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> My guess would be that any observational claim would be confounded badly by the kinds of factors that select people into financial literacy That’a what I thi

> My guess would be that any observational claim would be confounded badly by the kinds of factors that select people into financial literacy That’a what I think, also. It’s easy to boast of “financial literacy” when one is living a quiet and comfortable middle-class life with almost no financially-related existential dread, it’s a totally different conversation when you’re living day by day. I’m on mobile and too lazy to search but there was an article linked on this forum a few years ago written by a young lady (in her early 20s, I think) describing how after working 10-hour shitty shifts and coming back home to a very poor household one doesn’t think of ETFs and carried interest, but more about “let me have a few cigarettes, some fast food and a coke so that I could forget for some moments about my condition as a poor person”. More on that, I think this insistence on “financial literacy” is a very dirty play by today’s middle class (of which I’m a part, I confess) so that it won’t accept responsibility for the condition of the poor classes, it’s a sort of “it’s their fault for being poor because they are financially illiterate, there’s nothing much that we can do, the system works, the main proof being that we’re not poor”.

xyzelement 5y ago
>> let me have a few cigarettes, some fast food and a coke so that I could forget for some moments about my condition as a poor person”. Just to state the obvious, this is ONE way to think but it's not how people who climb their way out of poverty think. Eg - consider dirt poor Chinese immigrants to the US. They aren't thinking about coke and junk food, they are thinking about how to improve their family's lot and their kids' future, which is why they actually manage to. I grew up immigrant and very poor. So I "get it" but I also know first hand that when you are poor, toy can't afford to be stupid or careless to boot.
- ResearchCode 5y ago
  I don't think those groups smoke less than the majority population. Perhaps more.
- quadrifoliate 5y ago
  As another immigrant who came to the US dirt poor, I can absolutely say that I consumed cheap fast food as an escape from constantly thinking about how to improve my lot and climb out of poverty. I bet that has had a non-trivial negative effect on my health. Once I was more financially comfortable, I began making way more of the optimizations that most middle and upper class folks in the US treat as just "standard good practices", like maxing out your 401k, putting it in market-tracking funds, not picking stocks, etc.
- ozim 5y ago
  Top comment is kind of true, the one you are replying to I don't really agree as well. Top comment for me is saying about that it is putting blame on poor people for being poor like "you want to afford apartment, just stop drinking Starbucks lattes every day". We know world does not work like that and a lot of dirt poor immigrants are not hitting jackpot or getting super rich by being frugal. Lots of people are not getting into being financially independent by simply being frugal. They mostly get by and that is it, some get better of course. On the other hand the comment you reply to is advocating that, well people have shitty jobs, they go back home and they don't have enough energy to do anything with their life but just smoke/watch tv, whatever. Which is advocating for wrong things. I totally understand if someone tried at lest something to make his life better, quitting smoking, not drinking lattes every day, even if he failed we cannot say he is just a lazy bum - at least there was some effort. Who I don't sympathize with are people who will nag day in and out how bad their life is, but they would blame whatever is out there and who never would attempt to do something but would just indulge in smokink/drinking/tv series.
gruez 5y ago
>More on that, I think this insistence on “financial literacy” is a very dirty play by today’s middle class [...] so that it won’t accept responsibility for the condition of the poor classes [...] I'm not sure why you went straight for the "people are doing it because they're bad people" explanation. Why can't it be something less sinister, like creating anti-poverty programs that make the recipients self-sufficient, rather than subsidizing them for the rest of their lives?
- paganel 5y ago
  “anti-poverty programs” are a scam. What will really reduce poverty (at least in the Western world) is a total rethink of the housing policies. Unfortunately the middle classes are against that, because most of their wealth consists of real-estate. Or a real de-segregation of the school-system (which is both race-based and especially social-based). The middle classes are against that, cue their desperate search for property in “good school districts”. Or an abolition of all the regressive taxes, the cigarettes smoked by the poor are taxed to high-hell while the middle-classes pay almost no taxes for the money put aside for their pensions or to purchase their (first) house. The middle classes will vote out of power any politician who will dare to touch these tax privileges of theirs. When all these circumstances will change I’ll be the first to say that “the middle classes really want to help the poor”, otherwise I just can’t.
  - zozbot234 5y ago
    > What will really reduce poverty (at least in the Western world) is a total rethink of the housing policies. Very much true in urban areas, but rural poverty is a thing too. Housing is a key piece of the puzzle but hardly the full story.
JumpCrisscross 5y ago
> one doesn’t think of ETFs and carried interest This is more financial savvy than literacy. Financial literacy is mostly learning how to not get screwed. Understanding the cost of check-cashing services. Knowing that you should not be paying a monthly fee for a basic bank account. Learning how to file a tax return and collect your credits and refunds. Knowing how to opt out of overdraft protection. Knowing how to compare credit card offers. Learning about sending money home via money order versus TransferWise versus Bitcoin. These are powerful intellectual tools. If you’re born into the middle class, you got them informally. If you weren’t, you likely didn’t. That’s an oddity somewhat orthogonal to the economic plight.
- ixacto 5y ago
  It’s possible to get them off of r/personalfinance and r/fire. Meanwhile the high school accounting class that I was going to take was teaching how to day trade rather than actual accounting or personal finance. The advice to save half your income and go into a well paying career is not that difficult to follow if you grow up poor in this country and know where to look.
zozbot234 5y ago
People who are living "day-to-day" need financial literacy the most. The point of being financially literate is not learning about ETF's and carried interest, but how to climb out of the stress-inducing "day to day" trap as quickly and effectively as possible. There's quite simply no excuse for 'existential dread', if you're not in actual North Korea-style extreme poverty you can build a precautionary buffer of savings and escape all that stress.
- pirate787 5y ago
  Agree. I have family living "day-to-day" and the causes are not lack of financial literacy. Rather their poverty flows from a more generalized lack of literacy. They have no marketable skills and no desire to gain them. In both cases college education was paid for. I think there's a dimension of cultural rot, especially for men, in the United States. They smoke pot and play video games and languish. I thought they would age out and get it together, but it hasn't happened by 50 and it isn't going to.
thedailymail 5y ago
Barbara Ehrenreich wrote an excellent book, "Nickel and Dimed," on how exhausting and precarious the lives of poor (= minimum wage-earning) people are, based on her experience trying to live off minimum wage. In my life, I have been dirt-poor (homeless) and pretty well-off ($200k/yr), and my experience agrees with her reporting. Financial predators seek out the poor because 1) there are lots of them; 2) they don't have a lot of effective defenses; and 3) society, and poor people themselves, tend to blame the poor for their poverty (as the parent comment mentions). I have a running dad-joke with my kids that "I'm not smart enough to be poor." The truth is, I'm not hard-working enough either. Being poor sucks. The poor know it. Many of them are as smart and hard-working as the statistical "us" are. I wouldn't be surprised if there's a correlation between financial literacy and revolutionary attitudes about changes to the economic status quo.
- deleted 5y ago
  [deleted]
- wcunning 5y ago
  Planet Money or something similar did some interviews with people who use payday loan/check cashing places and asked them why they don't just have a normal bank account. Pretty much to a person they said it was because the fees that the payday lender charged were smaller than the banks and more predictable because they (or their brother or uncle or whatever) got charged an overdraft and then a convenience fee for an account below minimum balance and then and then and then and it all turned out to be way worse than just paying for a single financial service. Most of the "unbanked" are just as intelligent and rational as you or I, but for other reasons choose not to get entangled with the banks.
  - pathseeker 5y ago
    > got charged an overdraft and then a convenience fee for an account below minimum balance and then and then and then and it all turned out to be way worse than just paying for a single financial service. That's a fun anecdote but it falls right into the illiteracy problem. There are tons of normal banks now that allow you to opt out of overdraft (all of them might now might even be legally required to offer that as an option). You've inadvertently just shown why financially illiterate people end up way worse off (someone using a payday lender because of a story they heard from their uncle from a bank 20 years ago).
gajjanag 5y ago
> More on that, I think this insistence on “financial literacy” is a very dirty play by today’s middle class (of which I’m a part, I confess) so that it won’t accept responsibility for the condition of the poor classes, it’s a sort of “it’s their fault for being poor because they are financially illiterate, there’s nothing much that we can do, the system works, the main proof being that we’re not poor”. Why the focus on middle class? At least middle class bloggers point out the benefits of financial literacy and at least a few people in poverty benefit from this education. The upper classes on the other hand don't do even that. And anyway, concretely as an individual neither major political party in the US wants to tackle this meaningfully so votes on this front are irrelevant. Providing genuinely useful financial information can be argued to be far more positively impactful than whatever regressive housing policies (e.g., Prop 13) are enacted by our elected governments in the US.
WalterBright 5y ago
And yet, people by the hundreds of thousands walk a thousand miles with nothing for a chance to get into America.

xyzelement 5y ago

>> let me have a few cigarettes, some fast food and a coke so that I could forget for some moments about my condition as a poor person”. Just to state the obvious, this is ONE way to think but it's not how people who climb their way out of poverty think. Eg - consider dirt poor Chinese immigrants to the US. They aren't thinking about coke and junk food, they are thinking about how to improve their family's lot and their kids' future, which is why they actually manage to. I grew up immigrant and very poor. So I "get it" but I also know first hand that when you are poor, toy can't afford to be stupid or careless to boot.

ResearchCode 5y ago
I don't think those groups smoke less than the majority population. Perhaps more.
quadrifoliate 5y ago
As another immigrant who came to the US dirt poor, I can absolutely say that I consumed cheap fast food as an escape from constantly thinking about how to improve my lot and climb out of poverty. I bet that has had a non-trivial negative effect on my health. Once I was more financially comfortable, I began making way more of the optimizations that most middle and upper class folks in the US treat as just "standard good practices", like maxing out your 401k, putting it in market-tracking funds, not picking stocks, etc.
ozim 5y ago
Top comment is kind of true, the one you are replying to I don't really agree as well. Top comment for me is saying about that it is putting blame on poor people for being poor like "you want to afford apartment, just stop drinking Starbucks lattes every day". We know world does not work like that and a lot of dirt poor immigrants are not hitting jackpot or getting super rich by being frugal. Lots of people are not getting into being financially independent by simply being frugal. They mostly get by and that is it, some get better of course. On the other hand the comment you reply to is advocating that, well people have shitty jobs, they go back home and they don't have enough energy to do anything with their life but just smoke/watch tv, whatever. Which is advocating for wrong things. I totally understand if someone tried at lest something to make his life better, quitting smoking, not drinking lattes every day, even if he failed we cannot say he is just a lazy bum - at least there was some effort. Who I don't sympathize with are people who will nag day in and out how bad their life is, but they would blame whatever is out there and who never would attempt to do something but would just indulge in smokink/drinking/tv series.

gruez 5y ago

>More on that, I think this insistence on “financial literacy” is a very dirty play by today’s middle class [...] so that it won’t accept responsibility for the condition of the poor classes [...] I'm not sure why you went straight for the "people are doing it because they're bad people" explanation. Why can't it be something less sinister, like creating anti-poverty programs that make the recipients self-sufficient, rather than subsidizing them for the rest of their lives?

paganel 5y ago
“anti-poverty programs” are a scam. What will really reduce poverty (at least in the Western world) is a total rethink of the housing policies. Unfortunately the middle classes are against that, because most of their wealth consists of real-estate. Or a real de-segregation of the school-system (which is both race-based and especially social-based). The middle classes are against that, cue their desperate search for property in “good school districts”. Or an abolition of all the regressive taxes, the cigarettes smoked by the poor are taxed to high-hell while the middle-classes pay almost no taxes for the money put aside for their pensions or to purchase their (first) house. The middle classes will vote out of power any politician who will dare to touch these tax privileges of theirs. When all these circumstances will change I’ll be the first to say that “the middle classes really want to help the poor”, otherwise I just can’t.
- zozbot234 5y ago
  > What will really reduce poverty (at least in the Western world) is a total rethink of the housing policies. Very much true in urban areas, but rural poverty is a thing too. Housing is a key piece of the puzzle but hardly the full story.

JumpCrisscross 5y ago

> one doesn’t think of ETFs and carried interest This is more financial savvy than literacy. Financial literacy is mostly learning how to not get screwed. Understanding the cost of check-cashing services. Knowing that you should not be paying a monthly fee for a basic bank account. Learning how to file a tax return and collect your credits and refunds. Knowing how to opt out of overdraft protection. Knowing how to compare credit card offers. Learning about sending money home via money order versus TransferWise versus Bitcoin. These are powerful intellectual tools. If you’re born into the middle class, you got them informally. If you weren’t, you likely didn’t. That’s an oddity somewhat orthogonal to the economic plight.

ixacto 5y ago
It’s possible to get them off of r/personalfinance and r/fire. Meanwhile the high school accounting class that I was going to take was teaching how to day trade rather than actual accounting or personal finance. The advice to save half your income and go into a well paying career is not that difficult to follow if you grow up poor in this country and know where to look.

zozbot234 5y ago

People who are living "day-to-day" need financial literacy the most. The point of being financially literate is not learning about ETF's and carried interest, but how to climb out of the stress-inducing "day to day" trap as quickly and effectively as possible. There's quite simply no excuse for 'existential dread', if you're not in actual North Korea-style extreme poverty you can build a precautionary buffer of savings and escape all that stress.

pirate787 5y ago
Agree. I have family living "day-to-day" and the causes are not lack of financial literacy. Rather their poverty flows from a more generalized lack of literacy. They have no marketable skills and no desire to gain them. In both cases college education was paid for. I think there's a dimension of cultural rot, especially for men, in the United States. They smoke pot and play video games and languish. I thought they would age out and get it together, but it hasn't happened by 50 and it isn't going to.

thedailymail 5y ago

Barbara Ehrenreich wrote an excellent book, "Nickel and Dimed," on how exhausting and precarious the lives of poor (= minimum wage-earning) people are, based on her experience trying to live off minimum wage. In my life, I have been dirt-poor (homeless) and pretty well-off ($200k/yr), and my experience agrees with her reporting. Financial predators seek out the poor because 1) there are lots of them; 2) they don't have a lot of effective defenses; and 3) society, and poor people themselves, tend to blame the poor for their poverty (as the parent comment mentions). I have a running dad-joke with my kids that "I'm not smart enough to be poor." The truth is, I'm not hard-working enough either. Being poor sucks. The poor know it. Many of them are as smart and hard-working as the statistical "us" are. I wouldn't be surprised if there's a correlation between financial literacy and revolutionary attitudes about changes to the economic status quo.

deleted 5y ago
[deleted]
wcunning 5y ago
Planet Money or something similar did some interviews with people who use payday loan/check cashing places and asked them why they don't just have a normal bank account. Pretty much to a person they said it was because the fees that the payday lender charged were smaller than the banks and more predictable because they (or their brother or uncle or whatever) got charged an overdraft and then a convenience fee for an account below minimum balance and then and then and then and it all turned out to be way worse than just paying for a single financial service. Most of the "unbanked" are just as intelligent and rational as you or I, but for other reasons choose not to get entangled with the banks.
- pathseeker 5y ago
  > got charged an overdraft and then a convenience fee for an account below minimum balance and then and then and then and it all turned out to be way worse than just paying for a single financial service. That's a fun anecdote but it falls right into the illiteracy problem. There are tons of normal banks now that allow you to opt out of overdraft (all of them might now might even be legally required to offer that as an option). You've inadvertently just shown why financially illiterate people end up way worse off (someone using a payday lender because of a story they heard from their uncle from a bank 20 years ago).

gajjanag 5y ago

> More on that, I think this insistence on “financial literacy” is a very dirty play by today’s middle class (of which I’m a part, I confess) so that it won’t accept responsibility for the condition of the poor classes, it’s a sort of “it’s their fault for being poor because they are financially illiterate, there’s nothing much that we can do, the system works, the main proof being that we’re not poor”. Why the focus on middle class? At least middle class bloggers point out the benefits of financial literacy and at least a few people in poverty benefit from this education. The upper classes on the other hand don't do even that. And anyway, concretely as an individual neither major political party in the US wants to tackle this meaningfully so votes on this front are irrelevant. Providing genuinely useful financial information can be argued to be far more positively impactful than whatever regressive housing policies (e.g., Prop 13) are enacted by our elected governments in the US.

WalterBright 5y ago

And yet, people by the hundreds of thousands walk a thousand miles with nothing for a chance to get into America.