viable human being. Otherwise you just exist- and sometimes not that well. "The vast majority of Americans do not know they do not have the skills to earn a living in our increasingly technological society," says U.S. Secretary of Education, (1994)

(USNews, June 1989) There are 25 million Americans who cannot read or write at all. An additional 45 million are functionally illiterate- without the reading or writing skills to find work. Illiteracy is compounded by the attack on English as the national language, yet civilizations rise and fall by literacy and common language. When common knowledge becomes accessible to all, common values can be defined and pursued. In our post industrial era where most Americans make a living with their minds, not their hands, it is education- more than steel, coal or even capital- that is the key to our economic future.

July 1990: Consumers have accepted levels of mediocrity by doing less and less of what can actually help them. Between 1970 and 1988, adult population grew by 36% but the number of daily newspapers subscriptions increased by only 1%. Are these same people watching the news? No! ABC, NBC and CBS have lost millions of viewers to their evening news broadcasts- and these viewers are NOT going to PBS, CNN, etc. They are NOT doing anything- except watching more and more fluff. Shows like Jeopardy, Wheel of Fortune, Cosby, Roseanne outdraw news shows by over 2:1.

ILLITERACY: (Marcia Kaplan, SF Chronicle, 5/95) "Each year over 700,000 graduate from high school unable to read their high school diploma. The US. Department of Education says that 20% of American adults are functionally illiterate. Functional illiterates can read words but they cannot comprehend their meanings, synthesize information or make decision based on what they read. And marginally illiterate people feel most comfortable receiving information in a visual format, relying more on television than print for information.

At the same time that American's skills are declining, entertainment, computer and telecommunications companies are creating new, technologically advanced methods to amuse and educate us. (However) in the excitement about the information superhighway, businesses are ignoring a troubling fact- a substantial number of Americans are not intellectually capable of using their technologies.

.....Any business that sells a products or services that require a user's ability to exercise cognitive skills will face a shrinking market.

No other industrialized country treats literacy with such contempt as the United States."

There's more to this well written article. Too bad hardly anyone will read it.

TV: By the time a child enter the first grade in the U.S., he or she has already spent the equivalent of three school years in front of a TV. Per Dear Abby, "no other country in the world has permitted such unmitigated trash to be aired during the hours children are accustomed to watching". Children that have computers spend less time in front of a TV. By the seventh grade, according to one study of 1,200 families, those children that had computers spent "only" 11.9 hours watching TV while the computerless children spent 12.8 hours per week. In the forth through sixth grades, girls spent 8.9 hours with a computer; boys 7.2 hours. In the seventh and eighth grades boys spent 12.4 hours at a terminal; girls, 11. In high school, it was 12.3 hours for boys; 10 hours for girls. While this is nice to see, the study does not state what they were actually doing on the computer. Was it video games? Trashing on the Internet? Spending just slightly less time in front of a TV, but hours upon hours in front of a terminal viewing even worse trash only promotes further concern.

ILLITERACY KILLS: A study in late 95 showed that at least 30% of 2,659 patients had inadequate functional health illiteracy- meaning that they could not comprehend the written instructions on the prescription bottles. A doctor noted that "adults with limited literacy face formidable problems using the health care system. They are less likely to use screening procedures, follow medical regimens, keep appointments or seek help early in the course of a disease". The study parallels a 1993 Education Department literacy survey that found that 47% of American adults- 90 million- have only rudimentary literacy skills.

ILLITERACY: (1997) 85% of kids appearing in juvenile court are illiterate. 85% of prisoners are illiterate. Either read and teach your kids to read or they and society will suffer the consequences.

READING: (1997) 25% of all Californians are functionally illiterate. Further, a study of students in 41 countries showed that American eighth graders ranked in the middle of the international group- between Romania and Bulgaria- in math and science. Businesses are spending millions on remedial education. Schools can do better, but the parents are to ultimately blame. The only way to live in this world is through the written word. Once you can read, you can think. Once you can think, you can speak on many issues intelligently. Once you can read, think and speak intelligently, you can live. Until that point you merely exist. It all starts with reading.

LITERACY: (1998) The Organization for Economic Cooperation and Development said that 50% of the work force in the United States is not literate enough to work in a modern economy. They also noted that between one-third and one-half of the work force in the world's main industrialized states cannot read well enough to work in a modern economy and the 29 members of the group should consider boosting education and career training efforts because of this "worrying degree of under-performance."

EMPLOYMENT AND EDUCATION: (Fed Board of St. Louis) About 17% of the noninstitutional population over the age of 25 has NOT finished high school; 34% finished high school but did not attend college; 25% started college but did not graduate or have an associate degree and 25% have a college degree

As of early 1998, AN AVERAGE OF ONLY 39.6% OF THOSE WHO DID NOT FINISHED HIGH SCHOOL WERE AT WORK WHILE 78.7% OF COLLEGE GRADUATES HELD JOBS. Those who held a high school diploma and those with some college were in between at about 62.9% and 72.3% respectively. Unemployment was about 7.1% for those who did not finish high school versus only 1.9% with a college degree.

Literacy: (Education Department 1999) Only one in four of the nation's schoolchildren has the knowledge and skills needed to write stories and reports proficiently. Proficiency, in the testers' terms, meant that they could deliver a solid academic performance and competently write about challenging subject matter.

Total of 100,000 eighth graders who took the National Assessment of Education Programs
Nation Average Score % of Students below basic % of Students at basic % of students at proficient % of Students at advanced
148 17 58 23 1

Possible score was 300.

ILLITERACY AT ITS WORST: (1999) About 30% of first time college students take remedial courses because they cannot read, write or do math adequately.

ALITERACY (NY Times 1999) It means that people who can read- DON'T. "The NPD's research through the 1990s detects a continuing falloff in younger readers who said they spend at least 30 minutes of the day reading anything. The percentage is relatively stable for people 55 and older, with an increasing percentage for people over 65. At the start of the study in 1992, almost 51 percent of the people in the study said they were reading that amount of time. But by 1999, the percentage had dropped to 45 percent. The steepest reduction came among young men between the ages of 18 and 34: -- about 22 percent who reported reading that amount, down from 36 percent in 1992.  (The reading could have been comprised of a book, magazine, newspapers or a computer screen. )

The amount of time people actually spend reading has decreased only slightly in the last eight years, according to the NPD study -- down to 44 minutes a day from 46. The steepest drop in reading time was detected among men between 18 and 34 who are reading about 13 minutes less a day since 1992, down from 29 minutes.

Gallup, which has been querying people about their reading habits since 1949, detected a downward trend -- the proportion of Americans who had not completed a book in the last year had doubled to 16 percent in 1990 from 8 percent in 1978.

An educator noted (and are my words as well)- "But on the other hand, as an educator, I'm devoted to analytical thinking and it makes me nervous if people are reading less, because reading in print is traditionally the way we help people to sharpen their thoughts."  

My difficulty with such studies is that they do not necessarily define what is read. Obviously it is better to read something than nothing at all, but if it consists of miscellaneous articles on sports, beauty secrets and other similar "fluff", I find little solace in  that. (I may read books about fishing but it does nothing to improve the "hard" parts of my life.) It has been my opinion that there are only about 6% of the populace that do studious research on areas directly impacting their lives- health, investments, marriage, raising kids, etc. Don't agree?? Then you should also read the study, The 1992 Adult Literacy Survey, which shows the lack of competency by the vast U.S. populace in both quantitative and qualitative skills.

One of our ex presidents noted- "He accepted as an article of faith, as did the contemporaries of his time, that reading- heavy, at times difficult reading- is the best way to learn about the world. It never occurred to them that they could be leaders and not be diligent readers. The way Americans (should) absorb information and learn important things is by reading thoughtful books.'

Additionally, "The vast majority of Americans do not know they do not have the skills to earn a living in our increasingly technological society," says U.S. Secretary of Education, (1994).

And a 1992 study by the American Booksellers Association noted "Unfortunately, reading may therefore someday be engaged in by a small minority of people who are regarded as eccentrics by their fellow citizens." Well, I am certainly regarded as an eccentric then because of the intensive reading I have done for the last 30 years. Too bad it is not been financially rewarding. How's that? Simple- people rarely seek out and utilize those with advanced knowledge in the field of planning. They think anyone can do it- their neighbor, themselves, small furry animals, whatever. Then they find out they were lacking in the fundamentals- but they may then be 75 years of age and its too late to get the money back or purchase the insurance policy they should have bought initially.  

Reading: (2000) The National Assessment of Educational Progress shows virtually no improvement in students' reading scores for 30 years.

It is obviously just a matter of time before the bulk or our workforce will require a much higher level of problem solving skills than is currently evident.

Alan Greenspan (2000)

TV-  (2001) • The average U.S. household has at least one TV set turned on for about seven hours a day.

• The average school-aged child spends 27 hours per week watching TV (some preschoolers watch much more).

• Over the course of a year, children spend more time watching TV than they spend in school or participating in any other activity except sleep.

• Children’s TV shows contain about 20 violent acts per hour.

• A high percentage of a child’s viewing time is spent watching shows intended for adults: 40 percent of a 6-year-old’s viewing time, and about 80 percent of a 12-year-old’s viewing time.

• The average American child will have watched 100,000 acts of televised violence, including 8,000 murders, by the time he or she finishes the sixth grade.

Education (2001) - Greenspan noted that improving financial literacy among children and adults is crucial given the ever-expanding financial choices facing consumers. "In many respects, improving basic financial education at the elementary and secondary school level can provide a foundation for financial literacy, helping younger people avoid poor financial decisions that can take years to overcome."

Will never happen. Certainly some info will be taught. But not the real life application. Why? The brokerage firms will never allow the knowledge (diversification) be taught to students since it would slow trading and sales. Think that is not true? That's the reason I was given as to why the NASD would not allow the fundamentals of investing be taught to arbitrators. Does money make a difference? You decide.

Illiteracy: (2003) The National Commission on Writing in America's Schools and Colleges said most fourth-graders spend less than three hours a week on writing, about 15% of the time they spend watching television. 44 million Americans are functionally illiterate.

One hour ain't gonna cut it: Most U.S. students in elementary through high school spend less than an hour studying most nights, a report released Wednesday says. That's contrary to the popular wisdom that says kids today get too much homework.

* "Some people read so little they have rickets of the mind."

- Jim Rohn

Waaaaaaaaaahhhhh: The American Academy of Pediatrics 2004 recommends no TV for children younger than 2 and no more than two hours of high-quality programming for older kids. Frequent TV viewers in early childhood were most likely to score in the highest 10% for concentration problems, impulsiveness and restlessness.

Every added hour of watching TV increased a child's odds of having attention problems by about 10%. Kids watching about three hours a day were 30% more likely to have attention trouble than those viewing no TV. The researchers accounted for many factors beside television that might predict problems concentrating, but the TV-attention link remained.

Literacy: (America's Most Literate Cities 2004)

Most literate cities

1. Minneapolis

2. Seattle

3. Pittsburgh

4. Madison, Wis.

5. Cincinnati

6. Washington

7. Denver

8. Boston

9. Portland, Ore.

10. San Francisco

Least literate cities

70. Garland, Texas

71. Fresno

72. Arlington, Texas

73. Long Beach

74. Anaheim, Calif.

75. San Antonio

76. Santa Ana, Calif.

77. Corpus Christi, Texas

78. Hialeah, Fla.

79. El Paso

•The nation's largest cities appear well into the bottom half, with New York at 49, Chicago at 58 and Los Angeles at 68. Those cities, also home to large immigrant populations, exhibit what Miller calls "bimodal" activity, in which "a subset of people are very engaged in (literate) behaviors and a big group is not."

• Suburbs fared better than neighboring cities, at least in terms of education levels. Dallas placed 54th in education and 60th overall, while Plano, its suburban neighbor, ranked first in education and 59th overall. Phoenix, meanwhile, was 49th in education and 60th overall, while suburban Scottsdale was second in education and 19th overall. Both 'burbs placed in the bottom 10 in the newspaper category.

• Old industrial cities support their libraries. Pittsburgh ranked fourth in the library category and third overall, while several Ohio cities also fared well: Akron ranked first (26th overall); Toledo, sixth (40th overall); Columbus, fifth (11th overall); and Cleveland eighth (14th overall). On the other hand, Detroit ranked 48th in library resources, 69th overall.

The decline in reading: (National Endowment for the Arts 2004) Based on Census information collected two years ago, the report found that in a sample size of 17,135 adults, only 46.7 percent of adult American readers -- an estimated 96 million -- are reading what the NEA describes as "literature," which is fiction, poetry and plays. Compared to a similar study in 1982, we have lost 10 percent of our fiction readers.

* "For the first time in modern history, less than half of the adult population now reads literature, and these trends reflect a larger decline in other sorts of reading. Anyone who loves literature or values the cultural, intellectual and political importance of active and engaged literacy in American society will respond to this report with grave concern."

more women than men are reading fiction -- 55 percent of women, 37 percent of men -- but even reading among women has declined nearly 8 percent since 1982. The report also shows that divided by race, 51 percent of white people are reading fiction compared with 37 percent of African Americans and 26 percent of Hispanics. during the last two decades, young adults (ages 18 to 34) have gone from being the group most likely to read literature to the group least likely.

My point is not the reading of fiction but the reading of facts- such as contained here and in my book. I figure that of all the people who do read, maybe only 6% actually read material constructive to their lives- having a baby, health care, investments and so on. I think that is now down to 4%- maybe less.

READ!!!! A 2004 study in the Journal of the American Medical Association of people 65 and older found 26% performed better on memory tests after 10 training sessions. Likewise, 87% could process information more quickly and 74% had better problem-solving skills after undergoing training in each of those areas.

Another study of 800 Catholic clergy members age 65 and older found that a variety of intellectually stimulating activities, including reading, playing games and going to museums, were associated with a lower risk of Alzheimer's disease. Likewise, research involving people over 75, published last year in the New England Journal of Medicine, concluded that those who frequently read, played board games, played musical instruments or danced had a reduced risk of dementia. While these studies don't prove cause and effect, they suggest that any intellectually stimulating activity is probably beneficial for the brain.

Literacy?: (National Center for Education Statistics 2005) Only 45 percent of parents read to their children. Children who read with their parents have higher intelligence and reading ability and are better able to comprehend language, improve communication skills, speech recognition and verbal ability.

Illiterate: (2006) Eleven million U.S. adults — about one in 20 — have such poor English skills that they can't read a newspaper, understand the directions on a bottle of pills or, in many cases, carry on a basic conversation. Recent immigrants with limited or no English skills account for most of the group, adult education advocates say, but the survey suggests that even the average adult has low skills. Only 13%, for instance, are able to compare viewpoints in two editorials; interpret a table on blood pressure, age and physical activity, or compare the per-ounce costs of two cans of soup.

Only 52% could look at a heating bill and figure out that a five-cent-per gallon deduction on a purchase of 140 gallons of oil would yield $7.

the National Assessment of Adult Literacy found that an estimated 30 million adults, or 14%, have "below basic" skills. While blacks' abilities improved across the board, there were few improvements overall.

Interviewers surveyed 19,000 adults ages 16 and up living in the USA in 2003 and found that the basic skills of whites, Asians and Pacific Islanders rose modestly if at all across all education levels. Hispanics were the only group that fared worse than in 1992, in two of three areas: the ability to read "continuous texts" such as books and magazines, as well as forms, tables and TV listings. They were unchanged in "quantitative literacy," the ability to add a bank deposit slip

The survey concluded that an estimated 11 million adults are "non-literate" in English, including 4 million who probably can't speak English and 7 million who can't answer basic written questions.

I have said again and again- people don't read. (Washington Post, National Center for Education Statistics 2006) Well, these new statistics beg the case that proficiency in financial affairs (and most anything else) is suspect at best. "While more Americans are graduating from college, and more than ever are applying for admission, far fewer are leaving higher education with the skills needed to comprehend routine data, such as reading a table about the relationship between blood pressure and physical activity.

"The declining impact of education on our adult population was the biggest surprise for us, and we just don't have a good explanation,. "It may be that institutions have not yet figured out how to teach a whole generation of students who learned to read on the computer and who watch more TV. It's a different kind of literacy."

Only 41 percent of graduate students tested in 2003 could be classified as "proficient" in prose -- reading and understanding information in short texts -- down 10 percentage points since 1992. Of college graduates, only 31 percent were classified as proficient -- compared with 40 percent in 1992.

On average, adult literacy is virtually unchanged since 1992, with 30 million people struggling with basic reading tasks. While adults made some progress in quantitative literacy, such as the ability to calculate taxes, the study showed that from 1992 to 2003 adults made no improvement in their ability read newspapers or books, or comprehend basic forms.

Reading: (2006) One major factor separates high school graduates who are ready for college from those who aren't, a new study shows: how well students handle complex reading. An ACT report released Tuesday found that 51% of the nearly 1.2 million high school graduates last year who took the ACT college entrance exam demonstrated the reading skills needed to succeed either in college or in job training programs. That's the lowest in a decade, down from a high of 55% in 1999. About 27% were from the East, 40% from the Midwest, 14% from the Southwest and 19% from the West.

Readiness was defined as having a 75% chance of earning a grade of C or better and a 50% chance of earning a B or better in certain first-year social-science college courses.

The literacy of today's high school graduates has become an enormous concern for colleges and employers.

What differentiates students who are ready for college from the rest is an ability to comprehend sophisticated texts that may have several layers of meaning.  Reading is largely treated as an elementary school subject, with diminishing focus in later grades. But with each alarming report on college readiness, adolescent literacy is gaining attention.

On a federal test considered a report card for the country, the reading performance of 17-year-olds has essentially been stagnant for 20 years. Another recent study found that more than half of students at four-year colleges lack the literacy to handle complex, real-life tasks.

TV or not TV, that is the question:  (2006) Data from cities where preschoolers were exposed to the new technology, and data from cities where they were not, was correlated with test scores from about 300,000 students nationwide in 1965. The study also looked at test scores from pre- and post-TV age groups within cities.

The result showed "very little difference and if anything, a slight positive advantage" in test scores for children who grew up watching TV early on, compared to those who did not. In nonwhite households and those where English was a second language or the mother had less than a high school education, TV's positive effect was more marked.

Average TV viewing among 2- to 5-year-olds — the youngest viewers tracked by Nielsen Media Research — crept up to 3 hours and 40 minutes a day in the 2004-5 TV season. A host of cable channels have are dedicated to the tiniest viewers.

Financial Literacy and Planning: Implications for Retirement Wellbeing: Annamaria Lusardi ,Olivia S. Mitchell

Evidence suggests only a minority of American households feels “confident” about retirement saving adequacy. Little is known about why people fail to plan for retirement, and whether planning and information costs might affect retirement saving patterns. To better understand these issues, we devised and fielded a purpose-built module on planning and financial literacy for the 2004 Health and Retirement Study (HRS). This module measures how workers make their saving decisions, how they collect the information for making these decisions, and whether they possess the financial literacy needed to make these decisions. Our analysis shows that financial illiteracy is widespread among older Americans: only half of the age 50+ respondents could correctly answer two simple questions regarding interest compounding and inflation, and only one-third understood these as well as stock market risk. Women, minorities, and those without a college degree were particularly at risk of displaying low financial knowledge. We also evaluate whether people tried to figure out how much they need to save for retirement, whether they devised a plan, and whether they succeeded at the plan. In fact, these calculations prove to be difficult: fewer than one-third of our age 50+ respondents ever tried to devise a retirement plan, and only two-thirds of those who tried, actually claim to have succeeded. Overall, fewer than one-fifth of the respondents believed that they engaged in successful retirement planning. We also find that financial knowledge and planning are clearly interrelated: those who displayed financial knowledge were more likely to plan and to succeed in their planning. Moreover, those who did plan were more likely to rely on formal planning methods such as retirement calculators, retirement seminars, and financial experts, and less likely to rely on family/relatives or co-workers.

Aliteracy: (2006) "An ability to read but an indifference and boredom with reading for academic and enrichment purposes."

According to the survey firm NDP Group -- which tracked the everyday habits of thousands of people through the 1990s -- this country is reading printed versions of books, magazines and newspapers less and less. In 1991, more than half of all Americans read a half-hour or more every day. By 1999, that had dropped to 45 percent." ...

"American historian Daniel Boorstin saw this coming. In 1984, while Boorstin was serving as librarian of Congress, the library issued a landmark report: "Books in Our Future." Citing recent statistics that only about half of all Americans read regularly every year, he referred to the "twin menaces" of illiteracy and aliteracy." .

""In the United States today," Boorstin wrote, "aliteracy is widespread.""

... "One of the few academics who have written about the phenomenon, [Kylene] Beers, a professor of reading at the University of Houston, says there are two types of reading: efferent and aesthetic."

. "Efferent, which comes from the Latin word efferre (meaning to carry away), is purposeful reading, the kind students are taught day after day in schools. Efferent readers connect cognitively with the words and plan to take something useful from it -- such as answers for a test."

. "Aesthetic is reading for the sheer bliss of it, as when you dive deep into Dostoevski or get lost in Louisa May Alcott. Aesthetic readers connect emotionally to the story. Beers believes that more students must be shown the marvels of reading for pleasure."

Financial Literacy and Planning: Implications for Retirement Wellbeing: Annamaria Lusardi ,Olivia S. Mitchell

Evidence suggests only a minority of American households feels "confident" about retirement saving adequacy. Little is known about why people fail to plan for retirement, and whether planning and information costs might affect retirement saving patterns. To better understand these issues, we devised and fielded a purpose-built module on planning and financial literacy for the 2004 Health and Retirement Study (HRS). This module measures how workers make their saving decisions, how they collect the information for making these decisions, and whether they possess the financial literacy needed to make these decisions. Our analysis shows that financial illiteracy is widespread among older Americans: only half of the age 50+ respondents could correctly answer two simple questions regarding interest compounding and inflation, and only one-third understood these as well as stock market risk. Women, minorities, and those without a college degree were particularly at risk of displaying low financial knowledge. We also evaluate whether people tried to figure out how much they need to save for retirement, whether they devised a plan, and whether they succeeded at the plan. In fact, these calculations prove to be difficult: fewer than one-third of our age 50+ respondents ever tried to devise a retirement plan, and only two-thirds of those who tried, actually claim to have succeeded. Overall, fewer than one-fifth of the respondents believed that they engaged in successful retirement planning. We also find that financial knowledge and planning are clearly interrelated: those who displayed financial knowledge were more likely to plan and to succeed in their planning. Moreover, those who did plan were more likely to rely on formal planning methods such as retirement calculators, retirement seminars, and financial experts, and less likely to rely on family/relatives or co-workers.

People don't read: (Investment Company Institute 2006) mutual fund investors focus primarily on fees, historical performance, and risk when purchasing funds - and make little use of prospectuses or shareholder reports. In fact, around two-thirds of investors did not consult either when making their purchase decisions.

That's why they get screwed on just about anything.

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Reading (2007) Daily circulation fell 2.8% at U.S. newspapers in the six-month period ending in September. People just don't read period.

Reading???: (2007) In 2000, Americans spent 3,333 hours consuming media — and most of that time (1,467 hours) was spent in front of the TV.

Next year, Americans will spend 3,518 hours with their beloved media, including 1,555 in front of the TV. That means the average American will spend roughly 146 days, or five months, consuming media.

And a couple of other nuggets- •Nearly half (47%) of college freshmen enrolled in 2005 had an A average in high school, compared with 20% in 1970.

(Frankly I think that has to do more with the "grading" by teachers than an increase in knowledge.)

•The majority (79%) of freshmen in 1970 had a personal objective of "developing a meaningful philosophy of life." By 2005, 75% said their primary objective was "being very well off financially."

(And that is the major reason for the decline in ethics and fiduciary responsibility)

•In 2005, there were nearly 1.4 million men and women serving in the U.S. armed forces; in 1970 there were more than 3 million.

Consumer-finance myths and other obstacles to financial literacy, William R. Emmons St Louis Fed

(My email to him- Darn, you are good. I just happen to have read your 2005 article above and frankly think it is one of the best independent articles ever written on the subject. Well researched and well written- and since I have written about the subject as much as anyone, the comment is more than just idle commentary (see www.efmoody.com. Click my name for the resume). Unfortunately, I just don't think there is any way to getting to the general consumer outside of 'hitting them upside the head with a 2x4'. Or, 'people do not read, do not know and will never find out'. I don't think there is anyway of getting them away from the TV soundbites or the simplistic format of the marketing of the industry (that works so very, very well).

This paper focuses not on inadequate choices, inadequate competition or regulation, but on the difficulty many middle and upper-income households encounter in making good financial decisions—that is, a low average level of financial literacy. Millions of households are unable to make wise financial decisions even when adequate information is available. Low levels of financial skills provide a fertile environment for consumer-finance myths to arise and gain widespread acceptance.

The seventh consumer-finance myth afflicts not just consumers but also those scholars, policy-makers, regulators, and consumer advocates who believe that just a little more time, or money, or education, or financial-literacy training will create a financially literate population once and for all.

* One general conclusion one can draw is that U.S. households do not consistently demonstrate the basic skills of financial literacy.

* a clear majority of U.S. households with credit cards do not shop around when applying for a card and end up paying finance charges on the cards they use. These facts alone might support the conclusion that credit management is poor in the average U.S. household. Another indication of poor credit management is the fact that virtually all households that are paying high rates of interest on credit-card balances simultaneously hold balances in low-yielding assets, such as checking or savings deposits or money-market mutual funds, or have housing equity against which they could borrow at a lower rate.

* Perhaps the clearest evidence of U.S. households’ poor credit-management skills is the more than 13 million non-business bankruptcy filings in the United States during the ten years ending Sept. 30, 2004—a period of generally falling interest rates and low unemployment rates.7 A high rate of bankruptcy filings suggests that a large segment of the population lacks adequate credit-management skills.

* In sum, U.S. households’ average level of basic financial literacy is moderate at best. Cash management is done reasonably well by most households, while long-term investment decision-making—including retirement planning—is done poorly by the average household (in some cases by doing nothing at all).

* The third obstacle to widespread financial literacy is the undeniable fact that the literacy bar keeps rising—that is, the typical household’s responsibilities for managing its financial affairs are increasing. Moreover, the tasks are becoming more and more complex.

Two potentially far-reaching examples of increasing demands on consumers to make complex financial decisions are “personal retirement accounts” and “health savings accounts.”